By JR on Friday, October 02, 2015
Rich People Only: How the property boom is tearing our cities apart
Once again, no analysis of why. The problem is real but solving it needs understanding it. And the causes are as simple as the law of supply and demand. Demand is outstripping supply despite quite high building activity. Why? Demand is being pumped up by a high level of immigration. All those migrants, refugees or otherwise, have to be housed. And the supply is being restricted by an unholy combination of Greenies, NIMBYs and some farmers -- who regularly oppose the release of land for new housing. That keeps the supply down and the price up. The simplest remedy would be a big reduction in net immigration, maybe even a complete moratorium -- JR
AUSTRALIAN capital cities have sold out to the elite and cashed in the values that have sustained them, according leading Sydney University academic, Professor Patrick Phibbs.
“The problem is we’re essentially sleepwalking our way to very unequal cities and unless we do something about it soon it might be too late,” the Chair of Urban and Regional Planning and policy said following Sydney University’s Festival of Urbanism earlier this month.
“We’ve taken our eye off looking out for people on low to moderate incomes and we’re basically just pandering to an elite, and I think that’s a risk. Do we want a fair city, do we want an equal city, or do we just want a city where people talk about how much money they made off their million dollar apartment?”
The problem, according to Professor Phibbs, is the way Australians, and much of the world, sees housing today. “We’ve seen the complete pivot of housing from being a place where you live, as a form of shelter, to essentially housing as a wealth generator,” he says, “People have got to look a bit beyond their own personal gain. Sure you’ve made $500,000 on your house but is that really a good thing?”
With the mining boom fading, Australia’s economy is now leaning on an exploding property market for support.
As the Australian reported recently, a boom in apartment buildings around the nation has been responsible for a fifth of Australia’s economic growth over the past two years. A push that has been fuelled by a six billion dollar contribution from China, along with other foreign investors, to the Australian property market. Some of whom have used sophisticated trust structures to get around foreign investment laws.
The Abbott government, who oversaw the recent boom, failed to rein in the runaway housing market. Instead they encouraged it, despite persistent howls over housing affordability in the nation’s major cities. Today it’s left us with some of the least affordable housing on earth, particularly in Sydney where house prices are now 13 times the average annual wage.
“Sydneysiders have always prided themselves on being reasonably egalitarian and sticking up for the battler, but I think essentially we’ve stabbed the battler right in the wallet over the last ten years,” said Professor Phibbs.
Around the country, meanwhile, the economy is showing sign of weakening, with an inflated rental and housing market distorting living costs; unemployment on the rise; wage increases struggling to keep pace with inflation; and Australia’s net disposable income per head — the best measure of living standards — dropping by 1.2 per cent.
The losers in this scenario are pretty much everyone, says Professor Phibbs, though particularly the current generation of young Australians.
“In the current property boom there is a huge group of losers and the biggest, in a general sense, are young people. If they want to buy a house in Sydney, which a lot do, they essentially have to climb a cliff and I just think that’s completely out of order,” he said, adding, “If we’ve managed to make what was an affordable suburb to where houses are worth a million dollars, we’re just headed in the wrong direction.”
“If you’re saying Sydney is a place where kids can grow up and have opportunities, we’re essentially saying, nup, if you’ve bloody got a lot of cash you can stay here,” he says.