As Good Oil readers well know, Boomer-baiting is one of my favourite pastimes.
So, I’m going to surprise you all by saying something positive about them.
Dwelling prices have almost doubled over the same timeframe as wages have risen by a third, putting pressure on workers trying to save for a home deposit […]
The widening gap has left the average household struggling to afford the average house unless they have help from family or can move into high-paying jobs.
Which is where the Boomers come in for some unusual (for me) praise.
Because housing prices have remained high, even as interest rates have soared.
“That’s been the big mystery,” said AMP chief economist Shane Oliver. “I would have thought [high house prices] would have acted as a constraint, along with the high interest rates, but somehow the market just seems to be able to squeeze out more gains” […]
He suggested one source of support was the savings buffers that workers built up during lockdowns when they were unable to spend normally.
Home buyers have also been relying on the bank of mum and dad, he said. Parents who have gained wealth through the housing market are able to either go guarantor or make loans or cash gifts to their home-buying offspring.
This is the model, after all, that helped so many immigrant communities, from Italian market-gardeners in the ’50s and ’60s to Chinese and Vietnamese shop owners in the ’80s. Extended families would pool resources and build up their members’ capital and assets.
Necessary to such an arrangement, of course, is a large degree of trust.
Mortgage broker Aaron Christie-David is fielding demand from buyers with either help from parents or a government first home buyer scheme.
Boomers who brought in the depressed market of the ’80s suddenly found themselves sitting on an asset that had soared in value.
“As an asset class property has well and truly proven itself and Australians have a love affair with property.
“The power of compounding, that’s effectively the story. Property compounds, incomes don’t.”
To their credit, while many of their generational fellows brag about “spending the kids’ inheritance”, some of the Boomers are at least sharing the compounded wealth around.
But he said the bank of mum and dad was the ultimate leg up for younger Australians who couldn’t save enough to buy a house.
“The only way to get in is one, parents or family, two is, they’ve got access to some type of first home buyer scheme,” he said.
Curiously, though, both the Age and the economists it quotes avoid addressing the single biggest issue in soaring house prices.
[Oliver] said the fundamental issue was the shortage of supply, where the nation needed 250,000 new dwellings a year to accommodate population growth but was only building about 170,000 […]
[ANZ economist Madeline Dunk] noted the mismatch between supply and demand of homes.
Why is population growth surging ahead of housing supply?
Two words: mass immigration.
That’s the elephant in the room that economists, mainstream media and establishment politicians won’t address. Australia, like much of the West, is being foisted with the highest levels of immigration in human history. Aside from the massive hits to the host cultures, all those new people need somewhere to live.
So the solution is as obvious as it is untenable to the elite class: slash immigration.
