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Byron Shire
July 13, 2024

Editorial: Surprise! Home ownership is falling as wages stagnate

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A federal housing affordability and supply inquiry has been announced! 

Will it make a difference? After all, there are countless reports into black deaths in custody, and governments, guided by an apathetic, confused and distracted public, can simply ignore recommendations and data presented by committees. But there’s no point in giving up hope – the more knowledge, the better, right?

As for this inquiry, its Chair, Jason Falinski (Liberal MP), says, ‘As data provided by the Reserve Bank of Australia (RBA), the Treasury and the Australian Bureau of Statistics (ABS) shows, home ownership, one of the building blocks of Australian society, has been falling for the last 30 years’.

He adds, ‘As consistently noted by the RBA and others, regulatory settings are directly responsible for the unresponsive nature of housing supply in Australia’

‘The Organisation for Economic Co-operation and Development (OECD) conducted an analysis of Australia’s housing market, particularly its very high ratio of housing prices to household incomes. The OECD concluded that Australia’s unusually high level of inelasticity in housing is the major driver of this ratio. This has resulted in our country having the fourth-fastest house price growth out of the world’s advanced economies over the past 20 years’.

Falinski cites ABS data that suggests total residential private building approvals decreased 44 per cent across the nation from 2016–2020, ‘compared to the previous five-year period’.

The inquiry will ‘investigate the impact of tax and regulatory regimes on price, affordability, and supply of housing in Australia today as well as into the future’.

Public submissions close September 13. For more more information visit www.aph.gov.au/Parliamentary_Business/Committees/House/Tax_and_Revenue.

Meanwhile, left leaning think tank, Per Capita, released a discussion paper in July (www.bit.ly/2WmzXty) that claims ‘the lifetime cost of buying a home increased by 130 per cent over two generations, and that this increase in daily living expenses is not adequately captured by our cost of living measurements’.

The paper claims the average repayment cost over the life of the mortgage rose from 11.2 per cent in 1970, to 19.5 per cent in 1985, then 25.5 per cent in the year 2000.

The authors say, ‘For the nation, it represents a significant constraint on household consumption, which accounts for more than half of Australia’s economic activity’.

It’s no secret that for decades, average wages have been stagnant while CEO pay packets have ballooned obscenely.

The ABC reported in 2019 that ‘Chief executive pay in the United States rose nearly 900 per cent between 1978 and 2012, a trend that Australia followed’.

Professor David Peetz from  Griffith University wrote in The Conversation in 2019, ‘Wages growth for Australian workers is among the worst in the industrialised world. For more than a third of workers on individual contracts, wages aren’t growing at all’. He says despite ‘Australia’s strong economic growth with apparently low unemployment and a supposedly strong economy’, the reason is the ‘loss of worker power owing to the decline in unionisation over the past three decades’.

Politicians used to come up with policies that would advance the nation as a whole. Yet these days, it’s unclear what they are actually good for.

One good thing the PM could do is call an election.

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