Want a real, live cost-of-living story that’s actually true, and not the distorted views of entitled voters with growing incomes and the politicians who exploit their fears?
It’s right there before us in yesterday’s census release. And it demolishes the claims of the housing denialists such as Steven Keen and the cherrypickers at The Economist that there’s no housing shortage in Australia. In the five years between 2006 and 2011, rents rose nationally on average just under 50%. That’s more than 30% above inflation. Monthly mortgage repayments rose on average 38.5%.
The biggest rise was in WA, where median rents went up more than 76% and mortgage repayments went up more than 60%. The smallest rise was in NSW, where rents rose just 42%. But that’s because rents there were already the highest in the country outside the ACT, and still are. Dwelling approvals peaked in NSW in 2002 and have been falling ever since, apart from the temporary lift provided by Kevin Rudd’s stimulus programs. That state is now building about half as many dwellings in total as it was a decade ago. The O’Farrell government made its first substantial attempt to redress the issue in its recent budget by switching it first home owners’ grant scheme to new building.
The National Housing Supply Council demonstrated in late 2011 that the gap between housing supply and demand was increasing in Australia and was nearing 200,000 units, but also that it differed across states. The gap was narrowing in Victoria (which has a far stronger record of maintaining housing construction) and South Australia, but increasing in Queensland and worst in NSW. It also explained why house prices have been flat despite the growing shortage.
Despite being a creation of Labor’s, the council’s report received minimal attention from the government, continuing a tradition that sees housing only addressed seriously when falls in affordability are sufficiently severe to make the issue spike into the media. Joe Hockey has occasionally raised the issue, but otherwise political attention has been minimal since COAG quietly abandoned the issue in 2011.
As the council’s deputy chair Saul Eslake has forensically demonstrated, Australia has a long history of policies — chiefly grants to first home buyers — that effectively serve to increase demand for housing and bid up house prices while doing nothing to address supply. And that’s no accident — the interests of the majority of Australians lie with pushing up housing prices rather than making it easier for people to enter the housing market.
The invisibility of the issue is in marked contrast to that of other cost-of-living issues, where the persistent lack of evidence that prices are increasing at anything like the rate incomes are increasing is ignored in favour of a “doing it tough” narrative that all politicians have cravenly pandered to ever since John Howard made the mistake of daring to tell Australians they weren’t doing so badly. And that pandering has been rhetorically and via policies such as middle-class welfare.
The victims of this national myopia are younger people, lower-income earners and particularly those who need social housing, which has seen its own particular slump in construction courtesy of state governments. None of them tend to feature prominently in demographics pursued by the commercial media (although Today Tonight commendably tackled the public housing issue in May). The plain demonstration in the census of the long-term impact of our housing myopia might focus some political minds, but don’t count on it.
I’m not sure if this is relevant in other states but in Queensland the Census was done just after the Queensland floods which means while I was doing the census I was coming across many displaced people. This would have distorted the rental prices and situation in Queensland.
the census is chock full of myth busting stuff – which most commentators will avoid – here just a few
1. rents up dramatically – (as you have pointed out) – up another 10% since mid-last year
2. household sizes are increasing – start of a long term trend
3. heaps of spare capacity in homes – unoccupied and bedrooms – question how much we really do need to build – better to get some of the unoccupied stock filled
4. more family households
5. more living in detached housing – as % and especially in numbers
6. larger homes in demand
7. suburbia increasing in popularity
and if interested i will cover such in coming weeks in the property observer – a network partner with crikey
Surely rising rents will ultimately lead to rising property prices (in contrast to ms Gail Kelly doom and gloom predictions that property prices are perpetually on hold). Just a matter of looking at the fundamentals, study the cycles and some intelligent analysis. Tony Spies
Pride, the sin that facillitates unaffordable national and personal housing speculation, cometh before the inevitable fall.
Remember Mark Latham castigating the conservative government for failing to iron out boom- bust housing markets with strategic public spending?
An incoming Abbott administration will be sitting on a housing powder keg of its on creation in the Howard-Costello Credit Card Economy. HCCCE anyone?
With Abbott’s state colleagues already setting fire to the fuses with mass sackings the coming bust will be a big one.
The last great gunpowder plot failed to blow up the houses of parliament, Will Abbott become the Guy Faulkes of the Australian economy, an another English Catholic?
He seems to have succeeded in detroying parliamentary institutions in order to gain power.
Will he blow up the housing market as well?
Redefining the word “Boom” as regards housing. Yes, that is what the article is about, isn’t it?
I can see the hands plaintively wringing right now to the refrain of “But what can we do?”
Two words -affordable housing- impeded by cartel enabled asset price maintenance.
Where are you ACCC? where are you champions of the “free market”?
Leith van Onselen on MacroBusiness today:
Can you two have a chat and let me know who’s right?