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How the 'Great Australian Dream' of home ownership has changed · The Morning Edition

0:01
S1: Housing affordability in Australia is at an all time low,
0:05
S1: and it's left young people rethinking the dream of home ownership,
0:09
S1: something previous generations had taken for granted. I'm Julia Carcasole
0:14
S1: and you're listening to Morning Edition. From The Age and
0:17
S1: The Sydney Morning Herald today, property reporter Caroline Zielinski on
0:22
S1: whether we can or should return to the great Australian dream.
0:26
S1: The enduring belief that home ownership can lead to a
0:29
S1: better life. Caroline, welcome to the podcast.
0:36
S2: Thank you very much.
0:38
S1: So you've been reporting on housing in Australia. And when
0:41
S1: we think about the 1950s, life looked very different for
0:44
S1: Australians aspiring to own their own home. Can you paint
0:48
S1: a bit of a picture for us of what life
0:51
S1: looked like?
0:52
S3: Well, the way I approached this was to find people
0:55
S3: who actually lived during that time and bought houses. I
0:58
S3: find that a lot of reporting sort of about boomers
1:02
S3: finding their houses. It's based in the economics. So I thought,
1:05
S3: why don't I just find someone who's 80 plus and
1:08
S3: actually ask them how it was? And one of those
1:11
S3: people was Neil Robertson. He's 77 and he bought his
1:15
S3: first house in Fitzroy, an inner city suburb in Melbourne,
1:19
S3: for 7500 dollars.
1:23
S4: I don't think I saved up at all, and I
1:25
S4: think I put 1500 as a deposit on the house,
1:29
S4: and I paid it off monthly at around about $100,
1:31
S4: maybe a little bit more a month.
1:33
S3: Neil, like many of his generation, he did what was expected.
1:37
S3: He worked hard. He bought a home, he fixed it up.
1:40
S3: These houses weren't like what we expect now. They were
1:43
S3: pretty dilapidated. There was an outhouse outside.
1:47
S4: It was a small terrace. It had two power points,
1:51
S4: one for the toaster, one for the fridge.
1:54
S3: So he sort of spent his time building it and
1:56
S3: sort of his uncle helped him fix it up.
1:58
S4: So that took quite some time. I did it room
2:01
S4: by room.
2:02
S3: I talked to other people as well, A couple in
2:04
S3: their 90s. And my colleague Alice Uribe talked to people
2:08
S3: in Sydney about this. And we sort of all found
2:11
S3: out that most of these people paid off their mortgage
2:14
S3: by 30 or 40, which kind of hurts because today's
2:17
S3: my my 38th birthday and I'm not not close to
2:21
S3: paying off my mortgage. Um, let's put it that not Neil,
2:24
S3: but other people like him ended up buying extra houses or,
2:28
S3: you know, it was quite manageable back then. I think
2:31
S3: houses cost about three and a half times the average wage.
2:34
S3: You know, they, they maybe bought an investment property, a
2:37
S3: small nest egg for the kids. You know, their decisions
2:40
S3: were were quite rational. They were measured. They were even humble.
2:44
S3: The houses weren't huge. They weren't home cinemas. But the
2:48
S3: thing is that read through the eyes of generations today,
2:51
S3: younger generations, these choices, these opportunities are what many believe
2:55
S3: have contributed to their own difficulties in achieving the same
2:59
S3: sort of Australian dream.
3:04
S1: Mhm. And so tell me more about what it actually
3:07
S1: meant to own a home back in that time, because
3:09
S1: there was an ideology, a political ideology underpinning it wasn't there?
3:13
S3: Yes there was. So in that time, you know, if
3:17
S3: you cast your mind back to the Second World War,
3:20
S3: a lot of soldiers came back and there was this
3:22
S3: political will to make sure that they had somewhere to live,
3:25
S3: somewhere affordable to buy a house. And there was all
3:28
S3: these policies that came in. A lot of them were
3:30
S3: led by Robert Menzies, who was the longest serving Australian
3:33
S3: prime minister who helped cement property ownership in the Australian psyche.
3:38
S3: He and his government and also, you know, the opposition,
3:40
S3: also thought that it was very important that everyone has
3:42
S3: access to a house because he believed that if Australians
3:46
S3: owned their own home, they would have a bigger stake
3:48
S3: in the country. So effectively becoming, you know, little capitalist,
3:52
S3: you you would care about your country a little bit
3:55
S3: more because you owned a stake in it.
3:58
S5: And looking forward to an attack on the great problems
4:00
S5: of Australia. All that I want to say about those
4:03
S5: problems is this, that I don't believe their problems for
4:06
S5: one section of the Australian people. The problem of Australian security,
4:11
S5: for example.
4:13
S1: So what were some of those policies that did actually
4:15
S1: help that dream come alive?
4:17
S3: Well, between the end of the Second World War and
4:19
S3: sort of the late 1970s, house prices were really stable.
4:24
S3: They were about, as I mentioned before, three and a
4:25
S3: half times the average weekly earnings. But governments, I think,
4:29
S3: both believe that the primary role was to boost housing supply.
4:33
S3: So in the 1950s, nearly 1 in 5 homes were
4:36
S3: built by government. So they actually built these homes for people,
4:40
S3: which has significantly reduced today. But, you know, many of
4:43
S3: them may have been sort of poorly located. That's sort
4:46
S3: of where your Broadmeadows in Melbourne and outer suburb in
4:50
S3: the north west exist. So they were poorly serviced amenities,
4:53
S3: but they provided secure housing for people at an affordable
4:56
S3: price for both home owners and for the renters. And
5:00
S3: in 1963, Menzies introduced the first Home Owners grant scheme,
5:04
S3: which shifted government policies from boosting supply towards inflating demand.
5:08
S3: And that's sort of where we start to see the
5:11
S3: changes creeping in. It would take a while until that happened,
5:14
S3: but you sort of start getting that, that feeling that
5:18
S3: housing is a little bit more than just somewhere to live.
5:21
S3: It might be a pathway towards building wealth.
5:25
S1: So tell me more about those main drivers that I
5:28
S1: guess have made housing unaffordable in the end. So we're
5:30
S1: talking about grant schemes, negative gearing, different tax changes that
5:35
S1: do end up inflating demand.
5:37
S3: Well, it's a really complicated situation as you can imagine.
5:41
S3: And it includes that shift towards seeing housing as a
5:44
S3: vehicle for wealth building rather than just somewhere to live.
5:47
S3: So this is underpinned by a bunch of policies that
5:50
S3: were introduced by both governments since the 70s. So you've
5:53
S3: got the changes to capital gains tax concessions, which made
5:57
S3: it easier for investors to purchase property. So as a result,
6:01
S3: more home loans were taken out by investors largely to
6:04
S3: buy established properties, which experts say have actually driven up prices.
6:09
S3: Local governments have also made it more expensive to redevelop
6:12
S3: in these established suburbs. That's all that sort of zoning
6:16
S3: laws that you hear, and the suburbs you're thinking are
6:18
S3: the sort of inner and mid city suburbs in in
6:21
S3: a lot of these capital cities that have high amenity,
6:24
S3: good access to school, public transport, sort of these places
6:27
S3: where most people want to live. But it's very difficult
6:30
S3: now to redevelop that into higher density living as Australia
6:33
S3: tends to build a lot of detached housing. We we
6:37
S3: really love our big houses that are sort of not
6:39
S3: units or apartments. As a result, we've left a lot
6:43
S3: of those detached big houses now in the the greenfield sites,
6:47
S3: which are sort of outer suburbs really far from from
6:50
S3: the city, 30km plus, which have a lot less amenities
6:55
S3: and infrastructure. And that's, that's a problem. You know, they
6:58
S3: have less schools, they have less access to a lot
7:00
S3: of things. I mean, you've probably often hear I mean,
7:03
S3: I'm from Melbourne, but you know Sydney as well. Traffic problems.
7:06
S3: You can't get in now. The governments are all playing
7:09
S3: catch up really try to connect those outer suburbs to
7:13
S3: sort of. The city and stuff like that. So but
7:16
S3: the problem is that's still where the land is available to. Build.
7:19
S3: So trying to now retrofit some of these inner suburbs
7:24
S3: is proving very difficult. On a variety of federal, state
7:28
S3: and local government levels.
7:30
S1: So all those drivers combined. Have meant that houses are
7:34
S1: exorbitantly expensive and people are moving further out. And the
7:39
S1: prospect of home ownership for a lot of people, including myself,
7:42
S1: looks very different to the 1950s. Can you tell me
7:46
S1: about some of the people you spoke to about that?
7:48
S3: Yeah. So, you know, as a sort of a first,
7:51
S3: you know, to say like a lot of people are
7:53
S3: still buying into the market, right? Like the problem is today,
7:57
S3: a lot of younger generations have to rely on sort
8:01
S3: of the bank of mum and dad as we've heard about,
8:03
S3: or they have to live really, really far away, which
8:06
S3: is often quite difficult if you want to live sort
8:09
S3: of in the inner city, you're looking at millions and millions.
8:12
S3: Sydney as a. It's a total outlier like Sydney is
8:15
S3: insane and I am very sad for my colleagues there
8:20
S3: and everyone who lives there. I just don't know.
8:22
S1: It's so.
8:22
S3: True. Yeah, at least in Melbourne you can get something. Yeah.
8:26
S3: Um Australians median dwelling value is now $901,000 according to
8:33
S3: the totality home value index. Um you know that's compared
8:37
S3: with a median annual household pre-tax income of $104,000, which
8:42
S3: means it would take 11 years to save a 20% deposit,
8:45
S3: which is the most on record. As a result, more
8:48
S3: than half of the people born in the late 1980s
8:51
S3: hello did not own their own home by their early 30s,
8:54
S3: and we are the first generation to do so.
8:56
S1: How are the younger generations of today making it work?
8:59
S3: Then we tried to find sort of the different ways
9:03
S3: younger generations are making do with home ownership that is
9:06
S3: a little bit different to to the baby boomers and
9:10
S3: maybe the Gen Xers and how they sort of approach this.
9:13
S3: So I interviewed, you know, a couple of migrants, Ricky
9:17
S3: and his wife, Sherry, and Ricky and his brother and
9:20
S3: his wife worked a couple of jobs over four years,
9:23
S3: so they could save a 10% deposit for that big house.
9:27
S3: That is still part of that Australian dream.
9:29
S6: It's more freedom because when you're living with someone else,
9:32
S6: it's hard. You can't do things the way you want it,
9:35
S6: but when it's your home, you can design it your
9:37
S6: way and everything. Yeah.
9:39
S7: Yes. That's right. Yeah, that's another thing.
9:40
S6: Yeah, yeah.
9:41
S3: They ended up buying in the outskirts in Craigieburn, which
9:44
S3: is about 30km north of Melbourne's CBD.
9:47
S7: The houses are getting unaffordable now because, uh, when we
9:52
S7: bought this property, things were different, you know, like we bought,
9:55
S7: as I said, we bought this house for 380,000, which
9:58
S7: was like a decent amount for a 490 square metre block.
10:03
S7: But now getting the same block or maybe same house
10:06
S7: is like more than double. And it's not even ten years,
10:09
S7: you know, it's nearly ten years here.
10:11
S3: I also ended up talking to people like Will and Katie.
10:16
S3: Will and Katie are a little bit different. They've decided
10:20
S3: to rent. At least for the time being, if not forever.
10:24
S3: They have three children, three young children, and the kind
10:26
S3: of house they want. And in the area they want,
10:28
S3: they cannot afford or they've they've done the numbers. We're
10:31
S3: talking two plus million again for our Sydney audience, that's
10:34
S3: probably a drop in the water. But in Melbourne it's
10:37
S3: quite expensive.
10:38
S8: It was that commute back and forth to childcare, knowing
10:41
S8: childcare needed our firstborn to be picked up at a
10:44
S8: certain time, and us just having to constantly text each
10:47
S8: other and debate, oh, how are you going on the train?
10:49
S8: How am I going driving? We did that three times
10:52
S8: and that was enough to say like, no, the Clifton
10:56
S8: Hill is beautiful, but it's just too hard for our
10:58
S8: jobs right now. And I think because we also knew like,
11:02
S8: eventually we'll be switching jobs. Like you need to keep flexible,
11:06
S8: I'd say with your living location and your working location.
11:10
S8: And so I, it just makes more sense to find
11:14
S8: the right place for right now and be comfortable with
11:16
S8: your needs changing.
11:18
S3: So they've done the math. And you know, they don't
11:21
S3: see renting as a stepping stone to home ownership, but
11:23
S3: a rational response to what they consider an unstable market.
11:27
S3: It helps that they're not very sentimental, which means they
11:29
S3: can sort of uproot themselves whenever the kids grow up.
11:32
S9: And so it's fantastic to be able to kind of
11:33
S9: just change your house to meet your needs, as opposed
11:37
S9: to spend this huge amount of money up front and
11:40
S9: kind of hope you've ticked off all the boxes into
11:43
S9: the future for what?
11:44
S8: Or continuously fund the renovations to keep the house fitting
11:48
S8: what your needs are.
11:51
S3: What they have is, you know, the keys to remain
11:53
S3: flexible and have alternative wealth plans. The couple says they've
11:56
S3: invested widely, including exchange traded funds, superannuation and US investments,
12:01
S3: and they have also emergency savings. Other people that we
12:05
S3: interviewed also have decided to move from a house to
12:08
S3: a unit. So that's a really interesting way of looking
12:11
S3: at it. Like in Australia, traditionally, we don't really consider
12:13
S3: apartments and units as a viable way of living. Right?
12:17
S3: We just kind of see it as a, a stepping
12:19
S3: stone towards getting your house, which is quite interesting. I've
12:23
S3: lived in Europe, I grew up in Europe. I lived
12:25
S3: there a couple of years ago again, and it's so
12:28
S3: normal to live in apartments. Like it's a whole different.
12:30
S3: We just have a totally different mentality to this. And
12:32
S3: I think we're at a point that we have to
12:34
S3: sort of start thinking of different ways of living, rather
12:37
S3: than just in these big houses that are, you know,
12:40
S3: so expensive.
12:45
S1: We'll be right back. But there may be hope on
12:58
S1: the horizon. The current labor government is hoping to tweak
13:01
S1: or enact some tax reform in the upcoming May budget.
13:06
S1: What kinds of things are they looking to change? And
13:09
S1: do you think that'll even scratch the surface?
13:12
S3: Well, we've heard that the treasurer, Jim Chalmers Department, is
13:17
S3: working on options to overhaul negative gearing modeling rules that
13:21
S3: would limit negative gearing to two investment properties, as well
13:24
S3: as plans to wind back the 50% capital gains discount,
13:28
S3: but only for investment properties. Now, this is not at
13:31
S3: all confirmed. It's sort of just been, you know, put
13:35
S3: out there into the world to see how people react. Personally,
13:39
S3: I don't think this will move the dial too much,
13:42
S3: but I mean it's a start. Critics say also that
13:46
S3: what it actually will take is for people who are
13:50
S3: homeowners to actually, unfortunately or fortunately, whichever way you look
13:54
S3: at it, to start sort of voting against their own
13:56
S3: interests and to sort of accept that they have the House. Like,
14:00
S3: is it actually reasonable to expect houses to keep rising
14:04
S3: and rising and rising? We're sort of in this mentality
14:08
S3: in Australia. We just expect the houses will just go
14:10
S3: up and up and up, but that just means that
14:13
S3: it makes it impossible for younger generations to get in
14:16
S3: without the help of parents and grandparents. And, you know,
14:21
S3: the government, I think is a little bit reluctant to
14:24
S3: do big changes considering the Bill shorten election. And I
14:28
S3: think that spooked them a fair bit. But I think
14:31
S3: it's a different time. I think they can take a
14:33
S3: bit more risks. But you know we'll see in May.
14:38
S3: Experts say that it will take a lot of political will,
14:41
S3: which was sort of seeing the beginnings of as well
14:44
S3: as homeowners essentially voting against their own interests so that
14:47
S3: they're further their kids and grandkids can have a life
14:50
S3: that they have. And, you know, politicians know that at
14:54
S3: any point in time, there are 11 million Australians who
14:57
S3: own their own home, and there are about 2.5 million
15:00
S3: Australians who own at least one investment property. I mean,
15:04
S3: there's a lot of overlap between those two. So that's
15:07
S3: close to about 12 million votes for policies that would
15:09
S3: keep house prices going up. Australia's not a very big country,
15:13
S3: so that is by far the majority. Like a lot
15:17
S3: of experts, I don't know how how long this can
15:23
S3: keep going for. You know, at this point, people who
15:26
S3: bought a unit potentially even ten years ago thinking that
15:31
S3: that's a stepping stone towards getting a bigger house or
15:34
S3: sort of moving up there effectively, effectively have been priced
15:38
S3: out of the market. The housing market, which has grown
15:40
S3: so much faster and bigger than units have. And we
15:43
S3: have a lot of stories on that as well. If
15:45
S3: you guys want to have a look through that. But effectively,
15:48
S3: units have grown much, much less than houses. And even,
15:54
S3: you know, if you wanted to make that jump from
15:56
S3: an apartment to a house, you'd probably be looking at
15:58
S3: an entry level home, which at the moment in Melbourne
16:01
S3: is about $720,000 as a median. And that's just houses
16:06
S3: that are out, you know, out in, in 40, 50km out,
16:10
S3: which is fine if you work in the area and
16:12
S3: it's developed. But if you sort of work in the
16:13
S3: city or anywhere else, then it's quite hard. Um, honestly,
16:18
S3: I don't know. Like, I just feel like we're at
16:22
S3: a point where it's just like a pressure cooker. I just,
16:25
S3: I don't know how this is going to get solved
16:27
S3: without some major, major political willpower. And I think a
16:31
S3: lot of politicians don't want anyone to lose, right? Like
16:34
S3: they're thinking they can solve the solution without anyone losing.
16:38
S3: But house prices have to stop rising. They have to
16:41
S3: stop going up, at the very least for people to
16:43
S3: catch up, for wages to catch up. It's just there's
16:46
S3: no other way.
16:48
S1: Well, thank you very much for your time today, Caroline.
16:50
S3: Thank you very much. Julia, I really appreciate it.
17:00
S1: Today's episode was produced by me, Julia, our executive producer
17:05
S1: is Tammy Mills, and our podcasts are overseen by Lisa
17:09
S1: Muxworthy and Tom McKendrick. If you like our show, follow
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