Tony Abbott must surely be the only possible route by which Australia can emulate the benefits that the US is now reaping from the election of President Trump.
While being a more refined politician than The Donald but falling short of many of our hopes when in office, Abbott shares Trump’s goals of small government, and like him contests Political Correctness, and is pro-liberty and democracy. Abbott’s unadvertised selfless, personal charity work among Aboriginal communities marks him as unique, possibly differentiating himself from any other politician in the world.
In his agenda, Abbott identifies several policies that most of us would welcome, at least as a start. They include:
- Stop all new and frivolous spending to fix the budget
- End further subsidies of intermittent and unreliable energy.
- Keep Jihadis off the streets. Stop hate-preachers.
- End funding for bully bureaucracies and welcome straight talking.
He also seeks to make housing more affordable, again something most people would welcome, but his policy to accomplish this is, “By scaling back immigration to migrants who can make a contribution from day one”.
Scaling back immigration numbers to include some genuine political refugees among a general programme largely limited to those that offer a net benefit is to be welcomed. But not because this would take the pressure off house prices. Pressure on house prices is not derived from immigrant numbers – and certainly not from the immigrants from basket case countries that are causing social problems.
Last week, the 14th Annual Demographia survey of global house prices was released. This measures prices (in 293 markets across the world) by comparing the median house price with median family incomes; while other measures might be preferable, they do not differ greatly in their outcome from that of Demographia.
Demographia estimates that Australia led the world in its house price costs in 2017, as it has done for most years. Of the 92 housing areas containing over a million people only Hong Kong has higher prices than Sydney. Markets with over 2 million people are illustrated below.
The above data shows that median prices relative to income levels in Sydney are threefold (and Melbourne over twice) the levels found in Phoenix, Dallas, Houston, Charlotte and Atlanta. These are cities showing much higher population growth than any Australian city.
Increasing the supply of houses is not a difficult process. The industry is adaptable and can readily increase output by 50 per cent or more in the course of a year or so. And while Sydney’s builds are, relative to earlier years, presently quite high, with NSW at around 70,000 a year (they have only rarely reached such levels in the past) this is due to the cap on development that has been in place for almost 40 years. In Victoria approvals are presently running at around 80,000 a year.
Nationally, house prices are at least twice what they would be if the constraining effect of development approvals was lifted and a regime similar to that of the low cost US markets was adopted. Excessive house prices are due not to immigration or even to the supposed increase in Chinese buying (which has doubtless boosted inner city prices) but stems from bureaucratic restraints on land release and development approval creating an artificial scarcity. This also has some implications for the nation’s real wealth since property constitutes 57 per cent of Australian households’ wealth (including owner-occupied property at 42 per cent) Table 3.7.
Australia is not a land constrained Hong Kong or even Singapore or Japan (in both of which prices are actually below those seen here). The cause and solution to excessive house prices lies squarely with excessive regulation.