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Hot chips. I just can’t say no. Why have one when I could have two, three or more? If I had my way, I’d eat them for breakfast, lunch and dinner and still come back for more.
The trouble is, they would eventually kill me.
Property is our national, collective bag of chips. For a privileged group, property has become an addiction that’s getting worse by the day. Why settle for one house when you can have two, three or more? On top of the family home, why not get an apartment to rent out, and another for summer vacation? And why settle for something small when you can have something bigger, if not to start with, then when you are ready for that next extension?
I call them MMOOYBYs – those who want to Make Money Out of Your Back Yards.
During the pandemic, the nation experienced a building boom on a scale not seen before. We not only broke records for new dwelling construction, we smashed it for renovations, too. Despite all that new supply, prices and rents went through the roof when Economics 101 would expect the opposite to occur, especially as overseas migration fell through the floor.
We have been building vastly more dwellings than are needed to match population growth for decades, yet real prices and rents keep growing, affordability keeps falling, and ever-increasing government subsidies can’t keep up. We currently have 1 million more houses than households.
Short-term holiday rentals are booming on the Mornington Peninsula.Credit: iStock
And all this because of the MMOOYBYs, who just don’t know how to stop.
The solution is not less regulation, as some insist. Those with property will just keep buying more and more of it, kicking house prices and now rents to new highs, supported by generous tax breaks, a banking oligopoly that’s always keen to lend and planning legislation that encourages those hooked to build higher and bigger.
It doesn’t matter that holiday homes sit vacant for much of the year. It doesn’t matter that new holiday homes mean building on our precious coast in otherwise rare and distinctive landscapes, destroying what should have been left for future generations – not just of people, but also native animals.
Nor does it matter that those holiday homes might have come at the cost of long-term rentals. And why should it, when there is easy money to be had through that largely unregulated, untaxed and rapidly growing channel of short-term rentals?
That property addiction works well for those with multiple properties — Baby Boomers and those on high incomes prominently among them. They get to negatively gear their rental properties with a tax break that rewards them for borrowing up so big that they make a sizeable loss, even if that new acquisition isn’t so nice to live in. They also get rewarded a second time by having to pay only half the rate of capital gains tax that productive businesses are required to foot.
It’s a different story for those without property – primarily the young and those on average and lower incomes. They get rent assistance, and that’s about it. But that doesn’t guarantee affordable, decent or secure housing, and certainly not a permanent home. They get tenancy legislation that is remarkable mainly for being landlord-friendly by international standards.
That’s why I am a fan of Victoria’s recent budget. In proposing to whack up land taxes on second and more homes, the Victorian government might have unintentionally started a national debate that is sorely needed. The time is right for all states to lift land taxes on non-first homes. Let’s put our best minds to what sort of tax and regulatory arrangements might best wean those property addicts off their costly habit.
The time is ripe to put a cap on negative gearing, which benefits the banks more than we care to imagine, and also to put some teeth back into capital gains taxation on investment properties. It’s time to re-think rent assistance, which in tight rental markets ends up in the pockets of landlords, instead of tenants. And yes, it’s time we started to put a brake on those holiday homes.
The time is right for states to lift land taxes on non-first homes, as the Andrews government has done in its most recent budget.
Let’s use that cash to pay for public and community-delivered homes for those who don’t have one, who in turn should be able to buy them when the time is right. That cash alone won’t do the trick, of course, but it will be a jolly good start.
And it might just take the heat out of a housing market that’s chock-full of policy cholesterol.
Gobbling down too many chips is not good for me. Encouraging MMOOYBYs to gobble up a lot of property most certainly isn’t good for the country.
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