When I think of the big bubble in terms of Sydney’s housing market I think of all the hot air that is written and spoken about the housing issue – most of which is a big pitch by vested interests who want to sound like the have some interest or concern about the housing crisis – but who really just want to lobby for their own idea/sector. I call this the Game of Homes.
After researching housing and participating in the housing debate for many years, I think the default view of many politicians is to sound very concerned about the housing issue but take no effective action. The reason is a simple one – with the largest tenure being home ownership the electoral arithmetic means that rising house prices is popular with the majority of the electorate. A great example of this is the current NSW Premier who when she first took the job said housing affordability kept her awake at night but in the following 15 months has taken little concrete action other than providing stamp duty concession to first home buyers which has had the effect of keeping prices in cheaper parts of Sydney higher than they would otherwise be. Despite the windfall gains her Government has made from stamp duty payments in the Sydney housing market, their spending on social housing has declined in relative terms.
We have a lot of fake bad guys in this big talkfest about the housing crisis. NIMBYs are in the frame as is the “terrible” NSW Planning system. Everyone is looking for a fall guy when the real problem is that with the current tax settings in Australia, the record low interest rates and a banking sector that has been running, until recently, its own race, the only possible outcome has been double digit increases in housing prices. This hasn’t been some sort of accident – in the Game of Homes there are a large number of influential stakeholders who have a vested interest in these rising housing prices, despite their speed at proposing solutions to the housing “problem”. The latest entrant in the Game of Homes is some economists from the Reserve Bank of Australia who earlier this year made some extraordinary claims about the cost of zoning. The Halloran Trust at the University has made a short film about their efforts. Their work also highlighted how normally reliable commentators like the Grattan Institute could suddenly forget basic property economics in order to make an argument. The Grattan Institute made their own contribution to the housing bubble by confusing housing markets (where prices are set by the market) with supermarkets (where prices are set at the cost of goods plus a margin).
The housing crisis is sharpest at the bottom of the market with increasing homelessness and a large number of renters on Centrelink payments who are struggling to pay Sydney rents. These are the real victims of the Sydney housing crisis whose position has been made much worse by State and Federal Governments abandoning their commitments to social housing in Australia. You don’t have to be a Nobel prize winner to work out that a period of long term large real increases in house prices and rents is not the time to be reducing your investment in social housing but that is exactly what has been happening across the country.
Whilst the situation might change with an alternative Federal Government reforming the generous tax concession to housing, it will really only change if the losers in the Game of Homes are able to become an effective voice against the noisy voice of self-interested “experts” advocating fake solutions. Some disruptions is needed to shake-up the status quo which has made many individual and firms small fortunes by excluding many individuals and households from what is probably society’s most important good - decent and affordable housing.
Professor Peter Phibbs