REIA not Alone in Running Out of Ideas
Domain.com.au's recent blog entry highlighted a trend amongst an industry and governments that have run out of ideas on how to make housing more affordable. REIA thinking goes that allowing first home buyers to dip into their super savings to purchase their first home will allow them to purchase their first home and relive some stress.
This does nothing to address affordability, all it does is allow people to purchase a home, which I suppose is REIA major reason for existence, more homes sold equals more happy agents, which is fair enough.
In my opinion the problem is much deeper than this and for every good reason the REIA can put up with this scheme, there are an equal amount of reasons why this doesn't work or is detrimental to housing affordability. My advice to REIA is to just be honest and say we want more young people owning homes and we know it will may make homes cheaper.
There are many reasons why homes are unaffordable to the majority of young middle Australia, supply & demand, urban drift and personal debts are just a number of many.
The biggest issue to me is personal debt and as I have said in the past, an over-priced property market (sighs ensue) that does nothing to help agents. The higher the prices, the less buyers, mainly because of holding debts amongst the young and wages which have a long way to go to compete with these price rises.
So why the debt? Well today it is easy to get into debt, buy this car on credit, but this TV on credit, get an awesome mobile phone for 99 cents (on a plan) and the biggest one of all, education debt.
Since 1989 the Hawke-Keating Government introduced HECS and since then public education costs have sky-rocketed, but it is all ok, you can pay this back later. This scheme was met with student protests across Australia and the idea that the government could not afford public education anymore and the fact that both sides of government supported the idea made this an easy passage through parliament.
But think about this, what we now do is educate our kids early on that some debt is a good thing, these young adults then enter a workforce where renumeration have not even closely kept pace with inflation and property prices over the same period. The effect of this is threefold, fresh workforce members have little to no liquid income, have high debt and monthly costs and therefore cannot save nearly enough to afford a deposit on a home that 30 years ago got you a whole house and educational costs (because you pay it back later) just keep rising well above inflation.
Over the past decade I have seen every single dumb idea pass through the lips of many so called experts but literally no-one looks at the real problems, everything is a stop gap measure. "We need more land", "we need more incentives", "we need more high rise development", "we need less taxes", etc. Every one of these measures have made little to no real difference to the problems we face and unless we can finally have some guts and take a little medicine, nothing will change and it will only get worse for real estate agents. Institues have got to be honest instead of continuing to roll out the same old cliches and begin discussion with industry groups and governments to make real changes - some that will need some intestinal fortitude and will fly against conventional wisdom.
At some stage governments are also going to need to make big changes and negative gearing is just one issue amongst many that needs to be discussed openly and without scare tactics, free university education for your first degree must also come back onto the agenda and a massive investment in self sustainable kit homes that are pre-approved for addition to land in suburban outskirt areas and some investment in high speed rail also needs to be discussed, particularly in Melbourne and Sydney.
Personally, we will continue to just get the same old short term fixes, industry groups self promoting measures that will only aid in the short term and banks that will soon offer inter generational loans.
We deserve better, here endeth the rant!