So, this is what a decade or so of driving up house prices in a vicious little feedback loop (Howard slashes CGT and chucks in a homebuyers’ grant and prices jump, then more of those with now increased equity in their home think hey, I should invest in rental properties, pushing up prices, so more try to get in with their further increased equity, rinse, repeat), combined with half a century of signing off on housing developments further and further away from the Melbourne city centre without either building necessary transport infrastructure or even leaving space for it to be built later – only a tiny fraction of young people in Melbourne can now afford to buy a home anywhere within reasonable commuting distance to the CBD. (And of course it’s even worse in Sydney.)
MOST Melbourne homes are too expensive for households on a median income, and only a handful of suburbs – mostly on the city’s fringe – pass the affordability test, a government report reveals.
The report shows households earning the city’s median annual income of $70,300 have few suburbs to choose from. Even the cheapest suburbs require an annual household income of between $67,000 and $90,000 to pay the mortgage and other bills.
In many inner Melbourne suburbs – which have better access to public transport and services – a household requires an income of between $120,000-$200,000 a year.
The Tandberg sums up part of it:
It’s difficult to overstate just how much long-term damage this stuff does to our society.
Could we please (a) stop encouraging the burying of investment capital in rental property, and (b) stop just giving state governments a free pass when they permit developments to be built without leaving space for necessary infrastructure? Just because the harm won’t be felt till after they’ve left office is no reason we shouldn’t be calling them on it now. Unless you’re planning not to be here in twenty years, it’s going to affect you, too.