The parental dependency generation

I’ve rabbited on quite a bit about the growing housing crisis in this country and what it’s going to mean for the Houseless Generation – which this Tandberg cartoon from this morning’s Age (terrible shot with the phone camera, I do apologise: if anyone has a decent scan, please let me know) sums up beautifully:


Do I hear a million bucks from the young couple with parents standing behind them?

We are fast approaching a situation where only the very top earners in the country, those who inherit property from their parents, or those whose parents are preared to give their offspring equity in their own homes, will be able to afford to live anywhere near a major city (or a railway line to a major city). Where housing is completely out of reach without a dependent relationship on someone who’s already part of the property-owning class. Where buying an average house on their own is simply no longer possible for any but the very top earners.

In the interests of helping them see a problem that would otherwise be largely invisible to them, I’ve tried to raise this point with those from the generations that could reasonably expect to own their own homes – do they really want to have to buy their kids a house in order to have any prospect of them finally leaving the nest? Do they really want their sons and daughters to still be living at home in their 30s? Surely that’s not an appealing prospect?

But maybe what Tandberg pictures is actually attractive to some of these people. Because a generation dependent on its parents for housing is a compliant, desperate generation. Rebellion? Insolence? They’d better not dare! Maybe the boomers have finally figured out how to leverage the control over their offspring that their parents utterly failed to have over them. The kids of today had better be nice to their folks, because the alternative is living in a cardboard box, in a swamp – at an exorbitant weekly rent.

Australian government housing policy: extending toxic parental dependency issues to its future citizens’ middle age.

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23 responses to “The parental dependency generation

  1. Wisdom Like Silence

    Richard Pratt is trying desperately to rise again and sell pond-adjacent boxes.

  2. usesomesanity

    The RBA is going to keep slamming up rates until housing price increses stablize or hopefully tick down.

  3. I don’t think that’s going to work – the investors will simply pass the rate rise on as rent increases.

    Making it even harder for the Houseless Generation to save an adequate deposit.

  4. What makes you think that the young being encouraged by circumstances to move out of the crowded cities is a bad thing?

  5. Because (a) they don’t necessarily have that choice – many jobs are only located in the major cities; and (b) it’s unjust – there’ll still be younger people in those cities, it’ll just be the children of the rich. The children of the rich will have even more exclusive access to the best jobs and decent services, and everyone else will be exiled to remote areas, commuting three or four hours a day and unable to spend any time with their kids – if they ever feel they can afford to have them.

    To be frank, it’s the end of the Australian dream of being able to build a life for yourself from scratch. The next generations will be completely dependent on their parents.

    And the older generation will complain about rising crime rates and falling birth rates, and wonder why.

  6. usesomesanity

    The victorian govt. is cancelling the first home owners boost for existing homes. And giving up to $26k for building a new home for FHB.

    JS-“investors will simply pass the rate rise on as rent increases. Making it even harder for the Houseless Generation to save an adequate deposit.”

    Liquidity being sucked out of the system by the RBA will mean that renters will not be able to pay the higher rates and investors will have to drop rates and investors will be unable to the yeild they are seeking forcing them to sell at lower prices than they bought forcing them into bankruptcy. Lose Lose for speculators and renters in an overvalued housing market.

    Do this generation understand who will be “looking after them” in their old age, the favor may be returned?

  7. Jeremy
    (a) they don’t necessarily have that choice – many jobs are only located in the major cities;
    It seems that you are wrong because it is clear that some of the most lucrative jobs are in fact located in some of the mines in the more remote parts of the country.

    (b) it’s unjust – there’ll still be younger people in those cities, it’ll just be the children of the rich.

    You exaggerate and exemplify inverse snobbery here

    The children of the rich will have even more exclusive access to the best jobs and decent services,

    Define the” best services” and the “best Jobs” there is no reason not to think that faced with extremely high overheads that many employers would continue to be located in the heart of congested cities.

    and everyone else will be exiled to remote areas, commuting three or four hours a day and unable to spend any time with their kids – if they ever feel they can afford to have them.

    You really do have your mind stuck into the idea that employment has to be located in the CBD don’t you?

    To be frank, it’s the end of the Australian dream of being able to build a life for yourself from scratch. The next generations will be completely dependent on their parents.

    Parents have always given their children a leg up in life and if you dig a bit deeper than your socialist ideology you will find that the notion of this country being populated by people who have done it all on their own is well. largely a myth. would you knock back an offer from your family to help you buy a house? or an inheritance that would allow you to do the same?

    And the older generation will complain about rising crime rates and falling birth rates, and wonder why.

    Well mate, its time for you to do your bit for the country’s population then Jeremy 😉

  8. Marek Bage

    Iain wrote;

    It seems that you are wrong because it is clear that some of the most lucrative jobs are in fact located in some of the mines in the more remote parts of the country.

    This statement is sloppy on two counts.

    Firstly, Jeremy said that “many jobs are only located in the major cities” and you countered with your factoid of above which doesn’t disprove his assertion, but merely talks about lucrative jobs.

    Secondly, looking to mining jobs to help young people afford ridiculously priced houses is silly.
    The reason is that the mining industry is practically useless when it comes to providing employment to Australians.

    In fact, the entire mining industry could completely disappear and it would hardly put a dent in our employment stats.

    Cheers

  9. usesomesanity

    Iain. “Parents have always given their children a leg up in life and if you dig a bit deeper than your socialist ideology you will find that the notion of this country being populated by people who have done it all on their own is well. largely a myth. would you knock back an offer from your family to help you buy a house? or an inheritance that would allow you to do the same?”
    Iain you may have been able to bludge your life away on your parents inheritance but you may be surprised some people live in the real world where they save for their own home and this is a dream prats like you dismiss with pompas fuckwitery.

  10. confessions

    Is iain seriously arguing against the fact that there are more jobs in cities than there are in country towns? Sheer idiocy!

  11. Maybe Iain thinks that the Australians now locked out of buying their own home without mummy and daddy’s assistance will be able to move to country towns and find jobs by starting their own businesses with all the capital that the banks will lend them when they can’t afford to buy their own home.

  12. The reality of the housing situation has been dawning on Jeremy for awhile now, he almost has a grasp of the situation, but not quite.
    Clearly housing in Australia has been turned into an investment commodity, fuelled by an excess of finance over the past two decades.
    The market however has been slanted by tax breaks towards the Boomers to the detriment of owner occupiers, particularly first home buyers.
    Because Paul Keating, acting in haste almost 25 years ago made the error of abolishing negative gearing with disastrous consequences for investors and renters alike, everyone assumes that correcting this imbalance is a taboo. That is nonsense, there is a an undesirable imbalance in the market, and it needs to be corrected.
    What we need is a controlled program to shift the emphasis and tax breaks towards first home buyers. Perhaps by gradually reducing the percentage of expenses that can be claimed on an property investment, while simultaneously allowing an offsetting tax break on the mortgage payments of First Home buyers.
    This will make it attractive for people to remain, (and perhaps renovate) rather than constantly “trading up” as is the case now.
    We need to get to a place where a home is again a necessary consumer item, rather than an “investment”. This is political dynamite though, because the boomers have been conditioned to expect the homes to provide a neat ly ballooning nest egg upon their retirement, and woe betide any government that does not actively manipulate the market to produce ever increasing equity for the “Haves”.

  13. Splatterbottom

    New Zealand is going to have a go at the investor tax treatment in its May 20 budget. We can see the effect of abolishing negative gearing in the months ahead. Nothing will be done in Australia before the next election.

    Also would the distortionary effects on the market of changing the tax treatment of investors be minimised if at the same time the demand among first home buyers was stimulated by more concessions?

    Just driving investors out of the market will not help, as less demand will mean less houses will be built. And just incentivising first home buyers drives up prices. Maybe a balance can be struck here?

  14. timandtess

    Would a simple solution work well: first home owners are entitled to pay no stamp duty, reduced interest rates on loans and reduced deposits when purchasing a home?
    Is it finding the funds in the first place the major issue?

  15. We are in a bad situation.

    It can be too expensive to live close to work – leading to long commutes.

    Not only has the cost of housing gone up, but the cost of education (including TAFE courses) has skyrocketed. [How are young folks (or their parents) going to afford to get skills? How are older folks wanting to change careers to do that?]

    In Japan they have two-generation mortgages. Let’s not go down that path.

    Like many things – roads, railways, energy generation – we need massive government expenditure. Major housing projects anyone?

    As a country we have been complacent for too long. The housing problems can only be solved by sensible policy changes and a LOT of construction work.

    (Could be decades before this is sorted out.)

  16. “Just driving investors out of the market will not help, as less demand will mean less houses will be built. And just incentivising first home buyers drives up prices. Maybe a balance can be struck here?”

    SB, do you get my repeated point that the status quo does not encourage investors to build houses. They just grab all the existing property and rent it out.

    We need to get investors OUT of the existing housing market. By all means, give them incentives to build new houses – but they’ve got to stop inflating house prices by shoving their investment money into the market.

    “Would a simple solution work well: first home owners are entitled to pay no stamp duty, reduced interest rates on loans and reduced deposits when purchasing a home?”

    No – the banks would simply lend more, and any benefit from cutting stamp duty would go to the seller, not the buyer. The only way to make housing more affordable is to make the housing market less attractive as a place to park money than other investments, rather than many times more.

    Oh – Hall did try to contribute a further comment, but he couldn’t restrain himself from speculating about my personal circumstances again (what is it with his fascination with my home life?) so I’m not approving it. Don’t worry, you’re not missing anything.

  17. Wisdom Like Silence

    Getting rid of stamp duty and conveyance stamp duty and reducing all of that into a land tax would dramatically drop cost of houses in suburbs and would attract more builder-investors rather than vulture-investors.

    Maybe Iain has this whimsical, Wind in the Willows fantasy of what it’s like to live in a small country town or a mining town? Having lived in a couple over the years, I can tell you, there is nothing worth going for. Being able to own a 4 bedroom home for under 500k is attractive, but only if you dont mind a 3 hour drive from the middle of nowhere to be in just to the left of middle of nowhere and a bit closer to a place you can do your job from. No internet, if Bill runs out of legs on the excercise bike no electricity, everything is about 4 dollars more expensive, no family, no friends, the list goes on.

  18. “Getting rid of stamp duty and conveyance stamp duty and reducing all of that into a land tax would dramatically drop cost of houses in suburbs and would attract more builder-investors rather than vulture-investors.”

    That doesn’t work in housing, because people are borrowing from banks and any drop in stamp duty would simply be immediately absorbed by everyone bidding more. It would be a transfer of money from the state (and public services) to vendors.

    I agree with your points about moving to country towns, though. Shitty infrastructure, remoteness from family and friends, and they are rightly renowned for being surprisingly cliquey and unwelcoming to “blow ins” from the city.

  19. “But maybe what Tandberg pictures is actually attractive to some of these people.”

    yes, I think a lot of people are now waking to that conclusion. this issue is not a case of bumbling incompetence…

    although i still contend the old vs young thing is unlikely…the media uses that angle all the time

  20. Splatterbottom

    Jeremy, investors, even when they buy existing housing, build new homes. This is the way demand is communicated.

    If you decrease demand, fewer houses will be built, other things being equal.

    If you want more houses built without reducing demand, you would need to make it cheaper to acquire the land and/or to build the houses.

    You seem to think there are two markets, one for existing hoses, and one for new houses. In fact new and existing houses are essentially substitutes and there is only one market.

  21. confessions

    iain needs to go to some of these mining towns. He’ll then see that housing isn’t any cheaper than it is in the cities. For that reason a lot of companies are willing to negotiate FIFO with employees, but from what I’ve seen it isn’t something that is offered to ALL employees.

  22. Wisdom Like Silence

    “Jeremy, investors, even when they buy existing housing, build new homes”

    Are you speaking metaphorically SB? A man’s home is his castle etc?

    Vulture investors buy existing homes, slap on a lick of paint, pretend the plumbing is fine then put it on the rental market. That isn’t adding to stock that’s removing it from stock.

  23. Wisdom Like Silence

    Jeremy, people who are selling aren’t the problem though, it’s people who buy and then hold on to it. And a land tax instead of stamp duty would mean more first home buyers could buy their own land and build on it rather than lookin to existing stock.

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