I laughed out loud when I read the final paragraph of “The Impossible Dream” by Ruth Williams in the Sunday Age.
Question: “What is the solution to the housing affordability problem?”
Answer: “Cheaper houses”.
The full paragraph reads:
”Ultimately, the solution to the housing affordability problem is cheaper houses,” Eslake says. ”We have a belief in this country that governments must always try to keep house prices going up. It’s time we questioned that.”
It isn’t rocket science. Hell, it’s hardly even economic science.
But that may be the point. Economic science – and political science too it would seem – has worked on the idea that rising property prices are a good thing for the economy. The Age has been running something of a campaign lately to help our economists and politicians see that this is not necessarily so. It is self-evidently a bad thing for first home buyers, and it is even becoming evident that it really doesn’t profit home owners either – since they have to live somewhere it is capital that is never realised.
We are really facing a crisis here in this country in the area of housing. I feel it acutely because I am one of those caught in the rental market with no way out into the home ownership market. The fact is that currently the median house price is eight times the median annual salary in this country, and the estimation is that we are about 202,000 houses short for our population.
So you may not have a degree in economics or be a town planner or a Canberra politician, but you don’t need any of that to know the answer to the problem of housing affordability. The answer is cheaper housing.