There’s a lot of anger out there about rising house prices. It is getting to the stage where an average person on an average income will not be able to buy a house in commuting distance from a major city.
There are several reasons behind this abject failure of policy – the first home buyers’ grant, which simply inflated prices well beyond any value it had to first home buyers; John Howard’s massive cut to capital gains tax, encouraging increasing numbers of home-owning Australians to buy investment properties by using the equity they have in their houses to outbid people trying to buy their first home; negative gearing; the lack of investment in public transport infrastructure in new suburbs so that properties further out from jobs can still be connected with them; and the fact that rising house prices made middle-class home-owning Australians seem wealthier – even if it was at the cost of their children never leaving home.
The problem with those explanations is that they keep anger focused on where it’s both deserved and where any change to these policies must be made: the government. Specifically, economic policies that are creating an unbridgeable divide between rich and poor.
How to redirect that anger? Who would make a convenient scapegoat? The Daily Telegraph knows – IMMIGRANTS!
Wealthy migrants pricing locals out of Sydney property market
AUSTRALIAN families are being priced out of the property market by record numbers of highly paid skilled workers arriving from overseas.
Research by The Sunday Telegraph has revealed for the first time how skilled immigrants – predominantly from Britain, India and China – are forcing house prices to some of the highest levels in the world when compared with average incomes.
Contemptible. And their “research” shows nothing of the sort.
Almost 115,000 permanent skilled visas were issued last year, compared with just over 40,000 in 1998-99 – an increase of 187 per cent.
During the same period, the median house price rose 168 per cent, from $156,600 to $420,600.
I could go through the many other factors that are much more closely linked to house prices over the ten year period described (essentially, the time of the Howard government), but the fundamental point is this – correlation does not equal causation. Lots of other things almost doubled over that period. That doesn’t mean they’re the main reason for the increase in house prices.
That said, if you look closely at house prices right after the GST, right after the FHOG, and right after the cut to CGT – three policies which directly affected EVERY sale in the country – it is difficult to ignore the pattern that emerges.
Oddly enough, the Daily Telegraph article mentions none of these factors.
It does, however, introduce us to one of these oppressive foreigners:
Mark Taylor arrived from Britain on a skilled visa in 2003. The engineer-turned-management consultant was attracted by Australia’s lifestyle, weather and plentiful job opportunities, but soon became obsessed with buying property. He now owns four houses around the country and is scouting for a property in Sydney.
“The tax breaks are just fantastic,” the 37-year-old from Maroubra said. “You can offset losses on rental income against your tax, which you can’t do in Britain, and that makes it such an attractive market.
The Tele journalist completely misses the point of this: it’s not that Mark’s a foreigner that’s got him buying four – soon, five – properties – it’s that Australia makes it far too attractive to use the property market as an investment engine, instead of, you know, housing people. Why does Mark choose to continue pouring his money into property? Because successive governments have chosen to make it one of the best investments in the country, and sod the consequences for those who just want to live in their own home.
We have a system that encourages the property-owning class to buy more and more property for itself, leaving those who did not own property before the boom permanently locked out. We are moving to a nation of landlords and renters – and it’s not because of immigrants. It is, as Mr Taylor reveals, because housing as an investment is “so attractive” here.
THAT is the failure in policy.
And, separately, skilled migration has a point – it’s about bringing needed skills to the country. You know, like doctors, surgeons, engineers – people our underfunded education system has failed to produce in the required numbers. For the benefit of all of us. The other policies listed above – cuts to capital gains tax, the first home buyers’ grant, lack of investment in public transport infrastructure – ARE NOT POSITIVE. They are about making the wealthy wealthier and screwing over the disadvantaged. Even IF skilled migration had an impact on property prices, it’s not the place we should be directing governments to change policy.
Changes are desperately needed to address the housing crisis, and urgently. It’s just a damned shame that newspapers like the Daily Telegraph are diverting attention away from what would actually help.