Housing market fears versus Tony Abbott vote-grabbing
The comments made by Treasury Secretary John Fraser in senate estimates on Monday have been described as unprecedented. An assistant governor of the Reserve Bank refused to repeat them, although he admitted the housing market was “overheated” and in “a risky situation”. For many, however, the comments were self-evident. They are part of an everyday truth.
“When you look at the housing price bubble evidence, it’s unequivocally the case in Sydney. Unequivocally,” Fraser said. “Frankly, whatever the data says, just casual observation can tell you it’s the case.”
The evidence was less clear elsewhere in Australia, although the case could be made in parts of Melbourne. “Certainly I think that’s the case in the higher priced areas of Melbourne, and I base that on my own observation as well as the data.”
It was a significant warning from the head of treasury. But asked about the statement in question time, Prime Minister Tony Abbott could only reach for burlesque. “As someone who, along with the bank, owns the house in Sydney, I do hope that our housing prices are increasing,” he said. “I want housing to be affordable but nevertheless, I also want house prices to be modestly increasing.”
Abbott was appealing to the two-thirds of Australian voters who own property or at least have mortgages on property. The calculus is simple: even if there is a housing affordability crisis, there are still more voters in the property market than there are voters locked out of it, and there are more votes in defending the value of their investments than in making equitable the system.
Never mind the varied recommendations to reduce the capital gains tax discount or address the incentive of negative gearing. Never mind treasury’s concern that low interest rates are encouraging people to load themselves with unsustainable debt. Never mind that the implied conclusion of any bubble is a bust. Property is good and its value should go ever up.
The prime minister’s fealty is to people who own homes. His reactions to Fraser’s comments made that clear. They are the majority of voters and the overwhelming majority of politicians. Among the 226 senators and MPs in parliament house, only 13 do not own a home. The rest own 563 between them.
But it is worth considering the other third of voters, the ones who do not own homes, the ones priced out of what was once casually and assuredly referred to as the Australian Dream.
In the past 30 years, home ownership for those aged between 25 and 34 has fallen from 62 per cent of the population to 48. In the next bracket, for those aged 35 to 44, ownership has dropped 10 percentage points to 65 per cent.
There are a variety of factors, including wages, but to ignore these figures is to ignore a generation. Unfortunately, as someone who, along with the bank, owns a house in Sydney, Abbott is happy to do that.
This article was first published in the print edition of The Saturday Paper on Jun 6, 2015 as "Homeric tragedy". Subscribe here.