House prices are falling in Australia, and while some might see this as a negative, I argue it's a positive development, especially when viewed through the lens of housing as a basic human need. The recent decline in house prices in Sydney and Melbourne, and the overall stagnation in national house prices, is a welcome shift in a market that has long been dominated by investors and speculators. This shift is not just about numbers; it's about re-aligning our priorities and understanding the true nature of housing as a fundamental human right.
In the post-World War II era, housing was seen as a means to fulfill basic human needs for shelter, security, and community. Robert Menzies, in his influential 1942 radio address, emphasized the spiritual and societal importance of homes, viewing them as the foundation of sanity and sobriety. However, over the past three and a half decades, this perspective has shifted. Housing has become more about wealth accumulation than meeting basic human needs.
This change in mindset is the root of our housing affordability crisis and the decline in home ownership rates among younger generations. The focus on housing as an investment vehicle has led to a situation where a large majority of Australians do not want housing affordability to be solved, and politicians of all stripes are complicit in this. During the recent federal election, despite the cost of housing being the largest component of the cost of living, both major parties promised policies that would keep house prices rising, prioritizing short-term gains over long-term affordability.
One factor contributing to this deterioration in housing affordability is the growing presence of investors in the market. Changes to the capital gains tax regime and negative gearing have made housing an attractive investment, leading to a surge in property investments and rental demand. The proportion of housing finance going to investors has risen significantly, pushing up house prices and rental costs. However, recent changes to negative gearing and capital gains tax offer a glimmer of hope.
These changes will reduce the demand for established housing from investors, which is a positive development. By diminishing the competition from investors, aspiring first-home buyers will have a better chance of entering the market. While these changes won't reverse the recent declines in house prices, they will help ease the rate at which prices rise, which is a step in the right direction. It's important to celebrate these small victories and recognize that the goal is not just to stop prices from falling but to ensure housing is accessible and affordable for all.
In conclusion, the fall in house prices in Australia is a positive development, marking a shift towards a more balanced and equitable housing market. It's a chance to re-evaluate our priorities and ensure that housing is seen as a basic human need rather than a vehicle for wealth accumulation. As we move forward, it's crucial to continue pushing for policies that prioritize affordability and accessibility, ensuring that everyone has a chance to call a place home.
