Crikey

With all their current talk about a housing affordability crisis, there is one thing that federal Labor members are at pains to make clear – they do not want cheaper houses. If that sounds a touch strange, then welcome to electoral arithmetic.

For politicians the equation is simple: there are more couples who own, or are buying, the place they live in than there are couples who are trying to become owners. Making houses affordable for the have-nots must not be directly at the expense of the haves. That would be a certain way to lose votes rather than gain them.

Hence contributions to the debate like this recent one from Shadow Treasurer Wayne Swan:

Treasury documents warn that John Howard’s calls for wide-scale release [of land] could lower property values down for existing homeowners, with potentially damaging consequences.

It should be noted that policies to increase affordability for first home buyers by increasing land releases may lead to lower property prices. This may impact on existing home owners, especially those with high household debt levels.

Clearly land release and planning policies have a role in housing affordability, but John Howard’s calls for wide-scale land release could inflict serious financial pain if this lowers property values and forces existing home-owners into negative equity.

Mr Swan, attacking Prime Minister John Howard for “tired and facile finger-pointing”, prefers to make his housing affordability policy one that would benefit existing mortgage holders as well as new ones.

He puts the problem down to eight interest rate rises despite Government promises to keep rates at record lows and in his recent statements has given no indication that a Labor Government has any new ideas to put to the national summit on housing affordability that Kevin Rudd has called for.