House prices in Australia have become so unaffordable that many young families simply cannot buy
into the market.
Wealthy Australians have become a nation of property “investors” thanks to a series
of government policies that allow and encourage it.
The lower and middle class have either been burdened with massive debt, or they are stuck
renting for the rest of their lives.
In the 1970s, the average house price was about twice the average annual income.
If we used today’s figures as a guide, the average home should only cost about $140000
to $150000.
But in reality, the average Australian house price is much higher.
Homes in Brisbane have a median cost of $478000; Perth $515000; Melbourne $595000; and finally
Sydney comes in at a whopping $776000.
Bubble, Bubble
By many definitions of the term, Australia is in a classic bubble.
Japan had one in the 1980s which burst in the early 1990s and sent their economy flying
into a downward spiral.
They are still feeling the effects of it to this day.
Ireland also had a major property bubble which burst in 2007.
Despite the bubble bursting, media commentators still encouraged people to go out and buy.
Irish television was littered with house-hunting and house makeover shows encouraging people
to increase their property “portfolio”.
Much like what is happening in Australia at this very moment.
It’s unbelievable that we’ve allowed this to happen.
In my opinion, a house should not be an investment.
It’s a place for people to live and to raise their families.
It’s a necessity of life.
To say that an investor should be allowed to take $400 (or more) a week away in rent
from a poor family just because the owner happens to have more money than them, is in
my opinion, immoral.
It’s a classic case of the rich becoming richer and the poor becoming poorer.
If history has taught us anything, ultimately this social hierarchy will fail.
Future generations will not tolerate such obvious exploitation.
Wage Slavery
Of course, many property investors will justify their actions saying things like “We’re
only doing what the law allows”, and to some extent, they are right.
However, it is not good for society to have all the workers (i.e. the people who actually
build and create things) to be stuck in a constant slave-like existence.
They work hard every week in order to pay off their mortgage, or pay the rent.
They do not have the option of leaving their job, even if it is the most dirty, dangerous
or demeaning one.
If they did leave, either the bank would take their home, or the landlord would kick them
out.
The current system is not too dissimilar to the days when workers used to work on site
(for example, the cotton mills) working long hours, getting paid very little, and being
treated like second-class citizens.
If the mill workers ever complained, there was usually only one outcome – losing your
job, which in those days often meant either starvation, or a life of crime and begging.
The landed gentry (that is, the owners of property) earned most of their income from
owning land.
Their job involved going around collecting rents.
In our modern system, landlords take on a similar role.
In my last flat that I rented in Brisbane, my landlord owned four blocks of flats.
His job literally involved going around collecting rents which I had to hide under the hot-water
heater in our garage.
The fact that he was collecting cash probably indicates that he was not telling the government
about his full earnings.
Hard Work Pays Off?
The modern landlord class is no different from the landed gentry of the past.
They are maintaining their wealth by taking from the poor.
I have a friend whose boss owns 23 properties around our district.
Who needs that many houses!?
I’ll tell you who – someone who is obsessed with money; someone who has put their greed
above the needs of the average person.
Sure, they’re doing everything by the book, but is it moral and does it benefit society?
I’m sure most land owners would disagree.
They’ll probably say that they worked hard for their money and made some wise investments.
Even if this is true, many people simply do not have the ability to “invest wisely”.
More often than not, land owners have inherited at least some of their wealth, or have gotten
lucky with some of their investments, but more than likely a combination of the two.
If “working hard” was the only criteria to becoming rich, then surely most people
would be rich.
I know lots of people who work hard, for example, people who volunteer at the local rehabilitation
clinics.
But they don’t have multiple properties to show for it.
Or what about a cleaner who has three jobs cleaning for three different supermarkets
working for minimum wage?
They will probably never have multiple properties, let alone their own home under the current
system.
When the land owners say “just work hard and you too can be well-off”, they’re
simply trying to convince the rest of us to continue working, doing the crappy jobs they
don’t want to do.
It’s a complete fabrication.
Some hard workers get rich, and some lazy people get rich.
But most of the people on this planet are poor.
Everybody can be Rich?
It’s a lie.
If everybody on this planet had exactly $10 million each, then nobody would be considered
rich.
Prices would just rise to suit everybody’s new found wealth.
Rich people only exist now because there are plenty of people being exploited.
With every millionaire, there are thousands of workers supporting their lavish lifestyle.
A rich person who says “anybody can be rich” is either kidding themselves, or being intentionally
deceitful.
What especially angers me, is that many wealthy individuals blame poor people for their own
misfortune.
What the rich forget is that if there are too many people who cannot afford shelter,
clothing and food, then crime rates skyrocket.
Think about it.
If you were unable to service the needs of your family and you saw that your children
were going hungry, you’d probably go out and steal something just to get food on the
table.
It’s happened time and time again throughout history.
Usually the first response of the ruling elite is to “crack down on crime”.
This usually involves serving out stiffer penalties and longer jail sentences.
But I think most of us know that this doesn’t solve the root cause of the problem.
In the 1800s, England was famous for introducing laws that allowed landowners to shoot trespassers
who did not give themselves up.
This was to stop hungry people climbing over the fence and stealing apples from the owner’s
orchard.
Those who weren’t killed on sight, were often caught by the authorities and given
hefty prison sentences.
Some were even sent to Australia on prison boats!
It’s strange how humans act towards one another.
When confronted with a hungry person trying to get food for their family, instead of giving
them food, we shoot them dead.
Of course, this isn’t literally true any more, at least not in Australia, but the class
divide still exists.
Greed
Ultimately, Australian property prices have got to where they are today as a direct result
of people’s greed.
Instead of treating houses as a place to live and raise a family, we are now treating them
like gambling chips.
Investors think the goal is to obtain as many properties as possible, regardless of the
people’s lives they are affecting.
Luckily, at least for some of us, greed comes back to bite people as seen in the Japanese
and Irish property crashes.
Instead of thinking about our own hip pockets, we should consider what is best for society
as a whole.
Updates
(February 29, 2016) A recent article on the ABC discusses the impending bursting of the
Australian Property Bubble.
Australian mortgage debt has grown to a staggering $1.4 trillion.
Australia’s total debt to GDP ratio is third only to Japan and the European Union.
Our private debt in now at about 130 per cent of GDP.
In around 2012, the Reserve Bank correctly identified that the resources boom was about
to end leaving thousands without jobs.
To counteract this, they started cutting interest rates in a deliberate attempt to fuel a construction
boom.
It worked, but had the added effect of overly inflating property prices to the unsustainable
levels they are today.
Sitting back and ignoring the warning signs is a sure way to bring about a disaster.
The problem with all bubbles, governments never seem to be ready for them, and after
they burst, the consequences are felt for many years to follow.