Housing continues to be unaffordable, and the official Canberra inquiry into the market isn’t looking at it.
Recession? What recession? Housing affordability is an important part of the Australian landscape, one that the closer we seem to get to it, the further it is away. Recently, the pandemic gave us hope. Hope that the bubble will soon burst, and we’ll all be able to hang a picture without asking permission. Today, the Reserve Bank of Australia has announced it is keeping the interest rate at 0.1%, while downplaying the threat of inflation. Is that hope? Well, no. As Greg Jerico of The Guardian noted, “The latest house price figures show that while the rest of the economy shuddered to a halt in the first half of this year, the housing market continued on its merry way… in the September quarter prices grew in every capital city except Melbourne.”
Why should it not buckle? Property prices in Sydney have been outrageous for years. It’s even prompted very loud people to suggest that if we can’t afford it, we should leave, and move out to Tamworth. For those playing along at home, the median price of a one-bedroom Sydney apartment, according to Domain, is $780,000. What’s more, it’s getting worse. As The Conversation noted, “Midway through 2020, the typical (median) Sydney house price was A$1 million, where it stayed until the end of the year. In the ten months to the start of this month the typical Sydney house price soared $300,000 to $1.3 million – a breathtaking increase (and an awfully big penalty for delaying buying) of $1,000 each day. In that time, in the year in which the typical Australian home price climbed 20.3%, the typical Australian wage climbed just 1.7%”
For many young Australians, soaring property prices are destroying the dream of owning a home. Some are calling it ‘inter-generational theft’. ‘Going, Going, Gone’ is next on #4Corners pic.twitter.com/nwGVFu8TmD
— Sally Neighbour (@neighbour_s) October 27, 2021
So, what to do? Well, according to Canberra, they’re looking into it. But as Peter Martin of ANU, notes, “we have been given an inquiry into affordability in name only. The parliamentary inquiry commissioned by the treasurer in July and chaired by backbencher Jason Falinski is called an inquiry into affordability and supply, but the word “affordability” appears in none of its three terms of reference. Instead, the terms of reference refer to the impact of taxes, charges and other things settings on ‘housing supply’. I guess the idea is that it is obvious that supply is the key to affordability, but it rather negates the idea of holding an inquiry, and it sits oddly with the explosion in prices we have seen in a year in which building approvals have surged by a near-record 224,000 and our population has as good as stayed still. In its submission to the inquiry, the Reserve Bank includes a graph showing the supply of housing (the stock of houses and apartments) outpacing population growth for the best part of the decade leading up to the latest price explosion.”
Emboldened by the binary awfulness of the numbers on the cheque, I decided to lazily Google the same amount overseas.
Did you know that, for the same price, you can get a rustic stone home with five bedrooms and three bathrooms, as well as three additional gorgeous treehouses on the outskirts of Paris? That’s right! A whole property with which to start a characteristic Bed and Breakfast for the price of a one-bedroom in Potts Point. Or live in all four homes like some kind of impulse-driven, cheese swilling tree-king.
That, or if you’re looking for something equitable, there’s this three bedrooms and two bathrooms number, or this humble number in the 17th, one that the advertisement defined as: “sought-after area, in a beautiful old renovated building, quiet and unopposed, a living room with fireplace, a kitchen, a bedroom with dressing room and a shower room with WC window as well as a cellar.” It also has a balcony that looks over a cobblestone street and a charming square, and again, it is in flipping Paris.
If you care not for that, there’s a swanky apartment that brushes the back door of the Notre Dame, which is an elbowed tourist away from browsing in the same bookstore Hemingway was once booted out of, and you’d still have $130,000 in spending money.
Sydney is dreaming too big… Manhattan wasn’t expensive just because it’s small and has no space, it’s because, for a time, everyone wanted to live there.
However, the rental market is just as disparate. A friend of mine traded in Ashfield for New York City and paid less in rent. Crunching the numbers, the mean average for a rental property in Ashfield is $1,460 per month, which equates to $1,056 USD. Which, even in the cut-throat rental market in Brooklyn gives you options. You could even hipster properly, living out your brick bled studio apartment dreams.
Brooklyn or Ashfield. Hmm.
This should not be. I believe one of the central reasons, beyond the tax breaks and questions about negative gearing, is that Sydney is dreaming too big, thinking of itself as some kind of world-class city. Sorry to burst your bubble, but it isn’t. Property sellers and leasers are taking advantage of people’s desire to live in a city. That’s it. Manhattan wasn’t expensive just because it’s small and has no space, it was, because, for a time, everyone wanted to live there. And it has the cultural cred to back that up. Whereas, our landmarks are tourist beaches and the steadfast self-assurance that just because it’s expensive to live here, it’s worth the money. Why not eat baked beans forevern in this Bondi Junction apartment for $600 p/week.
Because that seems totally sane and normal.