Hotspotting

Top economists are unanimous in believing Australia's housing market is in crisis, according to a new poll.

And I have to say, Wow, we had to go to a group of “top economists” to achieve that startling revelation.

It comes from a survey in which the Economic Society of Australia offered these top economists a choice of 14 measures identified by as likely to restrain prices for buyers and renters – in other prevent property prices and rents from continuing to rise.

Therein lies the first problem: they polled economists rather than real estate experts.

If there’s one thing we’ve learnt in the past four or five years of observing real estate analysis and commentary is that economists, generally and collectively, have a very poor understanding of real estate markets, which is why they are so incredibly bad at predicting outcomes.

But, ignoring that reality, the survey asked 49 people described as “leading economists” to respond to this question:

"Here is a list of measures governments could take to increase housing affordability (to reduce the cost of purchasing or renting relative to wages). Which would you most support? Pick up to three."

Among them, apparently, are former heads of government agencies, a former Reserve Bank board member, and former Treasury, International Monetary Fund and Organisation for Economic Co-operation and Development officials.

Sadly, but rather typically, the poll didn’t include any property experts. Just a group of individuals who have typically occupied ivory towers a long way from the coal face of property markets.

And here’s the next problem with this process:

the tick-box options presented to the leading economists did NOT include the only measure likely to ease the rental shortage and therefore restrain rental increases – providing incentives for people to become landlords.

You have to wonder why not.

So, whoever designed the poll – yes, a group of economists – failed to understand the problems they were exploring.

Of the options the panel of non-experts were given to choose from, two-thirds of them picked "ease planning restrictions" as most important fix. Almost as many picked "provide more public housing".

So, most believe that creating more dwellings will fix everything. Which, again, shows a fundamental lack of understanding of the problems, how they were created and where the solutions lie.

But it gets worse.

About one-third wanted to "tighten negative gearing and capital gains tax concessions".

You have to wonder about the thought process here. How does causing a major deterioration in the financial position of the people who provide the homes tenants occupy cause rents to fall?

And given that investors are less than 20% of the buyers competing in the market, how does this stop prices from rising.

Surely you would have to introduce measures to curtail home buyers, who comprise almost 80% of buyers competing in the market, if you wanted to stop prices from rising.

Back to the survey: about a third of the respondents wanted to "replace stamp duty with land tax applying to family homes".

Okay, so that’s a measure that might slow down home buyers a little.

Also popular were removing barriers to building prefabricated homes (31 per cent), fast-tracking the training of h ome builders (18 per cent) and fast-tracking the immigration of home builders (14 per cent).

Again, all are measures to increase housing supply and this appears to assume that building more dwellings will stop prices and rents from rising.

Ten per cent of those surveyed wanted to include the family home in the age pension assets test, 8 per cent wanted to remove first homeowner grants and concessions, and 6 per cent wanted to apply capital gains tax to family homes.

So, those measures at least at targeted on home buyers and appear to recognise their part in causing prices to rise, but these were the least popular of the tick-box choices.

The most popular were all measures which assume that building more homes and curtailing property investors will fix all problems.

But doesn’t explain how clamping down on the providers of rental homes will cause rents to fall – or stop prices from rising

A question I get asked more than any other is where I see the Australian property market heading in the next 12 months OR what I expect to happen with Australian property prices this year or next year.

And the answer I provide is usually delivered in multiple parts.

Firstly, there is NO Australian property market.

Although economists and journalists often refer to “the Australian property market” and predict what will happen with “Australian property prices”, the reality is that there is no such entity as the Australian property market.

Secondly, what I expect to happen with prices depends on where, because we have so many different markets across the nation.

Thirdly, real estate is local in nature and the market activity and the price movements depend on the local economy which underpins the location’s property market.

Take a look at the price growth results among the eight capital cities for the past year and you will note that some have had boom growth, some moderate growth, some have stagnated and a few have had falling prices. 

All those different scenarios occurred within just the eight capital cities. There were similar variations occurring throughout all the regional markets.

All those places sat within the same national economy, all had the same situation with interest rates and all were operating under the one Federal Government.

Why, then, did we have all those different outcomes? 

And the answer is: Because real estate markets are very LOCAL in nature. The greatest influence on them is the local economy.

So, if you want to understand a particular property market, first you need to understand everything that’s happening there in terms of the various local industry sectors, the infrastructure and other developments that are under way or in planning, and what’s happening with local jobs creation.

Once you can understand whether the location’s economy is weak or strong, growing or stagnant or contracting, then you can begin to determine what might happen with property prices.

For that reason, at Hotspotting we are always keenly interested in a quarterly report published by CommSec, called the State of the States report.

This report uses a series of different metrics to rank the eight state and territory economies.

And I have found, over many years, that there is a correlation between the strength of the state or territory economies and the performance of the capital city property markets.

The past three quarterly editions of the State of The States report have ranked South Australia as the No.1 ranked economy in the nation, a finding that would surprise many people.

But it doesn’t surprise the team at Hotspotting because we are very aware that the economy of Adelaide and South Australia is pumping strongly, helped by its status as the high tech innovation capital of the nation and the leading state for alternative energy developments. It also has a big education sector, a major military economy and a lot more.

Coinciding with the rise and rise of the South Australian economy has been the rise and rise of the Adelaide property market.

In 2023, Adelaide was the No.1 or the No.2 market in Australia for house price growth (depending on whose statistics you believe), in competition with Perth.

PropTrack’s data showing the leading suburbs and towns in Australia for price growth in the four years since Covid arrived, finds that the top 5 suburbs in the nation for price growth performance were ALL affordable suburbs in Adelaide.

In the latest edition of The State of the States, the No.2 ranked economy was (again) Western Australia - and again, there’s a clear correlation between that reality and the performance of Perth as one of the leading boom property markets in the nation.

Melbourne and Victoria now rank No.3 on economic performance and this is one of several reasons why we believe that this market is poised for price growth in the next 12 months and beyond, coupled also with very strong population data and a significant program of big infrastructure projects.

Consistently at the bottom of the CommSec report rankings is the Northern Territory – and it does not surprise us that Darwin has the weakest house price performance of all the capital cities in the past 12 months.

Other economies with lukewarm economic performance are Tasmania and the ACT – and this corresponds with the poor price performance of the Hobart and Canberra housing markets in the past year.

So this report, freely available to anyone who is interested, is one that’s worth following – because, read in conjunction with other data, it can provide clues about where prices are likely to rise in the near future.

Contemplate this scenario: you buy a capital city house for $380,000 and a year later it has a market value of $530,000. Up 40% in 12 months, providing a capital gain of $150,000.

Or this one: you paid just $240,000 for a house in a regional centre and a year later it’s worth $325,000 – up 35% in 12 months. And you’re getting a rental return above 7%.

A third example is paying $380,000 for a house in a capital city and watching it grow to $480,000 in 12 months. Meanwhile, rents have grown 25% in your suburb, underpinned by a vacancy rate of 0.4%, and your rental return has increased from around 6% initially to well above 7% a year later.

These are some of the scenarios to emerge from our analysis of the 50 locations in the special report, The Pulse, published quarterly by Hotspotting in conjunction with depreciation experts Washington Brown.

That 40% capital growth scenario has occurred in the Perth suburb of Hillman, which has benefited from the extraordinary price increases experienced in the Western Australian capital in the past 12 months.

The 35% leap in values happened in the little-known NSW regional town of Moree, where values have been boosted by construction of Australia’s biggest national infrastructure project, the $35 billion Inland Rail Link which spans the three major eastern states.

The third scenario relates to Elizabeth East in the northern suburbs of Adelaide, a precinct heavily targeted by first-home buyers and investors for its affordability, good amenities and proximity to major employment nodes.

These and other outcomes in locations featured in our report in the past year demonstrate one of the fundamental philosophies that underpins our recommendations to investors: 

Contrary to a popular real estate theory, you don’t need to choose between capital growth and high rental yields. If you select your location well, you can benefit from both.

The 50 locations featured in The Pulse report are chosen because they offer above-average rental yields – but we also require our nominated locations to have the credentials for capital growth.

Of the 50 locations in the current edition of the report, 48 have recorded growth in their median prices in the past 12 months – including 30 with capital growth above 10%.

The top 10 have all had price rises well above 20% - in addition to providing superior rental yields.

But the truly outstanding markets are the ones with exceptional growth in both prices AND rents.

Consider these examples.

Firstly, Armadale in WA.

Before Perth’s boom convinced investors that any house in Perth was a good buy, few people wanted to buy in downmarket Armadale. Now it’s flavour of the year for those seeking a cheap house with high growth prospects. The data for the past year is extraordinary, with the median price up 35% and rents up 28%. The median is now $460,000 but you can still get 6% yields.

Then, there’s Carey Park, WA: This affordable suburb in the key regional city of Bunbury has become a sought-after location for investors seeking low entry prices and high rental yields. Those who followed our advice and bought there a year ago would be happy: the median house price has jumped 22% and rents are up 23%. The median price is still under $400,000 and rental yields remain around 7%.

What about Murray Bridge, SA: Regional South Australia seldom features in the national discussion about real estate growth but it has excelled in recent years, led by Murray Bridge, where both the median price and the median rent for houses have risen 20% in the past 12 months. Vacancies are ultra low at 0.4% and, despite the growth of the past few years, the median price remains within reach of most buyers at $430,000.

And then there’s Woodridge, QLD: This is another unfashionable option which has nevertheless out-performed. Typical units in this southern Brisbane suburb now cost above $300,000 following annual median price growth of 24% - and, with rents also rising 16%, investors can find yields between 6% and 7%, with the vacancy rate around 1%.

There are many other examples like these on our list of 50 key suburbs which we have listed for their superior rental yields AND potential for capital growth.

And they’re all affordable places that should fit within the budgets of most investors.

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Episode Overview:

In this insightful episode of the Hotspotting podcast, Tim Graham sits down with Ben Kingsley, the Chair of the Property Investors Council of Australia (PICA), to discuss the vital role that property investors play in shaping the future of Australia's real estate market. Ben provides an in-depth look at the importance of the PIPA Annual Investor Sentiment Survey and how it captures the pulse of the property investment community.

Key Discussion Points:

Importance of the PIPA Survey: Ben highlights why the PIPA Annual Investor Sentiment Survey is a critical tool for understanding the mood, confidence, and key trends in the Australian property market. He explains how the survey data influences media and policymakers and why it’s crucial for all property investors to participate. 

Advocacy through PICA:

Tim and Ben delve into the advocacy work that PICA does on behalf of property investors. Ben shares how PICA ensures that investors' voices are heard in important policy discussions and how membership in PICA can help protect and advance investors' interests in the face of changing regulations. 

Membership Benefits: Ben outlines the many benefits of joining PICA, from staying informed about the latest changes in property law to networking with other like-minded investors. He also discusses how PICA members can access exclusive resources and support to enhance their investment journey.

Current Market Challenges:

The conversation also touches on the current challenges facing property investors, including new rental regulations and tax laws. Ben offers practical advice on how PICA membership can help navigate these complexities and safeguard investments.

Why You Should Listen:

Whether you're a seasoned property investor or just starting out, this episode is packed with valuable insights that will help you better understand the landscape of property investment in Australia. Learn how your participation in the PIPA survey can make a difference, and discover how PICA can support your investment goals.

Don’t miss out on the opportunity to have your say in the PIPA Annual Investor Sentiment Survey and consider joining PICA to ensure your voice is heard in the property investment community.

Visit Hotspotting.com.au for more resources and insights.

Complete the survey here: https://www.surveymonkey.com/survey-taken?sm=PXT61WAC1xL5N1S9IJePE1hAn4c6_2BrMhKsShimHkkmEzip1e9oEIwz8mVtE4BUS48EmEeTvIueOcJ2V9C91IGMteQ6VUOkZjAoyRp6M3rtZL2jIJEdiWCxXHtoDzsPg3MiLuyrYFEEQtWCQHMn_2F1xw_3D_3D

Join Pica here: https://pica.asn.au/membership/why-join/

There are two opposing story lines circulating in news media about Australian real estate ownership.

One story line, repeated regularly by media, is that the Great Australian Dream is dead and that young Australian adults can no longer afford to buy homes.

The other one, revealed whenever the Australian Bureau of Statistics releases official data on real estate finance, tends to suggest that the dream is very much alive – and indeed thriving.

In fact, the latest lending figures show major increases in buying activity by all types of real estate consumers, including first-home buyers.

Media loves negative sensation about housing affordability and very often the truth is optional. 

Some organisations who crave publicity to lift the profile of their businesses regularly feed this weakness in news media by creating bogus reports about Australian housing affordability.

They do this, usually, by applying a set of parameters that are irrelevant and unrealistic.

Here’s a typical example: a so-called research organisation will create a report which examines how long it takes a young couple to save a 20% deposit to buy a house at the median price in Sydney or Melbourne.

Or how much a person needs to earn to achieve a loan for this.

Now, there are multiple reasons why this is a nonsense designed to create a headline rather than inform the public. These reports are full of furphies.

Furphy No.1 – you don’t need a 20% deposit. You can get into real estate ownership with a 10% deposit or even a 5% deposit.

Furphy No.2 – first-home buyers don’t buy at the median price in Sydney or Melbourne or anywhere else. They buy in the lower price ranges. The city median is irrelevant to the circumstances of young buyers and the issue of affordability.

Furphy No.3 – these reports always overlook attached dwellings as an option for buyers seeking affordability. In many capital city suburbs, the median price for units is half the median price for houses. But these bogus reports never speak about this viable, popular and more affordable option.

Why are these so-called research reports full of irrelevant and misleading information? Because the goal is NOT to inform people, or help people, or improve the situation for the community. The goal is always self-serving and dishonest – to create free publicity by generating alarm in the community.

And journalists are happy to recycle this nonsense as factual news.

In Sydney, the median house price is close to $1.5 million (according to CoreLogic) but that is irrelevant to people seeking affordability in our most expensive capital city. 

What is considerably MORE relevant is how much it costs to buy a unit in the Canterbury-Bankstown area of Sydney, where there are plenty of viable options in multiple suburbs in the price range from $400,000 to $600,000.

Or what it costs to buy a house in more affordable parts of Greater Sydney, like the local government areas of Liverpool, Parramatta and Blacktown.

And of course there is the reality that over 20 million Australians live in places other than Sydney and the median house price in our most expensive city is utterly irrelevant to them.

How about some focus on what it costs to buy a house in the affordable northern suburbs of Adelaide, or an apartment in the inner-city Brisbane suburb of Bowen Hills, or in the inner-city Perth suburb of Belmont or a house in outer-ring areas of Greater Melbourne.

And what about regional Australia, which is attracting growing numbers of new residents relocating from the biggest cities in search of a different lifestyle, empowered by technology that allows more and more people to work remotely.

So, let me tell you, the home ownership dream is very much alive right across Australia.

How can I be so sure? Because the official lending data confirms it.

The latest stats from the ABS – which is for the month of June - shows we are currently seeing growing numbers of people buying homes as first-home buyers, other types of owner-occupier buyers and investors.

Lending for the purchase of homes rose 19% in June, compared to a year earlier.

In June lending to owner-occupier buyers was up 13% compared to a year earlier, with an even larger increase in loans to investors. There was also a rise in lending to first-home buyers, though not as large an increase.

It should be fairly self-evident that lending levels would not be rising, including for first-home buyers, if it was true that no one can afford to buy any more.

We have highly active property markets in most parts of Australia and buyers of all kinds are active.

So, next time you see one of those shallow media headlines declaring that the dream is dead and that young Australians are priced out of the market, don’t believe it.

The markets currently attracting our focus at Hotspotting are the ones we call “the second wind markets”.

These are locations which experienced strong capital from 2020 to 2022, have been in the post-boom pause/correction phase for the past 18 months or so, and are now poised for another period of price growth.

There are few better places to find second-wind markets than Regional Victoria, as many of the key centres have exhibited that pattern over the past 3-4 years and are now showing the early signs of revival.

Many of the suburbs of Ballarat are classic examples. The median house price for Sebastopol rose from $330,000 in 2020 to $475,000 by the end of 2022. There has been a price correction in the past 18 months but market activity is rising again and another period of price growth is expected.

Eaglehawk in Ballarat rose from $325,000 in mid-2020 to $520,000 in early 2023, before the price graph evened out over the following 12-18 months.

Bendigo displays similar patterns. The suburb of California Gully had a median house price of $300,000 in 2020, rising to $465,000 late in 2022. The price graph has flatlined since then, before showing the first signs of new growth in mid-2024.

Similarly, Flora Hill lifted its median house price from $255,000 in 2020 to $450,000 in early 2023 – but the price graph has been flat over the past 12 months. Now sales activity is rising again, which is a forward indicator of impending price growth.

Other markets in Regional Victoria have this pattern, which is a common one in real estate cycles with a period of strong growth followed by a period of correction or no growth, before the market embarks on the next growth cycle.

Shepparton, Traralgon, Mildura, Wodonga, Warrnambool and many other Victoria regional centres have this pattern.

They’re all places with solid local economies and credentials for future growth.

Most of them commonly have houses in the $400,000s and $500,000s, with low vacancy rates, so they present attractive features for property investors.

You can be forgiven for being confused about the Melbourne market.

On the one hand, news media is full of stories about investors shunning Australia’s largest city because of draconian taxes and policies by the nation’s worst state government.

There are also frequent articles about the lack of price escalation in Melbourne markets, at a time when many other capital cities are delivering stellar capital growth.

But this is balanced by the analysis from those who believe Melbourne to be a prime opportunity for buyers to get in early in a growth cycle, with the city’s markets poised for revival.

A strong state economy, a big infrastructure program and some compelling population data support the view that Melbourne is overdue for a growth spurt.

The first thing to understand is why Melbourne has underachieved in the past couple of years while others have excelled.

The lingering impacts of the Covid period are considered at least partly responsible. Melbourne was locked down for longer than other Australian cities and was indeed dubbed by media as “the world’s most locked-down city”.

There’s no doubt the attitudes and policies of Dictator Dan (Andrews) deterred many. And subsequent state policies unfriendly to investors – including the reality that Victoria has the highest stamp duty and the highest land tax in the nation – have deterred buyers from investing in Victoria.

On the positive side, Melbourne is the nation’s biggest beneficiary of overseas migration, which made it a national leader on population growth last year. Australia experienced a record number of new additions to the national population in 2023, with 84% of it attributed to overseas migrants.

So Melbourne, despite losing residents to internal migration (people moving to other parts of the nation), grew its population by almost 3% last year. Only Western Australia had higher growth.

Victoria consistently ranks among the nation’s leading economies and ranked third in the July 2024 edition of the State of the States report by CommSec. The July report comments that Melbourne is consistently strong across all the metrics used to rank the states and territories, which include population growth, construction work, housing finance, retail spending and employment performance.

A strong economy underpins the residential real estate market, because it means there is busy economic activity creating jobs, and from that springs demand for homes.

A key factor keeping the Victorian economy vibrant is the big program of infrastructure development across Greater Melbourne. They include multi-billion-dollar developments now under construction like the Suburban Rail Loop, North East Link, Metro Tunnel and West Gate Tunnel – which combined are estimated to cost over $70 billion.

Those projects alone – and there many others impacting the city – are likely to energise the local economy in ways likely to lead to growth in demand for homes.

So there’s a plausible argument that now is an opportune time to be considering investment in Melbourne, rather than doing what many investors do, which is dive into markets when they read there’s a boom on.

Far smarter to buy before the boom starts.

The trend we have termed “The Rise and Rise of Apartments” continues to pick up pace. Across Australia, more and more buyers are opting for attached dwellings for lifestyle, for affordability, for convenience and for safety.

One of the features that draws growing numbers of buyers (and tenants) to apartments is location appeal. Not only do attached dwellings allow people to access property in good locations at cheaper prices than houses, but the average unit is better located than the average house.

A report titled “Measuring Home Price Differences” by Infrastructure Victoria has found that units consistently trump houses on proximity to desirable features. 

“Units are located closer to selected infrastructure types, on average, than houses and townhouses,” the report says.

The report found that units were far more likely to be located close to train stations, tram stops, major activity centres and arterial roads than houses. “About 60% of units are within 1.6km of a tram stop, while this distance only includes about 20% of houses,” the report says.

This is one of multiple factors driving higher demand for units – challenging the dominant paradigm of real estate. That paradigm, still widely accepted in the real estate industry, states that houses always outperform units and townhouses on capital growth.

But that is undoubtedly changing.

We are seeing growing evidence that more and more buyers of various sorts are opting for attached dwellings. Buyer demand in locations where units dominate the dwelling mix - or are a significant part of the dwelling mix - has been rising notably for the past 12-18 months.

Suburbs where units prominent are now among the most powerful markets in Australia – which makes our Top 10 Apartment Hotspots report essential reading for investors seeking opportunities in 2024 and beyond.

Those seeking out well-located and affordable apartments include older people downsizing from a large family home.

They also include …

• young people seeking an affordable first step on the property ladder;

• lifestyle buyers seeking low-maintenance, lock-up-and-leave options in good locations;

• overseas migrants from countries where unit-style living is the norm;

• investors seeking affordability and higher rental yields in good locations; and

• buyers who seek the security and safety of an apartment above ground level.

In inner-city precincts in our biggest cities, houses can typically cost over $2 million, but apartments can be bought in the $600,000s and $700,000s in the same suburbs in many cases.

The rental yields are also significantly higher, a key consideration in times of higher interest rates – although it needs to be remembered that apartments do entail additional costs like body corporate fees.

But the most noteworthy data relates to capital growth. In a growing number of locations throughout Australia, apartments have recorded larger increases in median prices than houses, both in the past year and over the longer term.

At Surfers Paradise on the Gold Coast, apartments are considerably cheaper than houses, sell faster, have higher rental yields, have recorded bigger price growth in the past year – and the long-term capital growth rate also is superior.

There are many, many more examples like this across Australia.

New data from CoreLogic shows that apartment values are rising faster than those of houses in about six out of 10 suburbs.

This is also reflected in the general results for many of our major cities.

In the past three months, the median price for units in Brisbane rose 5.8 per cent, while houses increased 3.4 per cent.

Adelaide units outperformed houses by the same margin after increasing by 7.1 per cent during the same period.

Unit prices are also rising at a faster rate than houses across Sydney, Melbourne, Perth and Hobart, although they have fallen behind in Darwin and Canberra.

Across the combined capital cities, unit values rose faster than house values in 506 suburbs out of a total of 855 suburbs, with some unit markets gaining more than seven times more than houses.

The official data shows that the cornerstone of the financial wellbeing of most Australian households is the family home.

Over two-thirds of the household wealth in this country is residential property and, for most of them, this means their home - as most people don’t own investment properties.

The family home is the foundation of the financial security of most people and its value underpins people’s lives and their sense of security - and, in particular, their retirement.

The good news is that household wealth nationally grew 10% in the past year and 68% of that wealth resides in the residence.

The bad news is that if the Greens have their way, all of that will be decimated.

Their policy for real estate is to force the value of your home to fall - a lot.

And if you’re performing one of society’s most important functions, providing a home for others to live in as tenants, the Greens want you to be rubbed out. Not just curtailed, but eliminated.

Now, we’ve known for some time that the Greens are anti real estate and, in particular, hostile towards anyone who owns an investment property, even though these are the people who provide 91% of the homes that tenants occupy in Australia - and they’re in extreme short supply.

If the Greens have their way, ownership of investment properties will cease to exist in Australia - although, at the same time, they have no policy about who will provide the 3.2 million rental homes that investors currently provide.

But it gets worse, because the Greens plan is to force down the value of everyone’s home.

They apparently believe that this is how you deal with the issue of housing affordability.

One thing that is abundantly clear is, rather tragically, that no one in the Greens has any understanding of Australian property markets. They have no comprehension of how the cost of housing became so high, no clue as to how rental properties became so scarce, no understanding of why prices rise and no sensitivity to how important the value of the family home is in the life of the nation.

Because everything they propose to do, if they ever gained power, would make all of these issues infinitely worse and would decimate the structure of one of society’s most fundamental needs, shelter.

Observing the Greens espouse economic and real estate policy is like watching primary school kids talk about stuff they think is cool. Imagine if you could have anything you wanted and it doesn’t matter how much it costs and whether it’s really possible or not.

The Greens apparently don’t consider it necessary to cost their policies or to consider the consequences of their pixie-eyed plans.

Just one example: in the election campaign of local government in Queensland earlier this year, a key policy plank was fast rail connecting Brisbane, the Gold Coast, Toowoomba and the Sunshine Coast. There were no costings and no funding proposals for a plan, if you can call it that, which would cost many tens of billions of dollars. 

They also said they would build hundreds of affordable homes on the site for the Eagle Farm race course In Brisbane and it would all cost no more than $40 million, glossing nonchalantly over the fact that the race course land has an owner not keen to cease operations, and that land alone is worth hundreds of millions of dollars, never mind the cost of construction of hundreds of homes.

But returning to their policy of smashing the value of family homes.

Imagine if you’re a young couple who saved a 10% deposit and bought a first home for $600,000 and you have a mortgage of around $550,000. If the Greens had their way, your new home would be worth less than the size of your mortgage. You would be in a position of negative equity and you would be in an extremely vulnerable position. Your bank would be highly concerned and everything you have worked, saved and sacrificed for would be at risk.

Now multiply that by millions of other households and you have a financial, economic and personal disaster of galactic proportions.

And that’s apparently what the Greens want for Australia.

Two-thirds of Australian families own their homes and most would be alarmed at the scenario that the Greens think is fair, reasonable and desirable.

But even more fanciful than the Greens’ objective of destroying the value of our homes is the means by which they say they’ll achieve it.

Their stated plan is to scrap negative gearing and increase capital gains tax.

This apparently, miraculously, will cause the collapse of property values in Australia.

The Greens believe that the owners of investment properties in Australia are a criminal class and the source of all evil in the housing market.

Smashing investors will fix everything, apparently, including housing affordability, the rental shortage and the ongoing increase in rents.

No one cares what happens to investors, in the Greens’ mindset, because they’re all rich bastards who own 15 or 20 properties and earn millions of dollars a year - right?

Well, no. Here’s the reality. The typical investor is a young Australian who earns less than $100,000 a year and owns just one property or is buying their first.

They’re not wealthy, they’re not inherently evil and because they cannot afford to spend big, they’re buying at the lower end of the market and are limited in how much they can spend on a property.

They comprise perhaps 30% of buyers in the market. The other 70% are home buyers and the largest and wealthiest cohort in the market are home buyers other than first-home buyers.

They own their existing home, they have equity, they’re older with higher incomes, they can borrow more than first-home buyers and typical investors, and they’re aspirational. They’re the ones most likely to be pushing up dwelling values.

Investors are limited in their borrowing capacity and seriously disadvantaged in the market, because they have to pay higher interest rates, higher stamp duty, higher insurance, higher council rates - plus they have to pay taxes that home buyers don’t have to pay, like land tax and capital gains tax.

The Greens say they are privileged and advantaged – but clearly the opposite is true.

Australia scrapped negative gearing in the 1980s and it didn’t stop prices from rising. But it did create a rental shortage, so a couple of years later the then Labor Government reinstated negative gearing. 

New Zealand scrapped negative gearing in 2021 and dwelling prices kept rising. It was only later, when interest rates went extremely high, much higher than Australia, that NZ prices stopped rising.

But it did make rental properties scarce so New Zealand is now in the process of bringing back negative gearing.

But do the Greens care about any of that? The answer is that the Greens don’t know any of that because they don’t bother themselves with annoying things like knowledge or research.

They’re the spoiled brats of Australian politics and, if they have their way, you’re going to lose a big chunk of your wealth.

Be afraid, be very afraid.