The only
thing that can happen is happening. People are becoming increasingly resentful
of the prosperous. It is probably hard to get across how un-Australian this
sentiment is. Australians are a relaxed and laid-back people. Australia has
always been the land of plenty, the land where people could succeed and even
become wealthy if they worked hard enough. The kind of country where everybody
believed they had a fair go, because they had kind of experienced that and
grown up in a society that offered that. It has always been a country where
people felt that if they could not succeed in one area they could always move
into a different area and have a chance of success there. The problem is less
and less people are feeling this way now. Resentment is building, and this is
the only way things can go, if the situation does not change.
Houses and
asset prices have been driven out of reach of the average income owner. It is
now necessary to either earn a very high income, or to have a two-income family
who both have relatively high incomes that together make a very high income. Without
this kind of upper middle class wealth, it is almost impossible to get into the
housing market anywhere within a reasonable distance from the centres where
most people work. But despite how many people are facing these kinds of
struggles, not everyone is facing hard times, some people are doing incredibly
well it in this market.
Those with
the highest per-capita wealth and asset ownership are smiling while interest
rates go up. Every rate rise increases the value of their savings, and removes
more and more young families out of competition for buying the increasingly
expensive houses on the market, and the data bears out that this is the precise
effect this is having:
“Older Australians 'immune' to rate rises bought a quarter of
properties sold in NSW, Victoria and Queensland without mortgages in 2022.
More than 25 per cent of homes sold in Queensland, Victoria
and NSW last year were bought in cash by older Australians who have benefited
from high property prices and are "basically immune" to the effects
of rising interest rates, highlighting a "generational divide" in the
housing market.
New research published by property insights group Property
Exchange Australia (PEXA) found that $478.6 billion of residential property was
sold in 2022, with $122.5 billion worth of property paid for in cash…
… PEXA's head of research Mike Gill said the majority of cash
purchases were by older Australians who are retiring and looking to downsize,
and have benefited from high house prices.
"They've probably sold a family home, and obviously
benefited from increase in pricing over the last few years at least, and then
they've used the proceeds of that to then fund the next property," he
said.”[i]
There are
young families who are trying to work out if they can afford their home,
whether or not to rent a room out to a family member or stranger, or to add a
second, third, or fourth income to their household to pay the bills. They are
delaying marriage, delaying parenthood, and making all sorts of sacrifices, and
some are facing living in caravans just to afford to live. While at the same
time, older Australians are choosing whether to live in one of their three or
four homes, or spend a month in the caravan at some coastal camping ground,
just because they can. Resentment is building at how many older and wealthier
Australians are doing so well, when most everyone else is struggling.
Others are
noticing this too.
“Hot chips. I just can’t say no. Why have one when I could
have two, three or more? If I had my way, I’d eat them for breakfast, lunch and
dinner and still come back for more.
The trouble is, they would eventually kill me.
Property is our national, collective bag of chips. For a
privileged group, property has become an addiction that’s getting worse by the
day. Why settle for one house when you can have two, three or more? On top of
the family home, why not get an apartment to rent out, and another for summer
vacation? And why settle for something small when you can have something
bigger, if not to start with, then when you are ready for that next extension?
I call them MMOOYBYs – those who want to Make Money Out of
Your Back Yards.
During the pandemic, the nation experienced a building boom
on a scale not seen before. We not only broke records for new dwelling
construction, we smashed it for renovations, too. Despite all that new supply,
prices and rents went through the roof when Economics 101 would expect the
opposite to occur, especially as overseas migration fell through the floor.
We have been building vastly more dwellings than are needed
to match population growth for decades, yet real prices and rents keep growing,
affordability keeps falling, and ever-increasing government subsidies can’t keep
up. We currently have 1 million more houses than households.
And all this because of the MMOOYBYs, who just don’t know how
to stop.”[ii]
The writer
of this article then goes on to suggest multiple different policies that could
be instituted to turn this around. There really only needs to be two things
done though; decrease immigration and decrease how many homes people can own and not
be taxed heavily. These two policies will drive the wealthier home owners to sell
their homes and increase the supply for the existing population, and drive
prices down over time. The author of the above article suggests other policies,
like getting rid of negative gearing and other land taxes on extra homes. These
are not terrible ideas, but just lowering immigration would have a better
effect.
But either way, resentment is building and people are noticing this. People are starting to push for change. Australians are starting to become comfortable with suggesting increasingly radical policies to solve the housing crisis. The truth is, relatively speaking to other parts of the world, Australians have never really experienced true hardship, they have never experienced the bottom end of society being exploited so heavily that they cannot get relief, and the wealthy being able to lord this over them. Australia has never been a class-based society that has been divided so distinctly along wealth and status lines. But it is increasingly becoming this. Australia is creating a landed class, that has incredible political wealth and power, that is reaping the financial harvest, while their kids and grandkids struggle to hold their heads above water. Resentment is building. Because the country that was once the land of a “fair-go” where every humble family had a chance to own a home is no longer like that. It is now increasingly the land of the indebted, the bonded and the tenant.
Part of
having a stable political system is people believing it serves them, and their
interests relatively well, but most Australians are starting to become
disillusioned on this. Something needs to be done soon, otherwise the stable,
relatively free and prosperous life we enjoy here in this wonderful land, might
start to fade out of reach of the majority, and when that happens resentment
can go in any direction.
Is anybody listening? Is anybody paying attention to this?
List of
References
[i] Kate
Ainsworth, 2023, “Older Australians 'immune' to rate rises bought a quarter of
properties sold in NSW, Victoria and Queensland without mortgages in 2022” https://www.msn.com/en-au/money/markets/older-australians-immune-to-rate-rises-bought-a-quarter-of-properties-sold-in-nsw-victoria-and-queensland-without-mortgages-in-2022/ar-AA1cfWht?ocid=emmx-mmx-feeds&PC=EMMX01
[ii] David
Hayward, 2023, “Your beach house is lovely, but it’s killing Australia,” https://www.theage.com.au/national/your-beach-house-is-lovely-but-it-s-killing-australia-20230601-p5dd4m.html?fb_news_token=eBuWtmqHwKPejXRfJ%2F5TiA%3D%3D.rB01kNP4rTp2+Ryb4E8js4n+kHI5KO6%2F8Ao8LBZQAjSrk++934PSWVU5W4%2FjHuexcQVsfqY4kQ5p1Mkb%2FLopX3sPL1a5ePTaOWn5TYmNlDeuoOI+KsPjqDFEUDD%2FefE1r1RX2iYIQym3tJKJ1oLpDQMlMGr4glGWxNVM3imlsViFkTfOSujn5fZ+ZqHwHWtkn4l5SdpOWGoe1blwdOX81SrgV8+JH6XecvOKMrch7s0q2A+f+o4xMozBuFpV4DX6QYU4kb0QpgsAgPnB5ziV9eG+4yoZjHHQ0dJ1vxQCSj4ag90O8SsahI2smLG3zY7rwVVkSpm7ABe5fZk2cBpFqQ%3D%3D&mibextid=Zxz2cZ
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