IN announcing the Coalition's plan to allow first home buyers to put up to $50,000, or 40 per cent, of their superannuation toward a deposit, Prime Minister Scott Morrison said in one interview yesterday that the cost of housing was a simple equation of supply and demand.
While housing supply is certainly a factor, it is far from the only one.
If it was, house prices should have fallen, and substantially, during two years of COVID, when the immigration that drives our population growth was halted, but housing construction continued, albeit at a lower rate than usual.
This didn't happen. Indeed, house prices, especially in regional areas, went on to record some of their biggest annual increases in some years.
If there is one major difference between now and earlier times, it's the huge increase in credit availability, the result of a steady shift away from old-style economic policies and their subsequent "credit squeezes".
What was once derided as "easy money" is now seen as something that makes our lives easier. It has also helped inflate the prices of all asset classes, not only housing.
This, in turn, has created a generation of economic "winners" with their life savings - literally in many cases - invested in rising house prices.
These voters have no wish to see prices fall, and the politicians know this.
The opposition's Regional First Home Buyer Support Scheme has been targeted by the Coalition with a "Reds under the bed" style scare campaign, warning against inviting "Labor into your home".
Capped at 10,000 homes, away from the capital cities, its effect is likely to be minimal.
Similarly, the Coalition's $50,000/40 per cent plan has enough fine print - including an existing 5 per cent deposit as part of the eligibility criteria - to mean that it, too, is more of a tweak than a major change.
The PM's insistence that the amount used for a deposit, plus any capital gain, will go back into super after any future sale, sounds like a recipe for future dispute.
But it needs this clawback to avoid an unhealthy drain on long-term super savings.
Both sides of politics have presided, since the Hawke/Keating governments, over an era of house price rises far outstripping any wages growth.
They know that housing is the biggest cost in most people's lives, and that ownership provides a physical security extending well beyond the financial.
But they also both believe in the "market forces" that have put prices where they are today.
ISSUE: 39,872
