Housing affordability and the irrelevant generational war
If you listen carefully as you watch the soft focus “sneak peek” of Channel Seven’s home renovation television series House Rules, you can almost hear the death rattle of the Australian dream. “These are real Aussie families,” host Johanna Griggs assures us in funereal tones over an orchestral sting. “They all have dreams and hopes for their home; they just don’t have the means to make them come true.”
Take Claire and Hagan, a young married couple. “She’s a hairdresser, he’s a plumber…” Griggs tells us. “They’re struggling.” Claire and Hagan live in a converted shop so small the kitchen, dining room, laundry and living room are combined; the couple sleep in the same bed as their two young children.
Such, in 2016, is the tone of the home makeover milieu: even fantasist “factual entertainment” has narrowed its capacity to dream. Gone are the zen water features and home cinemas of the turn of the century; in their place is the extravagant wish for a separate bedroom for each occupant of the property, in whichever building a combined income can secure. Privacy is now as aspirational as a Scandinavian pendant light.
The Australian dream of home ownership was meant to be an achievable number of sleeps away, but now, for an entire generation, it is quickly becoming confined to the imagination: something ephemeral, mythical, which many of us will never know firsthand. Whose fault is all this? Why, it’s the baby boomers’.
The “Boomer Wars” have fuelled endless column inches in an inter-generational game of one-downmanship that often seems to employ everything as projectiles, kitchen sink included, except hard stats.
Despite the very clear socioeconomic markers that have led us here, there is a somnambulant quality to much of this commentary. The boomers congratulate themselves on the hard work of their youth, like Monty Python’s four Yorkshiremen, as though the very concept were anathema to today’s young people: “We used to have to live in a corridor!” “We used to live in an old water tank on a rubbish tip!”
The millennials respond that they are working hard, and that the boomers cruised through life with their free university degrees to ride high on a growing prosperity and then pulled up the ladder behind them. Occasionally there’s an outlier dredged up and splashed across newspapers: a boomer who can’t afford to pay rent, or a baby-faced property tycoon. Everybody in this war seems to have forgotten about generation X.
Characterising this schism simply as cultural attitudes – millennials demanding that the boomers put down their Beatles box sets and realise that the economy has radically changed, or boomers praying that millennials will stop whining and start saving – is a pointless exercise.
Attitudes, though they may stoke the fires of soft editorial, did not bring about this reality. The young generation and the next are not stuffed because they spend too much time on social media and haven’t worked hard enough, nor because the boomers don’t understand them: it is because, increasingly, economic policy has drastically reshaped the housing market. The difference between income and housing prices isn’t so much a gap as it is a yawning chasm.
The renovations showcased on House Rules, Griggs notes, will wipe away “30 years of struggle”. That’s fantastic news for Claire and Hagan and their fellow contestants, but there is no fanciful dissolve or time-lapse sequence that will solve the woes of the rest of us. For many Australians, 30 years would be a best-case scenario.
In 2015, it was estimated by McCrindle Research that while average annual incomes had increased by about tenfold since 1975, house prices had soared much higher: prices were 31 and 30 times their 1975 average in Melbourne and Sydney respectively. Another report released last year by the International Monetary Fund found that Australian house prices had increased at a faster rate than the OECD average over the past two decades, and that Australian household debt-to-income ratio had hit a record high of 154 per cent in 2014. In Demographia’s 2016 housing affordability survey, Sydney and Melbourne were ranked 2nd and 4th least affordable markets globally.
This disparity in income and housing prices is compounded, for younger millennials, by youth underemployment. University of Tasmania research released this week indicates the global financial crisis adversely affected young Australians’ employment prospects, as recovery from the crisis targeted skilled migrants and “prime-age” workers aged 25 to 54. In “hot spots” mapped by the Brotherhood of St Laurence, youth unemployment is as high as 21.8 per cent – that figure being for the Hunter Valley in New South Wales.
And then there are the twin horrors of the Australian tax system. Negative gearing and the capital gains tax discount, introduced with a view to increasing housing supply by encouraging the building of new houses, have instead driven up rents and lined the pockets of the well-off. Despite what Joe Hockey or Scott Morrison might have told you about negative gearing being the domain of “middle-income earners” or “nurses and teachers”, it’s clear that the market favours buyers who are on their second or third property, while first-home buyers are locked out.
As Mike Seccombe wrote in this paper last year: “Not only do the benefits flow overwhelmingly to the wealthy and cost the taxpayer – about $7.7 billion last year – they do little to increase the supply of rental accommodation. Some 93 per cent of investment goes into established properties.” This investor-driven boom – with investors outnumbering owner-occupiers in new housing loans for the first time in 2015 – spells catastrophe for younger or poorer prospective buyers.
Labor’s pledge to reform negative gearing and the capital gains tax discount in order to support growth and jobs, and improve housing affordability, has been curiously absent from much of the Boomer Wars commentary. The words “this policy will see a boost in new housing and will provide young families with the chance to find a home” should be music to the ears of those who feel boomer greed has robbed them of a secure future.
But instead of demanding changes from the government, to address the policies that have delivered the housing affordability nightmare, millennials seem to have been red herringed by the intergenerational argument. And in seeking to shape their own innovative response, they risk short-changing their prospects. Instead of calling for the dismantling of the institutionalised barriers to the pursuit of the Australian dream, many younger people appear to be thinking the best path in the future is to reject the dream in the first place.
We can’t afford a house, so the millennial conversation often goes, but we’ve realised we don’t want one anyway. Better just to stay in the family home and renegotiate how to incorporate a social life there, and hope for an inheritance. Or to scrape together enough to buy a tiny studio apartment, put some students in it to pay it off, and bank on a change in fortune. Or to sharehouse for life. To recalibrate aspirations of independence and simply not buy at all.
“We need to redefine what it means to settle down,” Brigid Delaney wrote recently in Guardian Australia. “Owning your own home (getting the deposit, making the repayments) is now so stressful and out of reach of most people, it should no longer be used as a marker to say ‘you are now a proper adult’. Our expectations and sense of entitlement about the amount of space we need also has to change.”
Delaney’s piece is compassionate, but the call for the young generations to fit into the contours of society, rather than to demand societal change, is heartbreaking. Has it really come to this? Perhaps the long-held ideal of the quarter-acre block upon which to raise 2.5 kids has begun to seem kingly to those who wish to live a single or child-free life, but surely it is not millennial entitlement to hope to soon cease pouring money into the wallet of a landlord and instead put it towards one’s own home, however small that home may be.
This “joyful decluttering” of our hopes – spring-cleaning the sock drawer of our future – doesn’t hold up to scrutiny, not just because most long-term renters would prefer the relative security of owning their own home, but because, crucially, the Australian dream of home ownership should, in fact, be an Australian reasonable expectation.
Once the smoke of the false intergenerational spat clears, we’re still left with a policy mix that has engineered the current housing affordability issue. Whether or not it was a result of boomers having “rigged” the system in their favour is, at this point, immaterial: it is a market distortion with implications across the economy and standard-of-living expectations.
What surely matters most is ensuring a fair future for all Australians, especially addressing the most vulnerable among us. To contend with the systemic barriers to achieving that, and restore the Australian dream to a mature goal rather than a myth, will require the nation – boomers, millennials and everyone in between – to abandon the distracting tit-for-tat arguments and demand forward-thinking policy from our leaders.
This article was first published in the print edition of The Saturday Paper on Apr 23, 2016 as "Argument of broken dreams".
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