Patricia Warren, Brunswick Heads
There is a ‘myth of affordable housing’ in Byron Shire.
Well may councillors lament the lack of ‘affordable housing’ in Byron Shire but they need to acknowledge it isn’t as much a planning issue as it is a deliberate mismatch between what is happening in the financial sector and what is happening in people’s lives.
Our lack of affordable housing is the consequence of the 1990s deregulation of the banking sector. At the same time the Reserve Bank had land values deleted from the Consumer Price Index.
The effect was to take out the greatest monthly cost in household budgets, understate inflation, and keep interest rates down. Thus, Australia has been in a structurally engineered property bubble for the last 30 years as the financial sector continues to separate itself from the real economy, leaving ‘affordable housing’ behind the starting blocks.
Banks no longer support the economy but rather are profit focused in their own right. Lending standards came down and interest rates continued to be cut over time.
Today, the unaccountable Reserve Bank is manipulating interest rates in the bond market and is resolved to do so for the next threee years. It has recently provided $160b of credit to the banks at near-zero interest rates for home mortgages. Interest rates are now at an historic low and banks are sloshing in deposits. Mortgage lending is 6–8 times household income and 60 per cent of income is servicing that loan.
Household debt in Australia is the highest in the world while wage growth has been virtually stagnant since 2012.
Mortgage loans now represent 65–70 per cent of bank assets and the banks are lobbying for a further relaxation in ‘restrictions on responsible lending’. This is in defiance of recommendations from the Haynes Royal Commission as restrictions represent consumers’ protection.
The mayor’s recent meeting with the minister for Planning to discuss the lack of ‘affordable housing’ is unlikely to solve the problem, leaving ‘affordability’ a fictitious notion in Byron Shire.