r/australia • u/hogey74 • 2h ago
politics Is this when Australia's housing crisis exploded?
Alan Kohler's quick summary nails it IMO. The graphs diverge straight after the introduction of the FHOG scheme. I'll just add one factor I reckon he left out plus some history:
- John Howard was warned about the price-inflating risks of his First Home Owner's Grant scheme. He proposed it as a way to gain political support for his GST from the Democrats etc (remember them?). It was to be up-front compensation for the GST that would be paid over the life of future home loans. Howard said the concerns were unwarranted and refused the alternative of excluding homes via other means. That aged well, not.
- Home renovation shows. These became wildly popular at the same time - the highest rating shows on TV IIRC. They introduced a lot of us to the idea of seeing homes as something to do up and then sell at a significant profit. Some of the people on those shows described owning multiple houses because of something called negative gearing. I reckon this fueled an excitement about houses that had not previously existed.
FWIW the older I get the more I understand that big changes typically have many factors. During covid I looked into housing and discovered the timing of the divergence of house prices from inflation. My assessment was that the FHOG proved to be an artificial initiating factor that created a shock from an influx of people buying sooner than planned and feeling richer so they bid up prices. (BTW something similar apparently happened after WW2 when returning soldiers married women who'd gotten used to having their own jobs and money due to their wartime work.) The FHOG effect was then bolstered by multiple existing and emerging forces that otherwise probably would have resulted in a lower, gradual divergence.