There has been a lot of news coverage about property prices beginning to rise again after two years of decline. While the property industry hopes for a new price boom, it’s not good news for the millions of people who can’t afford to buy a home.
Despite the fact that house prices have dipped a bit in recent years, housing affordability in most cities has actually got worse. This is mainly because wages have been stagnant and personal debt levels have increased.
Since 2011 property prices have risen 56% in Sydney and 38% in Melbourne. But income has only grown by 4% over that time. While we have historically low interest rates, people are struggling to save for the huge deposits that are needed to take out a mortgage.
Of those who have managed to scrape together a deposit, there are now more than a million households in mortgage stress. This alone is nothing short of a crisis.
Another aspect of the housing crisis is that people have been paying exorbitant amounts for buildings that are unsound and unsafe. The worst examples are the Opal and Mascot Towers in Sydney, which have major construction defects.
Everywhere you look the profits of a tiny few have been put before the needs of the many.
Some of the worst offenders are the property developers who use inferior materials and cheap labour to slap together dog box apartments. But you also have speculators who buy properties and deliberately leave them empty, waiting for a higher price to sell.
Nearly 30% of the Forbes magazine’s 50 richest people are property developers and speculators. In 2019 they held the combined wealth of $28 billion!
This tiny group of people have done very well out of the so-called ‘housing boom’, but it’s been at the expense of the millions who outlay a huge proportion of their wages just to put a roof over their heads.
The big banks have also raked in billions thanks to high property prices. They are the “middle-men” who take a cut from people’s mortgage payments and use it to reward big shareholders and executives.
The impression is given that this is just how things are done, but it doesn’t have to be this way. There are alternatives to leaving housing provision to private profiteers and the anarchy of the market.
Socialists start from the premise that housing should be a basic human right rather than just another commodity. There is no reason why the sector has to be dominated by profits.
Instead of leaving it to private developers and speculators, we need a publicly owned and controlled housing authority. Such an authority could build high-quality homes and sell them to ordinary people at the real cost of the materials and labour.
A publicly owned housing authority could also oversee the private rental sector and the provision of public housing. Rent controls could be introduced to stop landlords rorting tenants and a stricter regime could be imposed to make sure landlords provide good quality homes.
Laws could be introduced to make it unprofitable to leave properties vacant. Small landlords who didn’t want to adhere to the new rules could be offered the opportunity to sell their property to this authority so that it could be used as public housing.
A publicly owned housing authority could also oversee the construction of new public housing stock. This could be built with union labour and to the highest possible standards. Thousands of jobs could be created while addressing social need.
Money for all these projects could be found if the big four banks were brought into public hands. If it was under democratic control, the banking sector could decide to invest in socially useful projects. And a publicly owned bank could offer mortgages to low and middle-income earners interest free.
In the past we have had elements of public ownership and control in the housing sector, but it never went far enough. Things like public housing and renters’ rights were won on the back of labour movement struggles. In many cases the campaigns were led by socialists.
The fight for decent, affordable housing is linked to the fight for a different way of running society. A democratic socialist society is the alternative to profit-driven capitalism and it’s the only way to really deal with Australia’s housing crisis.
By Triet Tran