Want to buy a typically-priced house in Gadigal/Sydney? As of December, the cost of that median residence was $1,595,310, up 10.6% from 2022. Across all Australian capitals, the price rise in 2023 was 7.8%.
For perspective, that put the ratio of housing prices to household income in Sydney at 13.3 times, making the city the second most unaffordable in the world after Hong Kong.
A median-priced house in Naarm/Melbourne last year would set you back 9.9 times annual household earnings, not far behind San Francisco. Even Kaurna Yerta/Adelaide, at 8.2 times, was similar to Miami.
For rents, the story has been similar, with prices spiralling far beyond pay rises and the broader inflation rate. In the 12 months to December, Australian rents rose nationally by 9.1% cent for houses, and by 13.1% for units.
The median rent for all housing reached $580, or 44.6% of median weekly earnings of about $1300. If you’re in a single-income household, you’re probably deep into rental stress, usually understood as any figure above 30%.
Clearly, a heist of epic proportions is under way, stripping wealth from poorer and younger people.
But what’s the underlying cause? Why the housing madness?
Too many migrants?
That, increasingly, is what the financiers, the big property-owners, and their spin-doctors and shock-jocks are telling us.
Here, for example, is a headline from the Australian Financial Review late last year: “Housing and migration have collided. One will have to give.”
Migrants, unfortunately, are the easy-to-blame scapegoats.
Following the lifting of COVID-19 restrictions, net migration underwent a temporary surge over the 2022–23 financial year, to a total of 518,000 people.
Reading the comments beneath news sites, it’s not hard to find gems like this: “These 518,000 immigrants have displaced AT LEAST 518,000 resident citizen Australians from housing …”
But a thoughtful reading of the statistics, plus a dash of historical perspective, yields a very different picture.
First, what counts for housing purposes is not the immigration totals but the rate of population increase. This has slowed markedly in recent times, higher immigration notwithstanding.
According to the Macrotrends site, Australia’s population growth in the three years to the end of 2023 was around 1% annually, with a predicted figure for this year of 0.98%.
These are some of the lowest figures since the 1930s Great Depression.
Intriguingly, recent population growth has been only a fraction of the rates of the 1950s and 1960s. Those decades are remembered as a time of rapid housing construction, when the tradition of Australia as a nation of homeowners became established.
Federal government figures show that population growth between 1946–1970 averaged 2.2%.
During the 1950s and 1960s, booming migration was overlaid on high rates of natural increase. Between 1946–1972, women could expect to give birth, on average, to 3.1 children during their lifetimes. This “fertility rate” has declined and, in recent years, has stood at around 1.8 — well below the “replacement value” of about 2.1 children.
Without large numbers of migrants, it is clear Australians would die out. Saving us from extinction is just the start of the favours that migrants do for us. The favours include bringing with them much-needed skills in categories that include experienced, job-ready building trades people.
Housing shortages
If providing abundant, affordable housing was possible in the 1950s and 1960s, when the population was growing at more than twice the present rate, what is different now?
The basic problem, as so often, lies in the capitalist system — and in the fact that its priority is private profits, not public needs.
Homes for the millions are not where the big profits lie. Think instead of harbour-frontage penthouses or Hills Face mansions.
In housing statistics, the category “value of building approved” has shown a strong upward trend in the past 10 years. This indicates that residential construction has shown a marked tilt toward the upper price bracket.
Where the market fails, deliberate government measures are essential.
Between 1945–1970, state government housing construction made up 16% of all Australian house building. In 1954, South Australia’s Housing Trust built a mammoth 47% of all new dwellings in that state.
As well as meeting mass needs, the large government presence in home-building mopped up demand and dampened speculative pressures.
But those days are long gone. Over the past decade, public and community housing construction has made up less than 2% of the total. Now the market rules and caters to those who can pay.
Government policies aimed at buying the votes of established homeowners have worsened the situation.
Tax provisions, such as negative gearing and capital gains concessions, have enticed the well-heeled to buy up residential properties — not to live in, but to trade for profit. “Hot money” has poured into the housing sector, creating a vortex of rising prices.
In theory, high prices should prompt a rise in supply, taking the steam out of the market. But, in fact, the number of home building approvals last year was well below the level a decade earlier. For the weakness in housing construction, analysts cite causes such as skills shortages and high interest rates.
The land factor
Ultimately, however, the housing price explosion rests on another factor, one that the pundits mostly underplay. Again, this reflects the irrational, unplannable nature of capitalism.
Some 70% of people, according to the Australian Bureau of Statistics, live in just eight large cities. For capitalist firms, the advantages of big-city locations are usually compelling — proximity to suppliers and customers, a large pool of skilled workers and availability of a wide variety of necessary services.
Workers, generally, have little choice but to go where the jobs are. Either they pay extortionate sums for inner-city housing or they face exhausting commutes.
In the 1960s, new housing sprawled onto relatively cheap farmland, still usually within bearable distances from workplaces.
Now, of course, things are very different, and oddly, today’s wildly speculative housing market is less about housing than about the land beneath it. Except during the pandemic, rises in housing construction costs have tracked the general rate of inflation quite closely and, last year, were significantly lower.
Strictly speaking, it is urban land prices that have gone berserk.
Instead of creating dysfunctional mega-cities, a social system that put people’s needs ahead of private profits would have planned over many decades to distribute the population more rationally.
Why not several dozen intelligently placed cities of 1 to 2 million people, big enough to provide efficiencies but still highly liveable?
Why not a consistent stress on medium and high-density housing, that would use land sparingly and improve the economics of public transport?
It is not the fault of migrants that Australian capitalism has lacked the vision, and the ability, to bring such things to fruition.
Nor are migrants responsible for the tax legislation that now fuels housing inequality. On housing issues, nevertheless, migrants are the targets of a campaign of distraction — insidious, at times vicious, and bearing a distinct tinge of racism.