New figures show that in the last year housing prices have shot up by 30% in some Australian cities. While ordinary people are struggling to buy a house or pay the rent, developers and landlords are laughing all the way to the bank.
The median house price in Melbourne is currently $524,200. An average full-time worker would take eight years to earn this amount of money. Between the 1950s and the 1980s, an average house in a capital city cost about three years of average full time wages.
Nationwide, rents rose 1.5% in the first three months of the year, on top of a 2% rise over all in 2009. In Sydney, the median rent price for an average house is $460 per week, and in Darwin the cost rose 10% to take the median rent to a whopping $550 per week!
Official interest rates have risen from 3% in October 2009 to 4.25% in April 2010 and are predicted to continue to rise this year. These rises have pushed up, and will continue to push up, the cost of rents and mortgages in 2010.
Changes to the laws regarding foreign investment in property since 2008 meant that profiteers and big investors from overseas have also been able to enter the market. This has only exacerbated the situation. In recent weeks the Rudd Government has backtracked on these changes. Unfortunately these measures will have very little impact because property speculation from overseas is nothing compared to that which occurs locally.
A lack of housing ‘supply’ has been blamed for rises in the price of rent and new houses. It is true that the population is growing and that as a result more houses are needed. It’s predicted that there will be a shortfall of more than 2500 new houses every year for the next three years.
The biggest reason for this is that six major land developers own most of the land released by state governments in ‘growth’ corridors. In 2007 these six developers acquired 38,000 more blocks of land than they sold, boosting their holdings by 20% and building a near $70 billion ‘land bank’.
These developers could be employing thousands of workers to build homes on these blocks and drive down the cost of housing. Instead they are ‘drip-feeding’ the market in order to maximise their profits, at the expense of ordinary people.
Developers are also doing their best to minimise costs and maximise profits by building new estates and suburbs devoid of social infrastructure like schools, public transport and other facilities. One new resident in the Melbourne growth area of Craigieburn commented that the developers built the streets very narrowly in order to maximise land sales and boost profit.
In order to tackle the housing crisis a socialist government would take the six big developers into public ownership. Under public ownership and control, affordable housing could be built according to people’s needs.
A rational plan could be worked out and implemented on a democratic basis by prospective residents and different levels of government. While the priority would be affordability, the plan would also take into account environmental concerns and make sure there is adequate social infrastructure.
Only by ending the rule of profit in the housing sector will we be able to ensure access to affordable and quality housing for all.
By SP reporters