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Prof. Ross Garnaut gave the Hamer Oration at Melbourne University on Thursday. He pointed out that Australia has not experienced a recession for 17 years, a record for The Lucky Country. Such a period of unbroken growth is not just an Australian record, it is a world record. But one-way tickets have built-in risks for the return journey.

Australians seem blissfully unaware of the burdens in high housing costs. We’re onward and upward!  Home Sweet Home is not just a haven of privacy and rest, it is a profit centre now.

But is it? Let’s look.

The Stoics, raised in the struggle of WW2, are fading away – their houses sold as they die or money is needed for nursing home bonds. They are real estate winners, the fruits of their investment to be enjoyed in death or dementia.

The Baby Boomers – now 50 years and older – have superannuation and valuable homes. Super took a devastating tumble in the Global Financial Crisis, yet there’s buckets of equity in the house ratcheting up day by day. But if we sold, where would we live?

Generation X have their foot in the market too, enjoying the gains on their starter homes. Secretly, they think they should have been able to flip their crummy house for something better by now. Oh well, it will be our turn soon.

And Generation Y is doing the sums. Sums that don’t add up. Two incomes, a giant deposit and a big thirty year mortgage buy a ‘starter’ home: a worn house in a poor suburb with bad schools and criminal neighbors. Can we blame them for declining to commit?

All these groups are trapped – tortured by the dream of land ownership in an era of high real estate prices, steep transaction costs and limited supply.

Dr Gavin Putland of the Land Values Research Group has released a remarkable graph comparing Aussie house prices to the usual suspects.

The real estate bubbles have burst in Europe and America. Australia has been protected by its stellar economic performance.

Did I say protected?

The banks are. Your mortgage is full-recourse and the bank can strip you of all assets if you default. Much of their housing book is well aged, protected by principal repayments and rising house prices.

If house prices fall by 30 per cent as they have in the US, Aussie banks will be unharmed.

The Stoics wont notice the change in their fortunes.

The Boomers will be financially ruined, their plans of spending a third of a lifetime playing golf erased. Retirement will be spent writing very angry letters to the media and their MP.

Gen X will remain stuck in their starter homes, suddenly worth less than the mortgage.

Gen Y will be able at last to buy. But they wont – because the price falls will go on and on for years.

Who benefits from high house prices? No one really. A price bubble can only leave regrets: ‘If only I had sold at the peak!’ But no one does. No one.

My wish is that we vow to never let this happen again.  The  real estate market needs automatic stabilizers to smooth the peaks and troughs. The stabilizer is Land Tax, a reform called for by the Henry Tax Review and long advocated by Prosper Australia.