The Forum > Article Comments > No opportunities on the property ladder > Comments
No opportunities on the property ladder : Comments
By Alan Moran, published 23/8/2006The blame for the high cost of housing in Australia rests squarely with government.
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If a house is sold to someone, by definition it is affordable.
You have changed the argument a little by saying "there is definitely such a thing as housing unaffordability... It is taking an ever-increasing multiple of average income to buy a house in Sydney."
If you accept the general principles of supply and demand, you must also accept that where demand exceeds supply, prices tend to rise.
So what has happened here is that the populace has determined that it is a good thing to set aside an increasing percentage of their income for the purpose of buying a house. Over time, this voluntary activity, encouraged perhaps by a belief that property is a safe investment, will gradually ease up prices, and increase the income multiple you refer to.
Demand also has other faces than being purely volume-related. Increasing prosperity also plays a part. As people work their way up the ladder, they look for properties more in line with the image they begin to form about themselves - "better" suburbs, more swimming pools etc. - that put pressure on the upper end of the market. This end of the market also has some natural limits, like there are only a certain number of harbourside or bayside properties, which causes the prices to move even higher. This has a natural trickle-down effect.
All this happens without a skerrick of government intervention. So even if the government were to rescind all of its market manipulation, and simply leave it for "the market to decide", prices will continue to increase in line with the country's overall prosperity.
And all the while, every property that actually changes hands is, by definition and logic alone, affordable.