There’s only one way to stop spiralling house prices
It’s odd, and sad, that Australia has urban housing prices comparable to New York and London. The squeeze is on for inner urban land, partly because Australians no longer found new cities. We are said to be the world’s most urbanised large country; 89 per cent of us, and that percentage is increasing, live in cities.
Throw in rapid population growth, and we are at great risk of increasing the pressure on our already sky-high land prices.
Sydney now ranks second only to Hong Kong as the most unaffordable housing market in the English-speaking world, with Melbourne just three places behind. The high immigration that holds down wages also escalates house prices, creating a mortgage trap. It also makes us a less equal society. *
House prices cripple many families. Marriages crack under the strain as people feel their lives slipping away from them, while working to pay off a house in a nice suburb - or any suburb. A recent COAG report on “Affordable Housing” found that three quarters of houses for sale in Sydney, and over four-fifths in Brisbane, were out of the price range of most families.
Population pressure leads to denser suburbs, which produce ever-worsening traffic jams, which add to the time parents spend away from home.
Because wages have to cover mortgages, high house prices add to wages and thus to the cost of every product and service we buy. Also, investment gets diverted from producing goods and services to property. True, your house may wind up worth millions; but while you still need to live there, you can’t sell it.
Most baby boomers, it seems, plan to “age in place”. Indeed they often have no choice, because they are housing their descendants who can’t afford to buy.
Property cost has become an invisible impost that impoverishes us all, except those able to speculate in property. It keeps us working - and driving - for ever-longer hours, without seeming to get the quality of life our parents’ generation had.
The property developer body Urban Taskforce claims we need high immigration to “support” house prices. But rising house prices increase the cost of living with no increase in utility.
The letters I have received since publishing on this topic reveal the public’s distress. As one woman put it: “It becomes an even more bitter pill to swallow when we watch our adult children frozen out by house prices from the cities they grew up in, even in terms of renting. The distance they will have to travel to sustain [a] family is heart-breaking. Their mortgages (if they dare) will be endless.”
At the same time as rising house prices, we suffer declining infrastructure and services. When Julia Gillard’s government was re-elected in 2010, she received a frank assessment from the Department of Prime Minister that quality of life in Australia’s cities is declining.
Without referring to the population debate that had recently broken out, the Department warned that population growth would “negatively affect living standards, particularly in cities, as housing prices rise, congestion increases and it becomes more difficult to access services.”
As this suggests, a crucial issue is Australia’s exceptional rate of population growth. As leading demographer Graeme Hugo points out, our annual rate of population growth is more than three times the average of high-income countries, and nearly twice the world average. And-no Senator Hanson-Young, it’s nothing to do with refugees. They are only 2 per cent of our intake. The main problem is employers lobbying for “skilled immigration”, which discourages employment and training of our own young people.
True, a bigger population means a bigger gross domestic product (GDP) but it doesn’t mean more GDP per person. Besides, GDP doesn’t take into account so-called “externalities” - such as free access to amenities like sports grounds and bush land. In our cities, amenity and environment are constantly eroded in the name of growth. Perhaps it’s time we got wiser.
*Mark O’Connor is co-author of ‘Why vs Why: Big Australia’ being released by Pantera Press on Wednesday 22 August*
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