Owning a home is a fantasy without $70,000 in savings. This is simply not possible on an average wage. The debate heated up with Tom Whitty's statement "You have to ask, if those being duped are too naive to complain, and those profiteering are too valuable to upset, is housing affordability a problem for our politicians, or a gift?" (The Age, 05/04/13).
If this boom continues, finding a place to call home will not be possible without sacrifices no other generation has been forced to pay. Many young people today pay 40% of their income for somewhere to live. In the 1990s an average First Home Owner's mortgage was barely $100,000. Today it is closer to $300,000.
The global property bubble blew the world economy apart but yet not one government has engaged in housing speculation reform.
Australia has arguably the most attractive tax system for property investors in the world.
Investors now dominate 36% of housing market loans, up from 12% in the 80's.
The housing bubble juggernaut is set to storm ahead with the recent loophole beckoning Self Managed Super Funds to invest in housing with zero capital gains tax (in the pension phase).
Those who already own a property are already subsidised to buy their second property through negative gearing. But those battling to save for a deposit by working a second job are heavily taxed. 92% of negative gearers buy existing houses, bidding up prices. Only 8% adds to the supply of houses. But PM Julia Gillard stated on QANDA that tampering with negative gearing would 'distort the market'.
For so long we have heard developers cry that land supply is the curse of affordability.
Recent evidence raises doubts on whether 'supply' really matters.
Over the last decade, Melbourne has increased the size of the Urban Growth Boundary by at least 97,000 hectares. This is enough land to house over 1.6 million people. As land prices fell last year, developers rewarded buyers by reducing land supply in the Shire of Mitchell by 30%. That's a fix if ever there was one.
Earthsharing Australia's study of over 1.1 million Melbourne homes found 90,000 empty last year. These vacancy trends have been calculated for 5 years, usually averaging three times the more widely quoted vacancy figures provided by the Real Estate Institute of Victoria.
In a Thatcher-like world of economic rationalism – terms such as 'a level playing field' and 'a land of opportunity' ring hollow.
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