Australia’s system of home ownership is, very slowly, starting to break. Since the 1950s we have enjoyed high levels of home ownership. Public policy helped people buy a home, which supported security in older age. Because ownership was ubiquitous, private renting was allowed to become insecure. In this post, Ben Spies-Butcher discusses the implications of this trend.
Since the 1980s those policies have been changing, encouraging people to be entrepreneurial investors. These policies encourage people to invest by offering tax concessions. As housing is the biggest investment most of us make, naturally these changes have a big impact on housing prices and affordability.
The problem is richer households can save more than poorer households, so incentives for investment almost always favour high income earners. Tax concessions are also designed to give richer investors more per dollar than poorer investors. At the same time, wages have also become less equal and funding cut to social housing.
Older households are better insulated from these changes because they bought under different policy settings. It is not that the old had it better than the young, it is that they had it more equal.
Younger households will be both less likely to own one home, and more likely to invest in several. The richer households will own more of the share of housing than the poorer households. As housing becomes more expensive, parents (who can afford to) help their kids, creating intergenerational inequality, meaning inequality is set to rise for decades to come.
Past policies built a relatively equitable model of home ownership. Ironically, current incentives to buy property and to save for retirement are creating a new cycle of inequality.
Housing should be a place to live. That means giving renters more secure tenure, increasing the availability of social housing that low-income households can afford, and eliminating tax concessions for capital gains and negative gearing that encourage speculation.
This will be discussed in the forthcoming edition of architecture bulletin: http://architecturebulletin.com.au/2017-autumn/ as part of a special issue about housing affordability.