The Bay Area is the epicentre of America’s housing crisis, where the tech industry’s hyper-incomes run into limited residential supply, due to zoning, NIMBYism, and a host of other factors that have resonance here.
Throw into the mix the Golden Gate City’s utter municipal dysfunction and, allegedly, harm reduction drug policy, and you end up with a homelessness calamity as well.
As they say among politicos, the optics are unfortunate for the Treasurer on a day when two big financial players have drawn attention to our own housing distress.
Former custodian Peter Costello pointed to the demand-driven post-pandemic influx of foreign students and temporary workers that is behind our world-leading population growth.
That surge is turbocharging competition for housing in our cities and pumping up rents, which is one of the main drivers in our high and persistent services inflation.
The Reserve Bank said on Friday that advertised rents (for new leases) are 30 per cent higher than pre-pandemic levels, although the pace of growth has slowed, particularly in regional areas that lured city dwellers and kept young people in the bush during Covid lockdowns.
Let’s be clear: it’s not the fault of migrants.
We didn’t build it, when demand receded, but big companies and universities have business models that need them to keep coming.
On the day he announced a $7.4bn full-year cash profit, ANZ chief executive Shayne Elliott said the nation’s lending standards set by the prudential authority risked entrenching inequality and creating a society where only the wealthy owned their own homes.
It’s a fine balance. How much saving does capitalism need from itself?
An update on housing affordability from the Commonwealth Bank, the nation’s biggest home lender, last week said repayments Australia-wide were approaching the levels seen in the late 1980s when the standard variable rate peaked at 17 per cent.
That’s a snapshot in time of how difficult it is to buy a new median-priced dwelling for two full-time workers earning a median income (lower than the average income, which is skewed by the very highly paid).
It’s obscene, especially in Sydney, where for the first time, the median priced dwelling in the Harbour City of almost $1.1m exceeds the definition of “mortgage stress”, where 30 per cent of household income is required for mortgage payments and associated housing costs.
We know we have to build more housing supply.
As every visiting economic delegation or OECD survey makes clear, our land zoning is sub-optimal, and it’s to the huge financial and emotional detriment of the young people who are doing the heavy lifting of study, work and child rearing.
Everyone can see the harm and yet we keep making it nigh impossible to boost housing supply.
In a way, this problem is as seemingly intractable for us as gun violence is in America.
Let’s break the wicked cycle.
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