This short video outlines the current state of the Australian housing market.
Sydney, Melbourne and Adelaide are now ranked in the top ten list of the least affordable housing markets in the world, with Sydney coming in at number 2, only beaten by Hong Kong.
The video lists various causes for this state of affairs, among them mass immigration, an unwillingness to build high density housing in already established suburbs, a dysfunctional approval process for planning for new builds, and negative gearing. There are other factors at play, but what the video doesn’t discuss is a possible solution. Well, I have one.
The Australian housing market is a speculation market. More people enter the market to make money on their purchase than they do to enjoy the luxury of having a roof over their heads. As such, the property market is now priced out of reach for most people seeking to purchase a home for the first time. One of the long held beliefs of the Australian way of life was that it was possible to own a home on just about any wage. That Australian dream has been destroyed. Who contributed the most to destroying it is up for debate.
Due to the rampant speculation and mass immigration, (over 650,000 immigrants entered Australia in 2023, an increase to the total population of almost 3% in just one year), it is now almost as expensive to rent a house as it is to pay off a mortgage. As a result, families are now being forced to live in tents or their vehicles. No government solutions to this government created problem are on offer as there are now too many people with their fingers in the investment pie to risk making any major changes.
So my proposed solution is simple: outlaw landlords. Make renting illegal. The only way to move into a home is to own a home. All of those investment properties would have to be sold to people who intended to live in the house itself. The market would correct itself in a very short time.
How to achieve it? Singapore successfully pulled it off by massively increasing stamp duty on the purchase of a second home, (around 300%). To prevent flipping a home to make a quick profit the government passed a law that a new purchase cannot be resold for five years. But my preferred option is to just outlaw landlords. So much more satisfying.
Coupled with a ban on immigration and incentives to send recent arrivals home with cash bribes, (say hi to Sweden), then young families would be able to easily enter the housing market at a reasonable cost. Of course, those who did manage to enter the market will see their properties plummet in value and will be underwater with the banks. Perhaps outlaw usury as well? Sounds like a win-win to me.
Originally published at Pushing Rubber Downhill. You can purchase Adam’s books here.
