Back when I was young and stupid enough to be a socialist, I thought Ronald Reagan’s famous saying that “The nine most terrifying words in the English language are: I’m from the government and I’m here to help” was the stupidest thing I’d ever heard. Older and allegedly wiser now, I see the profound sagacity of his words.
Nowhere more acutely for young Australians more especially than in the successive governments’ attempts to ‘help’ the housing market and few with more brutally hamfisted idiocy than the Albanese government.
A brutal property downturn is trapping first-home buyers in a negative equity minefield, with fresh data showing values have plummeted across nearly all of the government’s top loan guarantor hotspots.
Economists are warning that thousands of hopeful Australians who used the First Home Buyer Guarantee to buy with just a five per cent deposit are now highly exposed and watching their equity evaporate after a third consecutive month of sliding prices in part triggered by Labor’s housing tax changes announced in the budget.
The Albanese-Chalmers budget, with its assault on negative gearing and capital gains, is the latest chapter in this long saga of government ‘help’. While mass immigration has sent demand soaring, regulatory chokeholds on zoning, approvals and development have marched in lockstep to restrict supply.
Red tape on building apprenticeships, combined with a near-fanatical push to shovel everyone into university degrees instead of trades, has created a critical shortfall of workers who might actually build houses. And, Albanese’s net-zero fantasies have sent material costs through the roof.
The result is a market primed for pain.
Home deposit schemes since the Howard-Costello era have done little more than inflate prices in tandem with the taxpayer-backed deposits. A five per cent deposit might look attractive when a traditional one runs into the hundreds of thousands, but it leaves buyers dangerously exposed when prices turn. And turn they have, thanks to the very tax changes sold as fixing affordability. Negative equity – owing more than your home is worth – is now the grim reality for thousands who bought the government’s pitch.
This is not new. The market drove prices up after the 1980s, but instead of letting it self-correct, successive governments have only prolonged the agony, much like FDR’s New Deal dragged out the Great Depression by trying to ‘help’ the economy into submission. Politicians cannot resist the urge to tinker. They inflate demand with immigration and easy credit, strangle supply with bureaucracy and green ideology and then slap on more subsidies that simply bid prices higher. Young buyers are left holding the bag when the music stops.
But governments, especially of the left persuasion (which means nearly all of them, nowadays) loves nothing more than meddling in the market with grand government schemes. New Zealand under Jacinda Ardern gave the world a textbook case of how that always ends: soaring costs, vanishing supply and the very people supposedly being helped left worse off.
Ardern’s flagship KiwiBuild policy launched in 2018 with the usual fanfare, but was a grotesque failure. At the rate the government actually built houses, it would have taken over 400 years to meet its target.
Homes were often built in the wrong places, prefab units proved more expensive and sometimes inferior, and banks grew wary of lending on them. More Kainga Ora bureaucrats were employed than houses completed. Judith Collins called it exactly what it was: “embarrassing and an utter fiasco”.
The tax meddling was even more damaging. In 2021 Labour extended the bright-line test to 10 years (five for new builds) and removed interest deductibility on residential investment properties. The explicit goal was to deter ‘speculators’ and free up stock for first-home buyers. Exactly the same tune Albanese and Chalmers played with their 2026 budget – and with exactly the same chorus of damp farts.
Investor activity collapsed, rental supply tightened and rents rose. First-home buyers gained nothing while the rental market suffered the predictable squeeze.
The lesson is simple and brutal. Governments are terrible at playing real-estate developer. New Zealand’s experience under Ardern should serve as a warning – instead Albanese treated them like a rulebook. Socialism was going to work ‘this time’.
Young Australians deserve better than being guinea pigs in yet another failed government experiment. The solution isn’t more clever schemes or punitive taxes on investors. It’s slashing red tape, reforming planning laws, ending the immigration Ponzi scam that inflates demand and getting out of the way.
Don’t hold your breath.
