Rental Reality

The Australian Dream is outdated. The changeover from home-ownership to home-renting aspira-
tions need to happen now. It is time for a revolution.

By Nikesh Joseph

Sophie Watkins, a 34-year old, mother of two, currently re- and then I work overnight and I finish there at 8:30 in the
sides in an apartment complex in Hobart. morning, then I go straight to my next job..

She has two mortgages, and together with her significant oth- "So for three days I don't come home to my family and I just
er, dreams of eventually being able to afford a family home.
The financial strains from the Tasmanian housing market -
relatively low in comparison to the rest of Australia forces
Mrs Watkins to work a 43-hour week job for the Tasmanian
government and three nights a week at a shelter for young
women.
For us to be able to go further and achieve our goals I need
to work more. stated Mrs Watkins.
A normal day I would get up and I go to my full-time job, so
I start there at 7:30 in the morning and I finish there at 5
o'clock..
"And then I go to my next job which starts at 5:30 at night,
work back-to-back shifts. The sad thing is I am doing this for
my kids and partner and I dont get to see them as often I
would like" Mrs Watkins expressed with a gleam of disap-
pointment.
Mrs Watkins voiced that while she would love to spend more
time with her children, she felt forced into her situation be-
cause of the high cost of funding her own accommodation.
"Lots of my friends and people I work with at my full-time
job, they have second jobs and work to supplement their
dreams of owning a house," she said.
The circumstances which dictates Mrs Watkins life similarly
controls the lifestyle of many other everyday Australians.

1
 The Passing Of The Baton
The original values of the Australian Dream, which were
inherited into the vision of our ancestors, has realistically
drifted away from the traditional ownership of a red brick
house with a large backyard in the suburbs to renting an
apartment complex in a congested metropolitan region.

A report conducted by Mortgage Choice in conjunction

with research firm Core Data confirmed the end of the
Australian Dream. The report demonstrated 87% of ordi-
nary Australians - like you and me - believe it is too diffi-
cult to achieve the traditional home-ownership of a free- Australians, but as well advance the quality and prosperity
standing house and the Australian Dream is in need of a of living in the long run. The financial benefits are obvious
reinvention. as Australians would become more financially stable when
The reinvention consists of the primitive values of the retired, as a greater amount of money would go towards
Australian Dream shifting from home-ownership to home- superannuation. There would be less financial stress
renting aspirations. through the elimination of debts and mortgages and lower
maintenance and insurance costs and significantly cheaper
The changeover is a revolution which
accommodation in comparison to purchas-
goes perfectly hand-in-hand with the "The worst part of it [trying to
ing a house and acquiring a mortgage.
present and future state of the Australian buy a house] is you're doing this
housing market. The fulfilment of the for your kids and a better life- Renting a house would also improve a nu-
primary values of the Australian Dream style for your family and merous amount of social ramifications sur-
is barely noted today, and will just about friends, and you don't get to see rounding the involvement in family,
never be fulfilled in the generations to them as often as you'd like. It's friends, and social recreation. Through
come. pretty hard. renting, individuals would be enriching in a
greater amount of happiness and involve-
Whether we like it or not, accept it or not, support it or
ment from the unmissable journey of their children grow-
not, the Australian Dream has reformed.
ing up, spending more time with their significant other,
The new Australian Dream needs to be acknowledged, and being able to see extended relatives and friends.
cemented, and manifested into the mentality of the future
Valeria Rodrigo, a real estate agent by day and waiter by
generations of Aussies.
night, says, "The worst part of it [trying to buy a house] is
Whats The Fuss With Home-Renting? you're doing this for your kids and a better lifestyle for
your family and friends, and you don't get to see them as
The perception of renting a house is often frowned upon
often as you'd like. It's pretty hard. It's a pretty tough life
in todays society. To change this ignorant attitude, we
at the moment. The cost of living is just getting harder and
must embody an optimistic outlook which reveals the true
impossible for our generation, to buy a house.
outcomes of renting.
When the aspirations of home-renting solidifies as the
The many hearsay stories and conceptions of evil land-
new Australian Dream, the living standards of everyday
lords will become distinguished once we concede the new
Australians will improve.
dream. Home-renting will become the new norm of socie-
ty; tenants will have further security and stableness in The benefits of renting would completely overwhelm the
their length of stay, healthier relationships with their land- lifestyles of Mrs Watkins and Mr Rodrigo, both of them
lords, and communally accepted as a reflection of would be able to see their children and partner more, be-
come financially stable, and their health would not be hin-
impressive social status.
dered through limited sleep and rest.
Renting would not only improve the temporary lifestyle of

2
 Rise Of Housing Unaffordability
An analysis of the history of Australias housing
market reveals the outrageous downfall of the orig-
inal vision. Housing unaffordability in Australia has
gradually been increasing since the early 1980s. A
growing amount of young and poor Australians are
finding it extremely difficult to put a foot in the
harsh environment of the housing market; conse-
quently, going to extreme lengths such as non-stop
working and limited time seeing family to provide
funds. The decreasing home-ownership rates is
illustrated in Figure 1.

The issue of not entering the housing market is a

matter which many of our children, nieces, and nephews Figure 1Home-Ownership Rates
will face, and will only result in pure disappointment be-
cause of an unrealistic dream and ambition we have provid- closer to 7%. The low interest rates have resulted in many
ed them. Australians acquiring large loans and mortgages. SQM Re-
The median house price in Sydney in 1980 was $64,800; search managing director Louis Christopher affirmed the
whereas today it is $999,600. An increase of over $900,000! effect of low interest rates in the quote, By offering cheap
To make matters worse, in comparison with the average and easy credit the banks paved the way for the housing
rate of inflation Australia has experi- boom. There is no question prices would
Australian homeowners not be where they are today without that
enced, the price of a house in Sydney
today should only be $268,176. The ex-
are the most exposed in the access to credit.
isting magnitude of these unprecedent- world to any increase in The current low interest rates have not only
ed rises in prices has been manifested interest rates. influenced the housing market but corre-
globally, represented in a report re- spondingly provided a major unknown
leased in 2016 by Think Tank, which revealed Australia is threat to all of us. An increase in interest rates would result
the third most unaffordable housing market in the world, in an inability to service current loans and mortgages and
and Sydney the second most unaffordable housing market would add to the difficulty for young and poor Australians
in a major city. to enter the housing market as the guidelines for loans
The declining home-ownership rates and impractical prices would intensify.
of the Australian housing market today only validates the The increase in rates would provide further stress to parents
Australian Dream needs to be downplayed. such as Mrs Watkins and Mr Rodrigo, it would result in
them being pushed to work even more than they already do.
The Murderer Of The Australian Dream
You may be reassuring yourself that an increase in interest
The slayer of the Australian Dream stems from the increas-
rates is very unlikely; however, unfortunately, it is very
ing unaffordability in Australias housing market as a result
probable. The low interest rates are expected to increase
of various economic factors. A major reason behind the in-
according to former RBA board member, John Edwards,
creasing housing prices is the demand for housing out-
"My guess is that it is already thinking about a program of
weighing the current supply. The increase in demand can
rate increases that will continue for several years. It seems
be attributed to population growth and increased economic
to me that something like eight quarter percentage point
productivity, as the supply of housing takes time to respond
tightenings over 2018 and 2019 are distinctly possible, if the
to the demand.
RBA's economic forecasts prove correct". In addition, a re-
However, according to the University of Melbourne, the port conducted by the Bank for International Settlements
much needed supply for housing cannot be supported be- (BIS), puts forward the notion that, Australian homeown-
cause over a million new homes will have to be built in capi- ers are the most exposed in the world to any increase in
tal cities. This is not possible because of urban containment interest rates. This exposure is because of the large mort-
policies and a major upsurge in the need for infrastructure gages which Australians have, which are reliant on the low
which cannot be supported. interest rates which have punctuated the last few years and
encouraged borrowing. However, the low rates are unsus-
Another influence has been the structural reduction in in-
tainable as foreign investment is not stimulated, the value
terest rates. Mortgage interest rates in Australia in the 1980s
of the Australian dollar depreciates, and makes retirement
averaged around 14%, but since 2000 the average has been
and other saving less effective.

3
 The role of domestic and foreign investors has additional-
ly and significantly impacted the housing market. Ac-
cording to the latest census the amount of vacant houses
is steadily increasing. The statistics from the census re-
vealed 11.2% of houses across Australia are unoccupied.
The unoccupied houses of Australia are normally used as
a holiday home, also known as a ghost home. The empty
houses of Australia add to the demand and unsatisfactory
supply of housing. Additionally, the amount of foreign
investors purchasing homes in Australia have inflated
housing prices and resulted in less housing supply. Cur-
rently, in Sydney, foreign investors purchase 11% of real
estate properties.
Overall, these numerous economic factors contribute to
the character who has murdered the initial Australian
Dream and murdered family values, hopes, and dreams of
many everyday Australians.
Can The Murderer Be Stopped By The Police?
The politicians of Australia in this matter are the police.
The long arm of the law has provided some extraordinary
solutions to keep intact the Australian Dream, as seen in
Figure 2.
The tax system in Australia is funny and, as the second
highest users of Accountants in the world; utterly dys-
functional. In the same era that a generation cannot fund
their own accommodation, the full cost and gravity of the
Federal Court was recently deployed to conclude that a
mini ciabatta is not a biscuit; thus, not GST-free. Howev-
er, with all of the intricacies of the Australian taxation
system, the one change many are suggesting to reduce
the strain on housing prices is the change to negative
gearing.
The original intention of negative gearing was to encour-
age the building of new properties which would in turn
increase housing supply.
Yet, in 1985, Australian government, Bob Hawke made
legislative reforms which rather encouraged investment,
these reforms resulted in investment property expenses
being allowed to offset personal income; thus, reducing
personal income tax.

These pathetic solutions from some of the most im-

portant politicians in the country demonstrates that the
Australian Dream has to be modulated for the genera-
tions to come as the politicians do not know what to do.

Nevertheless, you may have read about various actual

answers to the housing crisis; unfortunately, these solu-
tions will not work.

The major policy which has been speculated a lot in par-

liament is the abolishment of negative gearing.
Figure 2. The Great Solutions of our Politicians!

4
The original intention of negative gearing has, lets say, more The new dream, revolving around renting aspirations, needs
than slightly drifted away. According to the Grattan Insti- to be implemented into the next generation of Aussies.
tute, the elimination of the policy would have the following
This notion must be accepted nationwide, otherwise many of
effect, The effect on property prices would be roughly 2 per
our children will find it too problematic and financially de-
cent lower than otherwise. The quote demonstrates how
manding to confine to societys idea of home-ownership and
even with the abolishment of negative gearing, housing pric-
at the same time have an enjoyable lifestyle.
es would only marginally fall; not enough to save the Aus-
tralian Dream. Unfortunately, owning your own home in this day of age is
against the odds. The stories of Mrs Watkins and Mr Rodrigo
However, this is a policy which will find hard to pass in par-
express this.
liament because roughly one in two politicians have invest-
ment properties maybe the reinvention of the Australian Individuals need to settle for renting.
Dream is to become a politician? When the idea of renting can be approached with an open
Overall, if the politicians of Australia have not provided a mind, the people of Australia will be able to see that its not
prominent solution over the last twenty years to combat the all that bad, and can in fact positively impact them.
increasing unaffordability in housing and with the disastrous
The police cannot stop the murderer of dreams and life;
state of the market today, it is safe to say a solution will cer-
therefore, we must come to terms with the new Australian
tainly not be apparent in the next few decades.
Dream before we have a genocide.
Australian Dream 2.0
It is safe to say Australian Dream 1.0 is officially outdated.