Perhaps you can remember Australia’s upbeat investment mood of the late 1990s. If you’re neither old enough nor brave enough to recall the vibe, let me tell you, it made those warehouse raves of the same era seem about as loved-up as a chemist flu shot. I never made any money, but all around me, regular people were speaking the giddy language of the market. They’d say things like “I’ve got high yield!” or “I flipped a duplex!” and other enthusiastic stuff in which I had no interest. But, I did understand one thing: many everyday Australians had come to think of themselves as investors.
You might have some memory of this. Say, around the turn of the century, your parents or your friends started talking about the value of their home. Which is fine, of course. There’s nothing intrinsically wrong with staying in touch with local real estate costs. But, there is something that happens to a nation when the value of a home is calculated less for its use—it’s got a fence high enough to keep the cat in, space for an oven big enough to feed the kids—and more for its market price.
When Australians were encouraged, by tax incentives and powerful political speeches, to think of their homes more as assets and less as places to live in, homes actually became assets.
I’m not being some anti-market Nanna here and saying that thinking about money is morally bad. I’m saying that the result of it has been bad, because this habit, brought into being by government settings, largely explains our current crisis of housing affordability. When Australians were encouraged, by tax incentives and powerful political speeches, to think of their homes more as assets and less as places to live in, homes actually became assets.
A few lucky people benefited from the investor concessions and built their property portfolios. The rest of us? Well, if we’re not scrabbling to pay a mortgage, we’re renting at high cost. It doesn’t take a genius who knows their way ‘round commodity markets to work out a basic truth: you cannot have a nation made only of investors. Some of us must pay for our landlords’ thrilling growth. We pay rent, and we subsidise tax concessions which—this is fun—go overwhelmingly to Australia’s wealthiest individuals.
Today, more than 30 per cent of us rent, and this growing proportion is the highest it has been in decades. There are some commentators who will tell you that this is the result of selfish, greedy Millennial behaviour and that the Young People of Today are too busy pouring artisanal coffee into their gobs to save for a deposit. Well. I did some basic caffeine calculations and I’m here to tell you that these commentators are not offering economic analysis. What they’re offering are Grandpa excuses. Let’s say you decide not to have one of these fictional $15 single origin drinks. At current median house prices, you must forgo that beverage every day for 30 years to meet the cost of a deposit. By which time, you “lazy” Millennial, few banks will offer you finance, because you’ll be too old. And, hey. It doesn’t matter that you’ve got a university degree, because that’s no longer a guarantee of higher earning potential.
Today, more than 30 per cent of us rent, and this growing proportion is the highest it has been in decades.
I say: drink your coffee. Drink your coffee and then consider with me the true cost of what we can no longer afford to think of as a property boom, but as a social bust.
We could leave aside the image of that growing number of Australians who cannot afford rent and sleep in our CBD streets, sometimes just metres away from the many residential investment properties that are vacant. We could refuse to think about the census data which records more than 100,000 people who have no home, nor of those many who are couch-surfing or living in temporary circumstances. Heck, we could even forget those living in unconscionable conditions in remote communities. We could give no thought to the queer kids thrown out of home, the asylum seekers living in precarious conditions from visa to visa. We could overlook, as we’ve had the habit of doing, those souls who have the least, and are cruelly thought by many policymakers to “like it that way”.
We could just think, if we are lucky enough to have hung on to a mortgage or a rental: what might happen to us?
There’s a range of social problems that stem from a crisis of housing affordability, and the very least of them, as suggested in press in recent days, is an adjustment to our expectations of being an investor. There’s the problem of disappointment, sure, but these are as nothing when we consider the cost of increasingly insecure housing to mental health, physical health and childhood development. Even those with good or adequate income face instability in the new cutthroat rental market, where the “nation of landlords” can royally throw you out with minimal notice.
The way to address the housing crisis is complex, and whatever our policymakers promise to those who like to consider themselves investors, it will demand a decrease in property prices. Sorry, Nation of Landlords, but your asset might not be worth so much anymore. But if you don’t want a Nation of Tenants at your doorstep demanding better conditions—and remember, these guys are revved up on posh coffee!— you'd best think about working with those of us who pay your rent.