Would you be willing to expound on this? A friend lives in Sydney and they say the rents and house prices are very high. Is this a matter of excessive speculation, a lack of supply and no will to build, or a combination of factors?
Australians treat property as pension funds. Pretty much every middle class person will have an investment property or holiday house. Airbnbs are popular, less requirements (no tenant rights)/more flexibility from a land lords point of view while also significantly more rent. This removes stock from local workers in favour of tourists.
There’s some tax rules than incentivises investing in property, negative gearing, capital gains.
With Australians holding there wealth in property the government and their core voters don’t want to see property prices reduce,
Australia also has high immigration but not building despite population growth.
Due to it's climate, national parks and beaches, Sydney is one of the most desirable cities on the planet. As a result this has lead to sustained and very high (3% year on year) internal (rural/regional to city) and external migration.
In response to this migration, local governments close to the city center have done everything in their power for the last half century to oppose high density construction in any form, and to ensure that construction that does occur is not paired with adequate parks, walking/cycling routes, schools, transit, or external parking garages. Eastern suburb train stations in the 70's were protested and cancelled mid construction, and several new rail lines in the 80's and 90's have been cancelled due to thinly veiled race politics.
This has resulted in suburban sprawl and some of the worlds worst road congestion and gridlock that extends all the way to Sydney's periphery, and for 12+ hours per day during weekdays.
I’ll put it this way. 2 bedroom houses in inner city Brisbane (10km or so from the CBD) are $800,000 AUD or more. Further out Northside isn’t much better. A 2 bedroom cottage sold for $1.2 million in Ashgrove last weekend.
Property is the core investment most Australians make. So there’s zero political success in anything that would jeopardise house prices. See for example, the calls to sack the head of the RBA for raising rates “too quickly” (not quickly enough, and late).
There’s construction, of course, but it’s all either terribly built shoebox apartments that are still horribly expensive, in cities without the infrastructure to really make them work well, or luxury homes for those who had the good fortune to be born 20, 30, 40 years earlier than those trying to get a home now.
Add on top the fact we have frankly pretty bad renters rights, inflation plus rising rates and near zero vacancies plus profiteering have driven rents through the roof.
Negative gearing and other tax benefits distort the market further.
And because home owners are such a large and powerful proportion of the voting populace (which is the entire country as we have mandatory voting), and it’s an ageing population too so the young non-homeowners don’t outnumber them fully as a bloc, and you have political inaction as a near certainty.
It’s a recipe that’s been causing damage my entire life, but it’s not going to be solved anytime soon.
