Australian property dream is more like a nightmare

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Chancellor's Postdoctoral Research Fellow, University of Technology Sydney

View more articles from Alecia Simmonds

An aerial view of a densely populated residential area of Paris.

An aerial view of a densely populated residential area of Paris. Photo: Nikada

Reading the newspaper lately has felt like being trapped in an infernal Sydney dinner party: "There's never been a better time to sell!" "Do you think that it's better to buy in the east or inner-west?" "Did you hear about the property lawyer who bought his unborn grandchildren their own gated community?"

It's the conversational equivalent of grating your face against a concrete wall.

Of course this is nothing new. We've been a nation of renovating, investing, buying and selling philistines for the better part of the past 20 years.

When prosperity hit in the mid-90s we elected a prime minister who channelled our wealth away from schools, public infrastructure, universities and hospitals and into the bricks and mortar of our suburban fortresses. And we never looked back.

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Now, in the midst of yet another hysterical burst of investment greed, we've started to count the costs: an entire generation locked out of the property market, first-home buyers pushed out of the inner city by baby-boomer investors, and carnivorous foreign investors consuming our land.

But all these stories presume that it's natural and inevitable for every Australian to want to buy property; that investing is hard-wired into our DNA, and that we will always dream of owning our own home rather than, say, dreaming of an equal society.

We presume that the problem is not that our imaginations don't extend beyond a suburban home, but simply that those homes are getting too expensive.

Call me treasonous, but to me the great Australian dream has always seemed like more of a nightmare: mortgaged up to your eyeballs in a house you never get to enjoy because you're too busy working to pay off the mortgage; living in the paranoid isolation of a cyclone-fenced suburb with only the blinking idiocy of a plasma TV for company; and lazy Sundays smelling of barbecues and debt.

When I picture the Australian dream I imagine something akin to the second circle of Dante's Inferno – the one where the sinners lie drowning in their own excrement.

What makes these infernal visions even worse is that heretics like myself simply have no option but to join the sinners in their excrement. The dream of home ownership is not an autonomous desire so much as a death sentence because we have no viable alternatives.

Rather than proposing solutions such as more land release, I would suggest five lessons about property to learn from our more civilised European compatriots.

 

1. Renting needs to be a secure option for individuals and families. In Australia if your landlord  decides to sell they can kick you out with one month’s notice. If you fall behind on your rent they are legally obliged to give you two weeks’ notice.  

Contrast this to France where no-one can be evicted during the winter months. Or to Germany and Italy where rental contracts can be for four years or even for an ‘indeterminate’ period – meaning that you can sign a contract that gives you the right to rent for life. 

 

2. The price of rent needs to be capped. In the three years that my friend Paul has lived in Potts Point in Sydney his rent has risen from $250/week for a studio apartment to $350; an increase of 50%. In many European countries this would be illegal. Under new laws in France, no new rental contract in the inner suburbs of Paris is permitted to charge more than 20 percent per square meter above the neighbourhood’s median rent, which will be assessed annually by a "local rent observatory." 

In Holland there is a similar rental review agency that you can appeal to if you think your rent is too much. They will assess your rent based on the median rent in the area and the quality of your house. If it’s too much then the landlord is forced to lower the rent and to reimburse you the excess money. 

 

3. Communities are made of houses, not investments. There is a word circulating, miasma-like, in Sydney of late: flipping. It holds a certain sinister whimsy and means to buy a run-down property, renovate it, then sell it – or, as wankers say, flip it! These are precisely the same wankers who are likely to spend their holidays sauntering through Parisian streets murmuring their appreciation of the quirky little stores that give the city its charm.

In my quartier (the fifth arrondisement) we had a bookstore that only sold ancient mathematics text books, an umbrella repairer and a music-box maker. I lived next door to a man who put gold embossing on books. Real estate in the fifth is expensive and these places are only able to survive because owners realise that sometimes it’s good to hang on to a place; that you don’t always need to sell and make money. Keep your bookstore for the sake of the community and beautify the property you have for you and your children.

 

4. We need to stop talking about property. While living in France, I encountered a wonderful phenomenon attributable to their socialist past: the belief that talking about property is vulgar and boring.

In fact, mentioning that you’re about to buy property in Paris is conversationally disastrous, as bad as telling people how much you earn. This has the effect of liberating dinner parties so that people can discuss ideas, art and politics. Not just greed packaged in a brick-veneer home.

 

5. Housing is a basic human need. Civilisation has arrived at a very dark point when people in the richest country in the world cannot afford to put a roof over their heads. We constantly complain that our rent is too high or that the property is over-valued and yet we do nothing about it. Boycotting rent would be lovely but wildly ineffectual and personally perilous.

We need collective pressure placed on our government to behave like most other governments in Europe: restrain greed, protect low-income families from housing insecurity and in so doing, liberate us from the conversational tyranny of the housing market.

 

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111 comments

  • Yes to all this. I have been living in a house for four years and have a fantastic landlord, who has agreed to another four year lease, as well as letting us superficially renovate as we wish, and telling us to treat it if it were our own home. I have no desire to own my own home, couldn't afford to if I tried, and feel so much better not wringing myself over unobtainable fantasies.

    Commenter
    rentersdelight
    Location
    melbourne
    Date and time
    November 11, 2013, 6:53AM
    • I concur. Property talk is vulgar and boring. I would add business and finance to these too. During my lifetime I've seen real estate agents go from despised and distrusted to revered members of the community who influence public policy. Business and finance news once occupied a spot of a few minutes in the nightly news, just before the weather. The so called ' budget crisis' was so important it helped decide the last federal election (where the crisis has gone is another story). Not that I'm blaming these people for anything. It's the us, the everyday Joe, that's let them in and convinced ourselves that we too should have the 'rental' , the investment property and the share portfolio, as though success here will make us something better than who we are. Yet these obsessions don't seem to have bought us more security. We are more worried about people not pulling their weight than ever, and seem to have forgotten that our nation anthem says we've ' boundless lands to share'.
      I applaud this article because in many ways if we scratch baby boomer
      dream we find a nightmare of insecurity and selfishness, and maybe if we stopped talking so much about them as if they were the be all and end all we would wake up from the 'gift' the baby boomers gave us, and be free to dream of other things that are important and more meaningful.

      Commenter
      Inner Northbourne
      Location
      Canberra
      Date and time
      November 11, 2013, 7:11AM
      • Wholeheartedly agree. Life here is suffocated by real estate insecurity and landlords are given excessive free reign in their dominion. Even the USA has rent controls and tenants rights more progressive than here.

        Commenter
        WTF?
        Location
        Melb.
        Date and time
        November 11, 2013, 7:29AM
        • You could achieve much more by capping negative gearing on existing properties and swapping stamp duty for a broad based land tax.

          Commenter
          Freddie Frog
          Date and time
          November 11, 2013, 7:50AM
          • Smaller houses on smaller lots in inner suburbs. Low cost government built and owned rental housing. End negative gearing - and I say that as one who owns investment property. End 1st homebuyer subsidies. End land banking: land or property bought for development should be taxed as if already developed. Much better security for tenants. The only reason we bought was to escape the grind of being forced to move every other year as houses were sold from under us. Tax city car use and use the money to develop comprehensive public transport with an emphasis on rail and light rail: we have the worst/least public transport systems in the developed world.

            Commenter
            Doug
            Location
            Melbourne
            Date and time
            November 11, 2013, 8:18AM
            • first home buyer subsidies are a joke - they only push up the price and so nothing to enhance affordability.

              They do, however, make it look like politicians care, which is why such absurd policies are enacted in the first place.

              Commenter
              mike88
              Date and time
              November 11, 2013, 2:38PM
          • Sadly, whilst I agree fully with your great article, you (we) are tilting at windmills. Australian's are obsessed with an enduring lust: property porn. Home ownership, which in a rational world, is a consumption good, appears to have become an investment vehicle, skewing the economy. Warren Buffet believes you should buy houses as if they are hamburgers, cheap. We certainly don't cheer when food prices go up. We also complain about the cost of living, particularly in big cities. Perhaps if we didn't have such irrational beliefs about illusory or lucky wealth ( ie those that bought in the cheap finance boom) through property, we would have more money to spend on living. I also dismayed by comments from the RBA that house prices 7-8 times the average income could be the new normal. Funnily, data from other countries always shows reversion to the mean of the long term house price increase which is tied to wage increases. But, this time it's different: apparently......

            Commenter
            Nescious
            Date and time
            November 11, 2013, 8:20AM
            • "... house prices 7-8 times the average income could be the new normal." Actually, we're already past that point. Way past. Fairfax press trumpeted today that Sydney's median is now over $722,000. Given that the average wage is around $70K, that makes it over 10 times. But we're not in a bubble, mind you - at least that's what they keep telling us.

              Commenter
              Don't Prop Up the Ponzi
              Date and time
              November 11, 2013, 12:04PM
          • Nice to see an article based almost completely on stereotypical, unresearched untruisms...

            Must have been hard to put together?

            I couldn't afford a house in the inner city either when I was younger... so I bought where I could and worked my way in, as most do, and most have been doing forever. It's never been easy, it still isn't. Boo hoo.

            Commenter
            David
            Location
            Sydney
            Date and time
            November 11, 2013, 8:31AM
            • Yes David, but the difference is some people are happy NOT to buy (believe it or not!) - to them, owning their own house is not the be all & end all and just because there are people like us out there, it doesn't mean that we should be treated like second class citizens. I'm a happy renter, with great landlords, I'm saving money which I plan to invest - quite frankly - in anything but property. I'll rent for a long time - it gives me the freedom I crave & I'm not a slave to the banks. Perfect really.

              Commenter
              CH
              Date and time
              November 11, 2013, 10:13AM

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