Page 1009 - Week 04 - Tuesday, 2 May 2006
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Another characteristic of my generation is that we are income rich but asset poor. My friend Ryan Heath refers to this phenomenon as “property apartheid” in his recent book about the baby boomers. Whilst the language is harsh, I believe the sentiment is fair. Generally all Australians say they aspire to own their own home; it is the great Australian dream. The preference for home ownership prevails across age groups, household types and socioeconomic status. However, achieving this aspiration has become harder and harder for young Australians. There is no doubt that continuing economic restructuring and social change have impacted on the proportion of younger people buying their homes. In 1989, almost 65 per cent of 25 to 39-year-olds had bought their first home. In 2003 that number had dropped to 54 per cent and continues to fall. Soon, half a generation will be locked out of home ownership.
Housing is a large part of Canberra’s wealth and living standards. Its value underpins consumer confidence. Its prosperity adds substantially to economic growth. The provision of secure, affordable and appropriate housing is central to community wellbeing. The recent huge increases in housing prices have created severe problems for the territory’s economic development and competitiveness, efficient urban development and intergenerational equity.
The major factor contributing to the decline in housing affordability in Canberra has been the increase in land prices. In the face of these substantial increases, the market has shifted towards smaller block sizes for detached housing and increased housing densities through multiunit developments. But despite these changes, the share of land cost in new house prices has increased significantly. I believe the solutions to these problems must come from the supply side and I warmly welcome the recent increase in land supply delivered by my colleague Simon Corbell.
I believe that the exemptions for home owners from capital gains and land taxes need to be looked at because they too are damaging affordability. I think it is fair to say that the price of a house in Canberra these days is a reflection of its tax-free haven status than its inherent value as a home.
Sir Humphrey Appleby would describe these views as “courageous”—perhaps best left alone as ideas floated by a new member in his first speech, but I believe that good governments never stop looking for better answers to difficult questions. These tax exemptions undoubtedly favour the majority of home owners, especially those who are older or wealthier. But in my view they are pricing younger people out of the market, thereby contributing substantially to the fall in overall home ownership for younger Canberrans.
Of course housing affordability is not just about the cost of buying a house; the cost of renting in this city also continues to increase. It is becoming more expensive to live in this city as a young person—even as a young professional. Rents of up to $400 per week for one-bedroom apartments are not uncommon, and even living in share houses does not necessarily relieve the burden. It would not be an uncommon occurrence that residents of a three-bedroom share house would each pay up to and beyond $150 per week in rent. I believe the supply of low-rent housing in Canberra would benefit greatly from targeted incentives to attract large financial investors and by expanding the use of not-for-profit
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