The article highlights some of the problems, but not its worst aspects, which is pensioners, paying out 72% of their pensions, simply to occupy a one bedroom flat!
And going without heat and food, just to be able to make ends meet, or having to vacate in just sixty days, when the greedy landlord, decides he/she wants to sell.
Going without essential nutrition has health implications, as does going without winter heat.
These same people may become premature high care nursing home residents, where they will cost the tax payer not less than $140,00.00 PA!
And given affordability issues, this trend can only ever expand and magnify.
Fortunately, old folks vote and are set to become a larger and larger demographic!
And very little appetite to forgive all those, who combined to create this crisis.
We need to jettison negative gearing and replace that with a capital gains tax, on all property speculation. Tax breaks ought to be directed at new housing development only, that stamp duty and other state Govt housing development charges be made illegal, by an act of federal parliament, using its external powers, to impose this requirement.
Failing that, a withheld GST could compel compliance.
We should be building at least 140,00 new homes every year, just to match current demand, and put downward pressure on house prices.
Incidentally, the cost of building a steel frame four bedroom home, with a small solar power system, a 5,000 gal water tank, and a fifty year structural guarantee, is still under $140,000, in subtropical Queensland?
Where winter heat is rarely required?
Think, the cost of keeping one pensioner in high care for just one year, would pay the build cost of a brand new home!
Talk about being penny wise pound foolish!
Rapid rail would make numerous new housing developments viable and desirable. Quantitative easing that virtually doubles money supply, would allow Govt to fund the infrastructure roll-outs, force the AUD down to around 65 cents, and perhaps even allow the federal Govt to buy into the very lucrative energy business, as an adjunct to tax collection?
Rhrosty.

Here is an interesting piece of taxes on new homes in my area, albury wodonga.

http://hia.com.au/media/~/media/Files/MediaMicrosite/Media%20Releases/VIC/Taxes%20Crippling%20Housing%20Affordability%20in%20Albury%20Wodonga%20-%20VIC.ashx

True to form developers will pursue their own interests and rightly so, developers are meeting the demands of consumers in a free market economy. However, there is no mention in your article of the fundamental issue which is driving demands on the property market. Every 3 years, Australia is growing by over 1 million people - the size of Adelaide! Though this is a dream for developers, for those who "are renting dingy apartments for $1600 per month" and have to save $70,000 for a deposit, well, it is tough for some of us and impossible for many. It is my opinion that a stable population will make a difference, relieving cost of living pressures like rents and mortgages. Politicians are not talking about the fundamental issue which is our rapid population growth. I entirely agree with you that "property ownership is heralded as the bedrock of democracy". Let's talk about the real issue and help create a more egalitarian democracy.

From the link posted by Chris Lewis,

<Taxes Crippling
Housing Affordability in Albury-Wodonga

A national study released today in Wodonga shows
that one third of the cost of a new house in Albury-Wodonga is taxes, levies and charges.

...
The single biggest issue driving the housing affordability problems facing Australians is the level of taxation built in by all levels of
government,” said HIA Regional Executive Director for Victoria, Gil King at the launch.

“The price of a home in Wodonga is on average made up of 36% government taxes, charges and levies. In dollar terms, that’s
around a whopping $143,000 on an average price house and land package in Wodonga.” “Across the border in Albury the problem is even worse,
with tax being 38% of the price, making up around $162,000 embedded in the cost of an average house and land package.”

“As well as inflating the purchase price of a home, these taxes become built into a mortgage and in the case of Wodonga, add on average an additional $250,250 in interest to the life of a loan or in other words, an extra $834 per month - it’s a double whammy for home owners.”>

Added to that is the pressure on housing prices from the record immigration number for the 'Big Australia' Julia Gillard claimed she was opposed to, but welshed on immediately.

The article indulges in the rhetoric of idealism and disregards important facts.

Even with the debate of new housing stock versus old stock. The point missing from the article is amenity. Sure, it used to be that starter homes were purchased further out from the CBD. But with the old version of 'further out' there was still a chance of being near a train line or driving on roads that weren't yet congested to oblivion. Young people are right to now eschew this option in our modern capital cities because no government is interested in providing the public transport that would allow low stress mobility.

The apartment option solves the transport problem but what is the longevity of single bed apartments when people begin to have families. Also, Australia does not have a history of building many quality apartments that might be truly considered as long term propositions. Instead they are too 'investor only' focused, whack 'em up then get some singles and students to fill them.

Yes housing is absurdly unaffordable and it's even more absurd that governments have done nothing about it. I was dismayed when mean prices shot up to 200,000 in the early 2000's then they doubled again and now in Perth where I live they are $500,000. The culprits are clear; some have been pointed to by bloggers here:
1/ Negative gearing - abolish it on all but new homes
2/ Capital gains - increase it on speculative gains
3/ Wealthy superannuants - tax them at least 30% on speculative gains.
4/ GST on building products and services also had an impact; it should not be increased.
5/ Banks' unscrupulous lending practices - 'NINJA' loans. Make them and mining companies pay higher tax on excessive profits.

But the horse has already bolted, the speculative gains have already been made and many are facing speculative losses. I feel for those young wage earners when the boom busts and we have declining house prices as the US has done. Maybe mass default / bankruptcy will be the result and the banks will be the losers for once - about time they took a hit.

Good piece, Karl Fitzgerald. The HIA is correct about taxes adding to the cost of a block of land, but they underestimate the trickle down effect of taxes in ALL prices whilst they also side with developers against taking the necessary remedial action, viz, reformed land tax.

That taxes on land--more correctly understood to be rents by economists--can't be passed on in prices gets a mention in any economics 101 textbook, and that taxes on land also keep the lid on escalating land prices rarely gets a mention at any housing affordability summit - because that's getting a bit too close to really dealing with the problem. And as mentioned above, we know Julia Gillard isn't about pricking this bubble.

The Henry Tax Review's recommendations to abolish 125 taxes and replace them with only two new ones, the mining tax and an all-in federal land tax (to replace state stamp duty and underutilised state land taxes) have a lot to recommend them if we are to have genuine tax reform and address housing affordability.

Housing affordability is just one of the myriad of problems we face in today’s modern world.

Unfortunately we now live in a world based on a fiat currency.

The US, Japanese, ECB and a growing number of reserve banks are printing money much the same as what successive Roman emperors did to the denarius – debasing it to the point of near worthlessness.

Central banks through currency debasement cause increasing taxes and impose ever more stringent regulations and impositions on the lives of individuals.

This is where the FIRE economy is today and for a time it will continue to be able to survive and perhaps even grow in some areas.
However, by doing so, it is vastly increasing its own costliness and decreases the marginal return it can offer to the man or woman in the street.

These continued and growing costs have drained the middle class within America and Europe and you can bet that unless a completely new policy shift or way of life emerges in the very near future, Australia will be faced with an ever increasing drain on individuals and their ability to sustain any fair and equitable level of financial stability in and ever growing corporate driven society.

The existing level of government support to those falling off the cliff is itself deteriorating to the point the added and growing social burden will further undermine any real ability to maintain “business as usual" much further into the future.

The world is in the early stages of financial collapse and those who live off the treasury are growing toward a point where they will become more numerous than those paying into it.

It does not need a genius to realise that our housing ponzi scheme here in Australia is totally unsustainable, bubbles always burst; we have just yet to experience the pain. When we do, it is going to be catastrophic for so many people. At the policy level, both sides of government remain in denial and will do little to mitigate this growing problem.

A house of cards can only stand for so long.

Sheesh, all this chatter and no mention that the boom in house prices has been created and sustained by the mobilisation of women into paid work, thereby increasing the disposable income of two-income families by 3 or 4 times. It is two-income families especially dual-professional or professional-self-employed pairings that are the negative gearers and many of those were assisted into their first property with very little capital by the policies of the Howard government, quite deliberately creating demand.

The problem is much worse than has been suggested, because many of those negative gearers have multiple investment properties which are funded through interest-only loan payments and equity has only been achieved through price inflation. As an aging population tries to sell out of those properties prices will inevitably deflate unless they are artificially supported, meaning the equity of the negative-gearers will evaporate. Many of them are already in that position, with banks foreclosing as equity ratios fall below their comfort level for interest-only arrangements and the investors cannot afford to repay principal.

According to the press today, some 23% of all property advertised for sale is currently on behalf of a mortgagee, receiver, or liquidator, with the agricultural sector - including hobby farms and "tree-change" properties bought by those same negative-gearers - comprising over 50% of that and residential around 20%.

On the Gold Coast some 74% of properties in all sectors were listed by a receiver, mortgagee or liquidator.

The economic disaster is just starting, and it has its roots in the vast social upheaval created by feminist social constructionalists, abetted by short-term and narrowly self-interested thinking within the professionalised petit-bourgeois middle-class and taken advantage of by more pragmatic financiers, who have made record year-on-year profits every year for well over a decade and will demand support from taxpayers when the whole thing collapses.

I neglected to mention the other exacerbating factor, which is that the employment of a high proportion of the female professional and quasi-professional workforce is dependent on Government funding. It is not unexpected that Qld is experiencing the highest rate of forced property disposal, given the reduction in expenditure that has been forced on the Newman Government.

It will come to the rest of the country too as Federal expenditure is reduced, as it must be.

Karl,

No more lies and wishful thinking.
Stabilise the population growth.

Balanced migration, 80,000 out then 80,000 in and get rid of the baby bonus.

1.2 million more people every 3 years is catastrophic.

BETTER NOT BIGGER.

Best,
Ralph

Also remember housing is adversely effected by every (so called) refugee boat arrival, simply because we have THOUSANDS of homeless Australians BUT NOT ONE HOMELESS REFUGEE.

With an expected up to 30,000 to arrive this year there is no room in the detention centers so they will be given houses which will put further pressure on housing availability.

House the Australians give the refugees a TENT just like the UN do in Africa and other places.

Juliar look after your own citizens first.