Federal Victorian MP Michael Sukkar who is in charge of tackling housing affordability issues has said that the ‘first step’ to buying a house is to simply get a ‘highly paid job’.
The assistant minister to the treasurer and former taxation lawyer gave advice to young Australians on Sky News that getting a high paying job is the first step into entering the housing market. He uses his own experience as an example; he left university because the economy was ‘so good’ and had a great start and was able to make a good career.
As an MP he receives a base salary of $199,040 per annum and an additional 25 per cent as an assistant minister, which excludes travel allowances. However the average salary wage is $78,832 per annum; less than half of his base salary. He also calls for a $48.7 billion corporate tax cut because it will benefit everyone and enable young Australians to ‘forge a career’. He also owns two properties, one for investment purposes and the other for residency.
The statement is a reminiscent of former Treasure Joe Hockey’s advice back in 2015, that to buy a property they need to ‘get a good job that pays good money’. If they had security in relation to the job, ‘then [they] can go to the bank and [borrow] money … that’s readily affordable’. Hockey also said that even though Sydney is an expensive place to live houses were still affordable and ‘if housing were affordable… no one would be buy it’. However in 2014, housing prices in 2014 surged by around 12 per cent. He also stated that the housing affordability issue is simply a supply and demand issue, and that increasing the supply of houses was the key.
In one way, supply would increase if people invested in new housing and could counter the increasing demand, but investors are interested in existing property and have no incentive to invest in new housing.
If it was as simple as Sukkar and Hockey says, many people would have done it. But unlike the middle class from twenty or thirty years, who could buy houses in their mid twenties with an average income, the property price to income ratio has sky rocketed since then.
In 2016, Sydney had a median house price of $775K (and average house price of $1 million within 20km of the CBD), and 8.1 property price to income ratio. In Melbourne, the median house price in $555K, where the house price had grew 13.7 per cent since the year before, and by 83.5 per cent since 2009.
The Government is neither willing to restrict negative gearing or capital gains concessions, which they believe would heavily affect the value of the house prices.
If this carries on young Australians will be completely locked out of the housing market, and cause a widening gap between people who do and do not own properties, and so the only way to gain a property may as well be through inheritance.