Anthony Albanese signals end to soaring property values to help first home buyers
John Howard’s now infamous words about the Australian Dream defined his legacy on housing, now Albo has had his moment.
It was John Howard who once observed voters rarely complain about the price of the family home going up.
If the great Australian dream is owning a home, a close second is noticing that the auction next door went absolutely mental or Googling recent sales in your suburb.
That’s what makes what the Albanese Government is doing right now such a bold and potentially electorally risky endeavour.
The Prime Minister let the cat out of the bag this week.
He doesn’t want the value of your home to go up, or more accurately not as fast as it has over the last 20 years.
How fast has it been increasing? Try 75 per cent in the last five years in Adelaide, 120 per cent in Brisbane, 109 per cent in Perth and 57 per cent in Sydney.
If you want to know why younger Australians can’t buy a home, those numbers help explain it.
Former PM John Howard back in 2000.
And that’s why the Albanese Government is making big changes to negative gearing and capital gains tax discounts for landlords, aiming to make it easier for first home buyers to enter the market.
In a passionate defence of the government’s changes to negative gearing and capital gains tax, Mr Albanese told parliament this week that the current trajectory has put the Australian dream of home ownership out of reach.
“Since 1999 house prices have risen by more than 400 per cent, more than two times as fast as average incomes in the same period,’’ he said.
“The changes that the Howard government made to capital gains tax in 1999 were meant to boost investment in the share market.
“Instead, they turbocharged property investment year after year, locking more and more young Australians out of the market by tax breaks that favoured property investors, widening a gap between the generations and eating away at aspiration.”
Prime Minister Anthony Albanese is taking a big risk. Picture: NewsWire / Martin Ollman
Indeed that interview all those years ago when Mr Howard brushed off concerns that house prices were rising too rapidly was about that very issue.
At the time, house prices had doubled in the early 2000s off the back of the first home buyers grant, supercharging negative gearing and the capital gains tax discount for property investors.
At the time, Mr Howard dismissed the concerns.
“I haven’t found anybody in seven and a half years shake their fist at me and say, ‘Howard, I’m angry with you for letting the value of my house increase,’” Mr Howard said.
“So it is not a problem if you own a house, it is true that to get into the market in the first place it is harder if the prices continue going up.”
But twenty years on, Labor’s argument is that it is a problem. It’s a growing problem.
One of the ways you make it easier of course is ensuring that house price growth slows down.
Slow down how much? The Government insists that the impact of the tax changes will be modest, the impact of rising interest rates will no doubt be more forceful.
That’s led to wild headlines this week suggesting a housing market crash along with predictions that house prices could drop by 9 per cent.
However, context is everything.
Homeowners in Adelaide, Brisbane and Perth who have enjoyed wild property value gains of over 80 per cent in the last five years will remain well ahead even in a predicted downturn of 9 per cent.
Homeowners have seen huge gains. Picture: NewsWire / Gaye Gerard
Is it a bad thing if that growth slows down? Well, it depends rather a lot on whether you own a home, for how long, or if you or your adult children are trying to buy and just can’t afford it.
Extraordinarily, perhaps, the Albanese Government isn’t even the only one saying it.
Liberal MP Andrew Bragg took aim at Clare O’Neil’s confusion over whether Labor wants house prices to go up or down arguing she didn’t need to sugar coat it.
“I think Australians are looking for authentic leadership. They’re over the bulls**t,” Mr Bragg said.
“What they want to hear from their politicians are honest answers. And the honest truth is that house prices in this country are too high for young people and they should go down.”
“They’ve been too high for too long and she should have said, Look, house prices are too high.”
It’s a fair bet that not all of Senator Bragg’s colleagues will agree with him that house prices should decrease.
But it’s interesting that he’s saying it, even if he doesn’t agree with the Albanese Government’s preferred method of slowing down the house price escalator.
Source: News.com.au
