Alan Kohler: Waking up from the Australian Dream   
April 7 2022 New Daily
The disaster of Australian house prices over the past 40 years has not just reshaped the economy but fundamentally transformed society.

In 1980, the median house value in Australia was $69,693. On Friday we learnt that it’s now $738,975, a rise of 25 per cent in the past 18 months of the pandemic – the fastest growth in history – and a 960 per cent increase since 1980.

Australia’s disadvantage is made worse by slow wages growth.

In the vast majority of developed countries, houses have become cheaper relative to income over the past 40 to 50 years, while in Australia that ratio has more than doubled.   :(



The result of 6 per cent compound annual growth in the value of houses over 40 years is that household debt has had to increase from half to twice average disposable income, and from 40 per cent of GDP to 120 per cent.

This is the most important single fact about the Australian economy, and will determine what happens to interest rates from here, and therefore to inflation, wages and growth. As far as the Australian economy is concerned, house prices are everything.

Land and energy are the two basic economic inputs, but while Australia has more of both than just about any other country, we export most of the energy and price our own at global parity, and we crowd into a few cities and pay each other 10 times our salary for the privilege.

The ABS reported on Thursday that total household wealth in Australia had increased 20 per cent in 12 months to $14,677 billion – an increase of 942 per cent since the ABS started measuring household net wealth in 1990 – which sounds nice but is almost entirely due to growth in the value of the places we live in.

Rising house prices do not create wealth, they redistribute it.

Destructive wealth   :(
It means the level of household wealth is both meaningless and destructive.

It’s meaningless because we can’t use the wealth to buy anything else, like a yacht or a fast car: Sell your house and you have to buy another one, or your children do.

And most of the wealth is concentrated in Sydney, where the median house value is $1.1 million, double Perth’s and regional Australia’s.

It’s destructive because of the inequality that results: With so much wealth concentrated in the home, it stays with those who already own a house and within families. For someone with little or no family housing equity behind them, it’s virtually impossible to break out of the cycle and build new wealth.

The growth in the value of land has fundamentally changed society, in two ways: First, generations of young Australians are being impoverished by the cost of shelter, especially if it’s somewhere near a CBD, and second, the way wealth is generated has changed.

Education and hard work no longer determine how wealthy you are; now it comes down to where you live, and what sort of house you inherit.

It means Australia is no longer an egalitarian meritocracy: Material success is a function of geography and class, not accomplishment.

Moreover, the geographic wealth gap is being widened by climate change, as floods and bushfires make living in large parts of the country uninsurable and financially crippling, but many families have no choice than to stay where they are.

Generational divide   :(
At some point millennials and Gen Zs will probably rise up in protest against the baby boomers, as the ballooning cost of their parents’ and grandparents’ aged care is added to the cost of their own housing.

Two weeks ago the umpteenth inquiry into housing affordability – this time by the House of Representatives Standing Committee on Tax and Revenue – concluded with a report titled The Australian Dream: Inquiry into housing affordability and supply in Australia.

Actually, the Australian dream is that a group of politicians might be capable of doing something useful about housing affordability.

Inquiries like this have been going on since the 1970s, and this latest one, for which 205 submissions were diligently prepared and sent in, was hobbled from the start by its terms of reference, which required it to focus exclusively on supply.

That’s because the government, whose MP Jason Falinski chaired the inquiry, doesn’t want to talk about the taxation of housing and land, having won the 2019 election by hammering the ALP’s plan to do something about the taxation of housing and land.

The result is that it was a party lines report, with all of the Labor members dissenting, and the majority of recommendations either repeats of previous motherhood statements about planning or so general as to be useless.

One of the pithiest comments came from the submission of Leith van Onselen of the newsletter MacroBusiness, who wrote, among other things: “Let’s get real and admit that this inquiry is a waste of time and taxpayer’s money.”

And so it was. The supply of housing does need to be considered, but the fact that house prices have gone up at the fastest rate in history in the past 18 months while there has been zero immigration and an oversupply of houses suggests that other things are perhaps more important.

Such as demand and bidding power, grotesquely amplified as they are by minuscule interest rates, tax breaks and government grants for first-home buyers.

What the standing committee’s report should have said is that the level of house prices and debt in Australia is a blunder, perhaps the biggest policy mistake in 50 years.   :(

If Labor wins the election there will have to be another inquiry, but at least the same submissions can all be re-used.

Alan Kohler writes twice a week for The New Daily. He is also editor in chief of Eureka Report and finance presenter on ABC news

It's because everyone wants a McMansion. And all the red tape. If house prices go up, it means people want to pay that much for a house.

It worked well for covid. If we have been living in ghettos like the Italians we would have had far more deaths. Only problem is now we have to house all those extra people.

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house prices have gone up at the fastest rate in history in the past 18 months while there has been zero immigration and an oversupply of houses suggests that other things are perhaps more important.

Why is this so? Interest rates? WFH frenzy? Lockdown = nothing else to spend on? What?

Federal Labor’s promise to commit $10 billion to build affordable social housing is welcome, but only scratches the surface of what is now a housing crisis in Australia.   :(   

If Labor leader Anthony Albanese is serious about reducing housing poverty in Australia, he must commit the party to spending at least $20 billion over the next five years, according to CFMEU Construction & General National Secretary Dave Noonan.

freediver wrote on Apr 5^th, 2022 at 7:30am:

It's because everyone wants a McMansion. And all the red tape. If house prices go up, it means people want to pay that much for a house. It worked well for covid. If we have been living in ghettos like the Italians we would have had far more deaths. Only problem is now we have to house all those extra people.

I believe it's more a case of people wanting to make money from selling their houses... they certainly want a lot more from selling them than what they paid for them and buyers then have no choice but to pay the increased prices.

It's a vicious cycle that's been going on for decades - aided and abetted by greedy real estate agents, of course.

It is a Bubble - and asset bubble and a debt bubble and when it crashes we get a Depression and a World War

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If Labor leader Anthony Albanese is serious about reducing housing poverty in Australia, he must commit the party to spending at least $20 billion over the next five years, according to CFMEU Construction & General National Secretary Dave Noonan.

How generous of the construction union to want a 20 billion dollar handout for the poor.


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I believe it's more a case of people wanting to make money from selling their houses...

They cannot force people to buy them.


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and buyers then have no choice but to pay the increased prices

They always have a choice. The only thing that actually limits their choice is government red tape.

When Covid19 first hit Sydney then Melbourne etc ...

1. Interest rates hit the lowest rate in 60 years.

2. Houses either stayed at or dropped a little in value for about 6 months.

3. So many Australians seized the opportunity and jumped in then and bought a home.

4. Certain Ozpolitics members merely stayed online and continued whinging.

5. Those in 4. above are still on OzPol whinging.

And here we are.

Boris wrote on Apr 5^th, 2022 at 7:46am:

It is a Bubble - and asset bubble and a debt bubble and when it crashes we get a Depression and a World War

Not just yet. Not this time.

It's a little bit different.

And it's because of who is NOW STILL buying houses. I'm not talking about pissy little units or villas or even townhouses. I'm talking homes on dirt near our coast worth decent coin.

If only 10 houses sell each week at say 7 to 10 million each that's a heck of a lot of money coming into Australia from....yep China.

Who is selling? Aussies cashing in and clearing their debts.

I remember reading many years ago that the biggest financial decision a lot of people needed to make 60 + years back was to buy either a house or a new car because there wasn't much difference in the price of the two back then.

Pity car prices didn't go the same way as house prices have done over the years. My 12 year old Hyundai Getz which I paid $11,000 for in October 2011 might have been worth ten times that by now. ;D

Australian house prices are some of the most expensive in the world.  No wonder so many now, cant afford to buy a house.   :(

whiteknight wrote on Apr 5^th, 2022 at 8:56am:

Australian house prices are some of the most expensive in the world.  No wonder so many now, cant afford to buy a house.   :(

Country's been sold out in countless ways - The Australian Dream is a life and times gone with the wind... the rapists have been in power for too long.... all the predictions of the early Anti-Feminists have come to pass - once you hand women more power in families, relationships, work and everything else - the entire society makes a downward turn due to the ineffectual nature of their response to tyranny - beginning with their inability to comprehend it in their inexperience and naivety, along with their willing compliance as long as it hands them rewards for destroying their own lives, families, and often economic future.

Truly they know not what they do, but most of them work it out when they are at middle age and the Loneliness sets in, but they compensate by blaming all those nasty men in their age group for getting themselves a lovely and helpful wife from Offshore who is half their age.  Men get the last laugh, and let me tell you - pretty young Asian wives are becoming commonplace here while the old girls go to groups of things and re-hash their bitterness towards men ...

That's one underlying cause of this disaster.

Another is the insane way 'immigration' has been undertaken on our behalf - without reference to the people of this nation - and this had lead to a massive increase in ghettoes and small and self-isolated groups, often of paranoids and xenophobes from disasters of countries - who will simply not fit in by working and actively contributing, but come here with a native cunning to get everything they can for nothing - an pursuit in which they are aided and abetted by the very governments of this nation!

A nation that de-skilled itself has no place for grasping hordes of peasants with little to no skills and we have no place for those who come here to ruin the Australian Dream and turn it into the Australian Nightmare!!

Another underlying cause is the sick adherence to the global economy with all its rorting and hiding in tax havens while ripping massive profits out of gullible countries such as Australia, and in the equally sick adherence to paradigm of 'user pays' in a neo-conservative environment of falsely based privatisation, which is not designed to give the best service for money, but rather to enrich those who 'buy' into it with massive guarantees against loss by the very governments that 'sell' our public utilities!

My Fellow Australians - tonaght is the naght of naghts!  We must take BACK this once great and noble nation from the vile usurpers who have stolen it from under us, and restore Power To The People NOW!!

Once again - I will be voting Independents and not parties - traitors have no right to my vote!!!

it is a bubble and it will burst

Meanwhile - at the other end of town - the Patriarchals - the Greeks, Italians, Lebos, Mussos, Indios, Asios and so forth - with their established family structure of 'papa has his job as head of the family/patriarch'/'mama has her job and place'/'all-a work-a togetha for family good' - and NOBODY deviate from the Grand Plan of accumulating assets no tax - are sweeping the floor with the Second Original Australians - the Indigenous since 1788 and even those from before - by taking over all the properties, taking full advantage of all the tax concessions, run-a da business with-a all the concessions and sometimes-a no tax (tax?  what is this tax?  I earn - I keep!), and-a pull-a da pension and-a unemployment Dimi money as well (thees business/block of flat no mine - only I collect marney for my uncle/cousin/relative etc who travel no know where is and no hear from him long time - mebbe he in Ukraine - family need marney for stress and sorrow/many children need childcare and Deemee for food) .

Then their offspring get all the professional jobs and the overpaid political careers and Australia That Was goes out the back door and down the gurgler with a whimper and not a bang and we become a nation of struggling paupers and peasants in Armani raised to the top of the pile and enjoying pushing others down.

Is that the Vision Splendid we want for this Country... this Poor Fellow - MY Country??

There was once an excellent play called 'Kennedy's Children' - we need a newer version titled "Feminist's Children'.  They started the rot with all this Mother Of The World sh1t that this nation is drowning in.

Take Back the Asylum NOW!

The world is rapidly becoming over-populated - Australia is essentially a lifeboat - there is only room on board for a limited number and continuing to overload the lifeboat will result in its overturning and sinking.

The world will sink with or without us - I'd prefer it to be without...

**chews popcorn while waiting for someone to come along and screech at me for being a Neo-Fascist or something - not at all - I'm trying to save what's left of this once proud nation ... chews popcorn while waiting for someone to come along and scream at me for being 'racist' and so forth for telling the truth about the murder done to this nation and its people by those entrusted with its care and oversight ... why would they change any of the rules when they benefit from them?**

whiteknight wrote on Apr 5^th, 2022 at 8:56am:

Australian house prices are some of the most expensive in the world.  No wonder so many now, cant afford to buy a house.   :(

https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/BriefingBook46p/HomeOwnership

Overall household home ownership rates in Australia (including dwellings with a mortgage and those owned outright) have hovered around 70 per cent since 1961.

https://en.wikipedia.org/wiki/List_of_countries_by_home_ownership_rate

While not exactly high on the list, we rank above the US, UK and NZ.

I expect this is more a function of government regulation than anything else. If it were legal to sell fibro shacks on tiny blocks of land with no utilities connections, our home ownership rate would be much higher.

whiteknight wrote on Apr 5^th, 2022 at 8:56am:

Australian house prices are some of the most expensive in the world.  No wonder so many now, cant afford to buy a house.   :(

Come live in China everything is cheap here.
;D https://forum.krstarica.com/styles/krstarica/xenforo/smilies/th_fireworks.gif

https://www.youtube.com/watch?v=gSs3651wzp4&t=875s

athos wrote on Apr 5^th, 2022 at 1:07pm:

whiteknight wrote on Apr 5th, 2022 at 8:56am: Australian house prices are some of the most expensive in the world.  No wonder so many now, cant afford to buy a house.   :( Come live in China everything is cheap here. ;D https://forum.krstarica.com/styles/krstarica/xenforo/smilies/th_fireworks.gif https://www.youtube.com/watch?v=gSs3651wzp4&t=875s

Especially the labour. You must be proud.

Grappler Deep State Feller wrote on Apr 5^th, 2022 at 12:36pm:

The world is rapidly becoming over-populated - Australia is essentially a lifeboat - there is only room on board for a limited number and continuing to overload the lifeboat will result in its overturning and sinking. The world will sink with or without us - I'd prefer it to be without... **chews popcorn while waiting for someone to come along and screech at me for being a Neo-Fascist or something - not at all - I'm trying to save what's left of this once proud nation ... chews popcorn while waiting for someone to come along and scream at me for being 'racist' and so forth for telling the truth about the murder done to this nation and its people by those entrusted with its care and oversight ... why would they change any of the rules when they benefit from them?**

Part of the underlying psyche of Nu Zulland and partly Australia is that it (they) are in a unique position compared to other 'First World' nations (sort of), due to the fundamental reality that they ARE indeed a long way from the disasters of cultures/nations building elsewhere.  When Downfall comes, they stand a chance of being saved.... the over-crowded areas will not and will be ravaged by war, disease, famine, plagues and all the rest.... while - as long as we preserve out borderline in several ways -we stand a good chance of coming out of it with only a few losses - IF we do not become over-crowded with antithetical groups, some of which are bent on our destruction to suit their fantasies.

As a nation looking forward to Global Downfall, we need to be looking at the very BEST coming here and not the dregs.

whiteknight wrote on Apr 5^th, 2022 at 7:35am:

Federal Labor’s promise to commit $10 billion to build affordable social housing is welcome, but only scratches the surface of what is now a housing crisis in Australia.   :(    If Labor leader Anthony Albanese is serious about reducing housing poverty in Australia, he must commit the party to spending at least $20 billion over the next five years, according to CFMEU Construction & General National Secretary Dave Noonan.

The number of people depending on government in some form - and often entirely - is ever expanding. Housing, welfare, education, health, aging - private aspects of life are taken over by government intervention, provision, assessment, resource allocation. Every aspect of private life is becoming a task and responsibility for government.  There is never a retreat by government intervention, only an expansion.

Frank wrote on Apr 6^th, 2022 at 12:00pm:

whiteknight wrote on Apr 5th, 2022 at 7:35am: Federal Labor’s promise to commit $10 billion to build affordable social housing is welcome, but only scratches the surface of what is now a housing crisis in Australia.   :(    If Labor leader Anthony Albanese is serious about reducing housing poverty in Australia, he must commit the party to spending at least $20 billion over the next five years, according to CFMEU Construction & General National Secretary Dave Noonan. The number of people depending on government in some form - and often entirely - is ever expanding. Housing, welfare, education, health, aging - private aspects of life are taken over by government intervention, provision, assessment, resource allocation. Every aspect of private life is becoming a task and responsibility for government.  There is never a retreat by government intervention, only an expansion.

Well ... when the government wants to take control over everything everyone does so it can do as it chooses..... Unexpected Consequences is not a sudden visit by a series of Greeks...

When you take command, old boy - you're on your own!

freediver wrote on Apr 5^th, 2022 at 12:52pm:

whiteknight wrote on Apr 5th, 2022 at 8:56am: Australian house prices are some of the most expensive in the world.  No wonder so many now, cant afford to buy a house.   :( https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/BriefingBook46p/HomeOwnership Overall household home ownership rates in Australia (including dwellings with a mortgage and those owned outright) have hovered around 70 per cent since 1961. https://en.wikipedia.org/wiki/List_of_countries_by_home_ownership_rate While not exactly high on the list, we rank above the US, UK and NZ. I expect this is more a function of government regulation than anything else. If it were legal to sell fibro shacks on tiny blocks of land with no utilities connections, our home ownership rate would be much higher.

But people who already own a house/mortage as their primary residence don't need to buy another one in the current market.

Plus it's almost impossible to find rental on the Gold Coast, and many of those who are renting have been kicked out as the landlords sold the house to cash in on the gains in the market making the problem even worse.