There is a deafening silence in the upcoming election about the most pressing financial issue that faces a sizable portion of the population. Neither of the major parties, nor any of the minor players, are saying anything about the outrageous house price bubble that has completely distorted the economy and turned younger generations into an underclass.
This, despite the fact that this election will be the first in which Gen Z and Millennials – those born after 1981 who are deeply affected by the housing bubble – outnumber Baby Boomers at the ballot box, a trend that will only intensify as Boomers die off. One would think that politicians would realise the issue is critical to their future appeal to voters. But apparently not.
One of the prominent themes of the election is the cost of living. Yet there is no attempt by politicians to connect this with the impact of house prices, which are causing significant economic disparities. According to the Australian Bureau of Statistics (ABS) average weekly housing costs are $493 for owners with a mortgage; $54 for owners without a mortgage; and $379 for renters.
This is the aftershock of ridiculous price rises. At the turn of the century the median house price in Australia was about $150,000. By 2011 it had risen to $500,000 and it is now about $1 million. Sydney, Melbourne and Adelaide are in the list of top 10 least affordable cities in the world. In Sydney prices are 14 times annual income; in the other two cities they are 10 times annual income.
The ’winners’ have been older voters. More than three-quarters of baby boomers own their home, compared with just 24.3 per cent of Gen Z. Nearly half of the baby boomers have no mortgage, making it easy for them to become property investors and contribute to the excesses. About a fifth of Australia’s taxpayers (2.24 million) are in possession of 3.25 million investment properties, with an average age of 43.
It has transformed Australia into a $10.4 trillion property casino, with those using negative gearing being prepared to lose money in the short term in the expectation of getting a windfall gain in the long term. Australia’s politicians and the Reserve Bank have simply sat back and watched it happen.
Economist Saul Eslake has accurately summed up the fecklessness of the political calculus: “For all the crocodile tears which politicians of all persuasions routinely shed about the difficulties facing those wishing to