In 2001, John Howard coined the term "barbecue stopper" to
describe the work/life imbalance. On July 13, Kevin Rudd
declared: "Housing affordability is the barbecue stopper right
across Australia at present." What has changed?

For an acceptable work/life balance, two conditions are needed:

(1) The ratio of wages to property values is such that a family
can pay off a mortgage on a SINGLE full-time income; AND

(2) The ratio of job vacancies to job seekers is such that you
can keep your job while refusing to work unpaid overtime.

The connection between condition (1) and housing affordability
needs no explanation except to emphasize that the condition
concerns a RATIO: it does NOT mean property values fall; it
DOES mean that if property values rise, wages rise faster.

Condition (2) means a plentiful supply of jobs. But jobs
cannot be created unless:

(a) the employer can pay the rent or mortgage on the business
premises out of the proceeds of the business; AND

(b) the workers can pay the rent or mortgage on housing within
commuting distance of those jobs, out of wages that the
employer can pay out of the proceeds of the business.

Condition (b) is housing affordability! Condition (a) is its
extension to commercial/industrial accommodation.

Now consider the lesser barbecue stoppers that Mr Rudd named:

CHILDCARE: The higher the ratio of wages to property values,
the fewer the hours you need to work in order to pay for
housing, and the less your need for childcare.

PETROL PRICES: If housing were more affordable (or jobs more
plentiful), you could live closer to your place of work and
consequently drive less.

GROCERY PRICES: The grocery bill is one bill among many.
Reduce the housing bill as a fraction of income, and all other
bills become easier to pay.

Housing affordability is not the only BBQ stopper, and not
always the BBQ stopper du jour; but it is by far the greatest
of BBQ stoppers -- a perpetual BBQ stopper, and the mother of
all BBQ stoppers. [Apologies to Winston Churchill
(http://wealthandwant.com/docs/Churchill_TPL.html).]

reduce population, houses get cheaper.

the hard part is, no one wants to discover if the economy can survive declining, or even stable population.

business is clear: rising population raises their boat. their captive pollies are clear: making business happy extends their time in power. academics are clear: their career will be blighted if they don't support the above two social sections.

the only ones that aren't clear are the poor bastards that can't afford to live near their work, as there are too many other bodies in the way.

it's too bad ozzies are politically handless, and clueless, but you get the government you deserve.

Not convinced.

If people cannot afford to buy houses, the price will fall. Agreed?

Why is it then not possible to accept that when people can afford to buy houses, the price will increase?

The nonsense spoken and written about "housing affordability" totally ignores this fundamental reality.

Houses are affordable, right up until the time that they are not. At that time, they will become unaffordable and - hey presto! - the price will come down.

An increase in the price of housing is a good thing. It means that the population today is wealthier than it was yesterday, and can afford (that word again) to increase its spending on housing.

We will, I can assure you, hear weeping and wailing and gnashing of teeth when the price of property begins to fall consistently over a period, because it will mean the economy is in recession.

And that will hurt the general population a whole heap more than simply paying a few more bucks in rent.

Demos
nice to see your volunteering to make an early exit from this earth
that will give us one extra spot at least
arnt you an 'aussie'
not a good idea to live in a country and bag its inhabitants
what do you think of my idea/ build up our metro areas, especially Adelaide here where i live (still a big country ghost town) GO UP A LITTLE INSTEAD OF OUT /encourage people both young and old to make use of the infrastructure we already have in place-
and at the same time make continue to care for the rest of the planet_including our own part

In answer to Demos:

I don't deny that, all else being equal, higher population
means higher property values. Hence I don't deny that
population policy, including immigration policy, is about
property values. And I don't deny that the campaign
against the legalization of contraception in Australia a
century ago was funded by the property lobby. And I don't
deny that One Nation signed its own death warrant when it
adopted the immigration policy of Australians Against
Further Immigration, thereby abandoning a simple White
Australia policy (which was compatible with rapid
population growth) in favour of a zero-net-immigration
policy (which wasn't). And I don't deny that one purpose
of Howard's anti-refugee policy is to create a xenophobic
smokescreen behind which he can ramp up other forms of
immigration to levels that the voters would not otherwise
accept. Furthermore, I don't deny that builders and
developers PER SE thrive on population growth.

Nevertheless I don't think it's helpful to concentrate on
population, for the following reasons.

First, all else isn't equal. Rising population can coexist
with improving housing affordability provided that the
supply of housing grows faster than the demand.

Second, the comment on builders and developers refers to
them in their capacity as builders and developers (hence
the words PER SE). But the biggest builders and developers
are also land-bankers -- i.e. speculators.

Third, the capital gains of property investors/speculators
do not depend on demand for housing outstripping supply.
They can also come from:

(i) increasing wages, which in themselves are compatible
with, and indeed may follow from, improving affordability
of accommodation (see first post in thread); and/or

(ii) improving infrastructure, in which case increasing
property values reflect improving utility -- NOT higher
prices for given utility -- and are therefore neutral
in terms of affordability.

Indeed, causes (i) and (ii) yield capital gains even
WITHOUT POPULATION GROWTH.

In short, not only the economy, but also even property
investors, can survive stable population. But whether
property investors understand this is another matter.
Privilege reduces the need to think.

There are two problems with Pericles' analysis.

First, it ignores the supply side. If accommodation is
plentiful relative to need, buyers/renters will pay high
prices/rents relative to their spending power. If
accommodation is scarce relative to need, buyers/renters
will pay low prices/rents relative to their spending power.

Second, it ignores differences in spending power. To get
the house, you have to be the highest bidder. As
accommodation becomes scarcer, the number of bidders
increases, and you need more spending power to have a
reasonable chance of being the highest bidder.

Pericles asks: "If people cannot afford to buy houses, the
price will fall. Agreed?" Not if they can't afford it
because they're outbid!

So what is to be done in order to improve supply? Speeding
up development permits doesn't help by itself, because it
doesn't actually compel development -- let alone compel
anyone to build houses on the developed lots. The broad
principles are:

(1) All taxes on residential property should be on SITES
(unimproved land and airspace and attached building
rights) rather than buildings, because taxes on
buildings can deter construction, whereas taxes on sites
can't obliterate sites.

(2) All subsidies for residential property should be for
buildings rather than sites, because the production of
buildings can be increased by incentives, whereas sites
don't need to be produced.

(3) All taxes on sites should be holding taxes rather than
transaction taxes, because holding taxes encourage
income-earning activities to cover the taxes, whereas
transaction taxes are bottlenecks in supply.

(4) All taxes for the funding of infrastructure should be
based solely on unearned uplifts in site values caused
by (among other things) the infrastructure;
lump-sum taxes that are NOT related to uplifts in value
may force development to be delayed until prices rise
sufficiently to cover the taxes.