Archives, eh
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# When Old Kent Road became Piccadilly, move to the 'gong
While I’m tackling serious matters with the utmost gravitas, house prices in Australia. Reasonably long term readers – of the one reader I have I believe I am the only reader to qualify – will remember that I have form on this issue; those of you who don’t know, my stance on this issue is essentially waiting around for house prices to plummet so I might engage my most maniacal of laughs.
I wasn’t paying much attention but apparently the issue of house prices is actually becoming one. Issue, that is. I mean, I always knew it was one; lord knows the monthly repayments on the mortgage for an average priced home in my area is pretty much untenable while tWM is with us and it’s not as if I’m not on a pretty good wicket these days, sixfigureslastyearthanks i. It has become an issue because the Australian Labor Party that has decided that it is safe to go back into the mortgage-waters again after having been slapped upside the head by the Government a few times. When the other side squawks about 17% interest rates every time you think of talking about debt, I suppose you do get a bit gun shy and it is hard to mold statistics into soundbites; sure, households are worse off now in terms of mortgage repayments than they were in the early ninties, but come on! 17%; that’s double 8%. Double! Must be worse. Stands to reason.
Actually, it has kind of been a slow boil issue for ages now; the government occasionally punts the blame down field, trying to play in the States half, waiting for them to make a mistake so they can slot an easy penalty. It’s stamp rates, they say. Or levies on developers. Or land not being released. Bullshit. You only have to have been paying attention to the handful of television programs that were around a few years ago at the height of the housing boom to detect the bullshit. There were shows about houses being auctioned iii with long shots of sellers fretting that there – sometimes arbitrarily chosen – minimum wasn’t being reached fast enough. We had shows featuring houses being done over specifically to be auctioned. Hour-long excursions into the property market every Sunday evening and you know what I noticed? It was a rare house that wasn’t in Sydney or Melbourne. Sometimes Brisbane or the NSW Central Coast. Even Adelaide, Canberra or Perth would be unusual and you can forget about Hobart or Darwin. I’ll come back to that.
The government says the solution is to keep interest rates low, abolish stamp rates and open up more land. While a higher interest rate wouldn’t help and the various duties the states apply do indeed drive up the price, they aren’t the big factor. The major factor in the price of an average home having gone from four times the average annual salary to seven or eight times is that we, the population of Australia, were willing to pay that much and had the means. Simple. The banks were willing to give us the money because rates were low, there were tax breaks on the offer, and incomes were high – after a prior period of attempts to keep wage growth slow. We were willing to take the money because rates were low, there were tax breaks and our inclomes had gone up a bit after the eighties and early ninties. Our price sensitivity was deadened by cheap money so we threw cash at houses, driving the price up merely because sellers knew buyers would pay more. Things like lowering interest rates even lower, abolishing stamp duties, increasing first home-owners grants; these will just make the problem worse; they’ll dip the affordability of a home momentarily but in the end they’ll just create more demand which will drive the price back up again. The prices will go up because they’ll be driven by cheap money and tax breaks. We had a breather earlier but with the US dollar tanking, the price of everything else we like to buy will dip again so we’ll have some more space in the budget to be filled with the mortgage putty.
At the same time there really is a problem with land being opened up for new housing developments; certainly everyone credible and otherwise seems to think so. I wouldn’t know because I’m not in the market because – ta da! – houses are too expensive. Even after the price has been dropping for a time here in Outer Sydney I am still looking at houses in Bargo, which probably isn’t even on the same water system as Sydney. I tend to be of the belief that it wasn’t so much that state governments dropped the ball by not opening up land for development; it was that they opened up land at their normal pace and failed to notice that the tide had gone out really quickly, holy shit watch out it’s a tsunami of demand coming down on us. A tsunami that had its roots in a glut of cheap money. Maybe they should have just cut back on some of the regulation and sped up the process of opening land for development. Maybe they should have let Sydney sprawl out a little faster. Maybe.
Except, getting back to that earlier point about shooting locations for all those reality shows, would it have really made that much difference? The key word just then was location; location. Location, you hear me? I live in a city where Botany Bay and Ashfield seem to be considered outer suburbs. Where using the M5 motorway is almost treated like inter-city travel. I have not a small circle of acquaintances here in Sydney and one one would buy a home in the real Outer Sydney. The only person who did has lived in the Penrith area for most of his life anyway. No, the rest of them buy apartments in the city centre, houses in Manly, Potts Point, &c. These are people with kids as well, so it’s not like they are living la vida loca before moving out to Campbelltown and Penrith to raise a family. And my impression is that this is not a unrepresentatative sample. The outskirts of Sydney are just too far away from the kind of life these people want, which is to say, something other than Jim Beams and coke in a park on a saturday night. They want the urban existance; not the suburban. Where do you get that? You get it in Sydney and Melbourne and you get it close to the City, which is to say the areas where there’s no space for new homes to be built, merelty carved out of existing buildings – hence redevelopments of ice factories and the like into lofts. We’re a couple of decades behind New York, neh.
Personally I find it an unsatisfactory solution anyway, the building further and further out; there’s only so far we can push out before the infrastructure requirements make it untenable. Peter Costello might think we don’t all work in the CBD, but peak hour commuters might beg to differ and that’s just transport issues. Enough of us do – and will continue to do so – that sprawling further and further out from a single metro area isn’t going to work. There need to be other solutions. We should be using the power of the governments to grow employment opportunites outside of the major metropolitan areas. It’d take decades but it needs to be done anyway; we can’t all squat in Sydney and Melbourne forever; and commuting to the City from Wollongong, Helensvale, &c is not a long term solution either. No, there needs to be a change in our population habits and it needs to happen pretty soon since we’re rushing towards another doubling of the population. I don’t know how to do it; if I did I wouldn’t be talking to this empty room. But somehow the change needs to happen and a good start would be persuading and enticing industries other than just the blue-collar to open up in population centres other than the Melbourne, Sydney and Perth CBDs. That’s what I plan to do by moving to Bargo. I don’t need to be in the Sydney CBD anyway, the only reason I am each day is because my home is too small to able to work from there without distraction.
i It doesn’t go as far as you might think, not when you have a fourteen year old in Catholic school, car payments, health insurance ii and the various other monthly payments for services that you feel you can’t live without despite living without only a dozen years ago.
ii You know, the stuff I didn’t need when I had cancer but do now that I earn more than my fair share.
iii Auctions! This was entertainment in the early 2000s, kids in the future reading this for history assignments. That and smelly, emotionally-stunted layabouts on the Gold Coast.
