As the cost of housing continues to surge amid flatlining wages, the prospect of owning a house in Australia for many young people has fast become a bit of a pipe dream.
But as VICE reported last week, Prime Minister Scott Morrison offered a simple solution for young people trapped in the rental cycle: simply buy a house instead.
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Damn! If only I had that thought sooner.
The Deputy Prime Minister and leader of the National Party, Barnaby Joyce, also had some sage advice when challenged over housing costs, suggesting people just pack up their life and move to the regions.
“First house I bought cost me $67,000,” he said. “If I go back to that town [Werris Creek] now, you could still buy a house for $200,000”.
So, I decided to put that to a test.
Can you really buy a house in the small New South Wales town of Werris Creek for $200,000?
Should I be packing up my things and heading to the greener pastures?
To Mr Joyce’s credit – and to my surprise – there are, indeed, some houses available in Werris Creek for $200,000.
But, there’s a catch: A search of two popular real estate websites produced a grand total of two houses for $200,000 or under, one of which carried a somewhat ominous warning in its description: “There is a bit to do to the home to bring it back to its glory days.”
Not exactly an oasis of affordable housing by any stretch of the imagination. In fact, there were only around 15 houses on the market in total according to realestate.com.
Sure, it’s just one town and by no means does it detract from the many excellent economic and lifestyle opportunities the regions can offer.
However, it does underscore a problem with the argument that people should just get up and move from the city to the countryside in search of cheaper housing.
Notwithstanding the obvious challenges of simply unrooting one’s life, leaving their community and moving to a small rural town in NSW – for most people, it just doesn’t make economical sense.
A quick search of a popular job listing website showed just four jobs currently advertised in the town of Werris Creek itself. Public transport infrastructure? Highly limited. The nearest major hospital? Over 30 minutes away.
New data produced by the ABC showed levels of childcare in the area to be “scarce”.
The last 2016 census showed that the average household income in Werris Creek was just $786 a week. Once adjusted for inflation, that’s around $53,293.88 a year, per household, in today’s currency.
Even with a (comparatively) small mortgage of $200,000, that’s a lot of money. Securing a loan and saving for a deposit on this kind of household income – without some kind of help – can be close to impossible.
For those (largely white-collar professionals) who are lucky enough to be able to work from home and earn good money, a tree change might well be on the cards.
But this can also have ramifications for the communities they descend upon. Just take the northern rivers of NSW, for example, where an influx of city-siders escaping lockdowns pushed up the cost of housing and worsened an already critical housing crisis.
And that was before the floods hit.
The real problem here is intergenerational inequality. In Canberra’s Braddon – where records show Joyce owns an investment property – the median price is $1.175 million. In the beachside suburb of Tamarama in Eastern Sydney, it’s an eye-watering $8.625 million.
Sure, things get more expensive over time but the problem is – wages just aren’t keeping up.
According to Domain, the average cost of a house in Australia in 2022 was just over $1 million. Meanwhile, the median income is $86,620 per year. In other other words, about eleven and half times an annual full-time salary.
When my parents bought their first house in 1995, the average full-time salary was around $53,544 and the average house cost $129,800. A little over double the average wage.
Yet, the tax system remains rigged against young people. Those who were able to buy into the housing market in a bygone era of cheap real estate are afforded huge tax breaks in the form of negative gearing.
The Government’s budget announcement to extend the First Home Own Save scheme – allowing first homeowners to only save 2% – 5% of their deposit without paying expensive lender mortgage insurance – is welcome news to some.
But economists also warn it could lead to further inflation of house prices by increasing demand and push people into precarious financial positions when interest rates inevitably rise.
Put simply, it doesn’t address the root cause of the issue: housing affordability.
If the government is serious about addressing housing affordability in this country, it will require serious structural reform – starting with the tax system.
