It looks like New South Wales will bring in a $ 2.1 billion budget surplus for the 2014/15 year, up from a predicted $ 1.8 billion in previous estimates, and one of the biggest contributing factors will be the stamp duty levied on home sales. In the past twenty years, this has moved upward by 749% as the median Sydney home price nears the one million mark.
For those at the bottom of the earnings pyramid home ownership is now out of the question. The savings to accumulate a deposit are beyond their reach and they would have no hope of servicing the loan necessary to secure a home if by some miracle they got their foot on the first home buyers ladder. Most accept that they are destined to pay rent for the rest of their lives.
What worries some economists is the attitudinal change occurring in those who do have the capacity to eventually become home owners. In past generations life followed a very predictable course. Marriage - home ownership - children - were in the sights of young people and for the vast majority this was attainable. It was often described as the "Australian dream " !
It seems that for some that dream is fast turning into a nightmare ! Many are turning their backs on the austerity that home ownership will impose on their lifestyle during the long grind to accumulate a deposit - and the even longer grind to pay off that loan and settle all the debts for conveyancing and stamp duty that go with the purchase. We live in an age of " instant gratification " .
The target of home ownership is fast being replaced by more tangible rewards. Travel has become the objective of some while others see ownership of a top of the range car that turns heads as their new desire. Others leave their future accommodation prospects dependent upon inheritance. Unfortunately for them, social engineering is heading in the opposite direction.
Pressure is mounting for the family home to be included in asset testing and with out ever extending longevity nursing home placement is requiring bigger deposits and bonds that usually require the sale of the family home. Funds from that sale are then added to the asset test and this decreases the pension, requiring the retired to dip into their reserve for living expenses - leading to sharply shrinking estates when their life ends.
It seems inevitable that in the near future the demand for public housing will increase exponentially. At present the waiting list can be as distant as ten years, but it could become usual for this to be factored in for lifestyle plans if people give up on home ownership, adopt a hedonistic pursuit of travel and high living, and then patiently wait till they top the list for public housing in later years - with the expectation that the rent will be assessed as a percentage of their income, which is usually a fraction of what is demanded in the private rental market.
Australians were known as a nation of home owners. The price of an average house has distanced itself from most other commodities - and shows no sign of slowing down. This is a world wide phenomenon that is accentuated in major cities and where those cities are the focus of migration. There is every chance that a decade or so from now the provision of public housing may be the biggest problem facing both Federal and state governments in this country. The growing pool of those "unhoused " will deliver immense political pressure.
Theoretically, releasing more land for building sites could ease home prices but Australia is a destination sought by migrants and there seems no prospect of our population ceasing to grow. Our economy is subjected to periodic recessions and during these prices drop, but it is unlikely that we will see a permanent decrease - and if one did occur it would be a financial catastrophe for many.
All three tiers of government had better get used to the idea that providing public housing for the masses will soon become a demand on which they will be judged !
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