Housing affordability: Another problem Treasurer Scott Morrison doesn’t understand

Michael Pascoe writes in The Age “Housing is Scott Morrison’s favourite sort of problem – someone else’s – with a fix years away”

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ScoMo:  So many problems and so few answers

What ScoMo told the Urban Development Institute of Australia was more of the same – high housing costs are a supply problem and the states really should do something about it.

However the Productivity Commission says: “Interactions between negative gearing, ‘capital works’ deductions, post-1999 capital gains provisions and marginal income tax rates have lent impetus to investment demand during the housing boom.”

Most first-time buyers who find themselves priced on the market have a better understanding of why this is the case than the Treasurer. Many of them have been talk and where they have lost the bidding against a cashed up investor.

There is another problem is well. Wages growth has installed, while property prices are booming. As housing affordability is a relationship between wages and prices, is not surprising that houses are becoming less affordable.

This is an extract from my blog Tony Abbott gets it wrong on negative gearing.

“This causal loop diagram shows how the dynamics work.  Click here to understand how to read a causal loop diagram.

 The causal dynamics of negative gearing
The causal dynamics of negative gearing”

See also Some advice to Malcolm Turnbull on negative gearing.

Until Morrison begins to demonstrate minimal understanding of the problem and the government’s role in creating and maintaining it, there is little chance that housing affordability will improve.

And in a sign that there is no chance of that happening

Coalition’s housing affordability inquiry scrapped amid growing market fears

The inquiry was initiated by Morrison’s predecessor, Joe Hockey, and took evidence from the Treasury, the Reserve Bank, ANZ Bank, the Law Society and housing economists.

The inquiry painted a picture of a nation turning from a “commonwealth”, with huge home ownership, into a “kingdom” made up of landlords and serfs. One of the ideas considered by the committee was a winding back of negative gearing

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