The Prime Minister’s statement to Parliament yesterday that “as someone who, along with a bank, owns a house in Sydney, I do hope that our housing prices are increasing. I do want housing to be affordable, but nevertheless I also want house prices to be modestly increasing” perfectly sums up the political mentality that has delivered us an increasingly concerning property price spike in Sydney.
The statement is patently self-contradictory in a way only that Tony Abbott could manage — by what numerical magic will already unaffordable housing rise in price without becoming less affordable? But worse is how it reflects a mindset at the heart of policy inaction on housing affordability in recent years — the basic political calculus that any serious move to make housing more affordable in a significant way will have to high a political price because of the threat it would pose to home owners and investors.
Accordingly, politicians, from the Prime Minister down to local councillors, shy away from the solutions that would make a serious difference: phase out or reduce negative gearing, remove local planning restrictions that prevent medium-density housing in established areas, dump stamp duty in favour of land tax and release more land with appropriate infrastructure to support housing development.
In short, the political scales are weighed heavily in favour of existing home owners and against those trying to enter the housing market, who are far fewer in number.
Instead, this government reaches for dumb policy options like demonising foreign real estate investors (who are an important source of funding for new housing stock) to give the illusion it is serious about addressing the issue. As Abbott’s ridiculous statement makes clear, it isn’t. Abbott hopes, in some nebulous way, that something will happen to make housing more affordable — but nothing that will upset homeowners and investors who rely on it becoming less affordable. And certainly nothing that his government will do.