Comment by skissane | Hacker News Reader

Comment by skissane | Hacker News Reader

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> Here in Australia

Australia has made a bunch of home-ownership-unfriendly decisions which the US hasn't – e.g. in the US you get a mortgage interest deduction on your primary residence, in Australia you only get it on investment properties (joint filing for married couples, which the US has but Australia doesn't, also helps here); in the US owner-occupier mortgages are normally no-recourse, in Australia they are almost always full recourse; US government policy encourages long-term fixed interest mortgages, the Australian government has no comparable policy

Some of it is also geography – Australia is very centralised, with most people living on the coast. Each state has its population dominated by a single metro area which also serves as the state capital – quite unlike the US where majority of the time the state capital is outside the state's largest metro area.

Australia's comparative lack of rainfall inland is a factor, but political culture, and hence decisions by politicians, also plays a big part – suppose NSW moved its capital to (say) Dubbo or Bathurst? Many government jobs would leave Sydney, followed by many consulting/etc jobs which provide services to the government - right now, central and western NSW has plenty of affordable housing, but a big shortage of jobs providing incomes to pay for that housing. Never going to happen: it would require a degree of originality and thinking outside the box of which Australian politicians are constitutionally incapable.

Some of those things I agree with, however the issue was primarily sparked during COVID like in many countries. Houses prices were relatively affordable prior to COVID and increases in inflation.

Australia kept its record low interest rates in place during COVID, then we had runaway inflation to record high’s like many countries did and our reserve bank failed to increase interest rates even slightly to help with the increases to inflation. We increased overseas migration significantly to help drive growth in the economy which has created an enormous shortage of housing supply. As a result, interest rates have soar’d coupled with record high inflation our cost of living has skyrocketed including housing prices. As I said since 2019-2020 house prices have increased 30%+

Our country has always been centralised to the coast and isn’t necessarily the reason for these costs

People have been complaining about housing affordability in Australia for years. I remember endless discussions of it, media articles about it, and feeling its pain myself, 20 years ago. No denying it has gotten worse, but it was already rather bad.

That said - we bought our house (NSW Central Coast) in late 2015 for AU$550K. At the peak of the COVID price surge, those property value websites were saying it was over AU$1 million. Now they are saying it is only AU$850K. Still gone up a fair bit compared to when we bought it, but also fallen a fair bit off the peak. Of course, those websites are not completely accurate, but what they say is consistent with sale prices of comparable properties in our neighbourhood

That’s fair enough. Complaints are valid, I do feel that things have become too unaffordable.

I lived in a rental which was sold in 2019 for $580k and I remember people thinking that was high, now that house is worth $760k.

Looking at suburb medium prices skyrocking in only 3 years does put a dampener on things

> suppose NSW moved its capital to (say) Dubbo or Bathurst?

In a sense they already have, most NSW government departments moved their offices from the Sydney CBD to the Parramatta CBD, which is about 25km west. This helped a tiny bit.

Meanwhile, my multi-millionare ex-boss is struggling to buy a house, because he's being outbid by chinese "students" (lol) to the tune of +$500K over the expected price.

> which is about 25km west. This helped a tiny bit.

It would help a lot more if they added a zero to that number

> because he's being outbid by chinese "students" (lol) to the tune of +$500K over the expected price

I believe that’s a real problem but only in certain suburbs. If you are a well-off Chinese businessperson or government official, and you want to get your money out of China - in case Xi Jinping suddenly decides he doesn’t like you any more - splurging on a residence for your kid at uni in Australia is a good way to do so while complying with the laws of both countries. Still, while it is a real issue in some areas, at a national level I don’t think it makes a huge difference - there’s lots of housing in Australia which isn’t that close to a university campus

> in the US you get a mortgage interest deduction on your primary residence,

Well that wouldn't be so bad to get rid of but ...

> in Australia you only get it on investment properties

WHAT? That's blatant landlord-pandering!

Landlords are running a business and get taxed on the rental income of their property. Deducting costs, including interest, same as any other business, is pretty standard and most wouldn't say it's "unfair".

Giving an interest deduction to owner-occupiers is a common policy to promote home ownership. But it's not a "level playing field" with landlords unless you also assess income tax on the imputed amount of rent they are saving by owning.

Reminder that Dubbo (population of only ~40,000) had to have water shipped in on trucks during the recent drought, so there are valid environmental reasons for the current layout too. A lot of those cheaper places are struggling, they cannot support large populations, and it's been said we've used up the good topsoil over the last 200 years so farming may be facing some issues in the coming years too.

I do think we should decentralise, but it will likely look more like Newcastle and Wollongong growing, which will probably feed commuters into Sydney more than they already do.

Also note, Canberra kind of fits your description - a regional "town", servicing the government. And it's also very expensive. As in, recently reported to be the second most expensive place in the country to buy a house, after Sydney. I think our issues are far more political as you point out, so other fixes are just bandaids, but anything that impacts home prices will be unpopular with the dominant voter bloc.

> Reminder that Dubbo (population of only ~40,000) had to have water shipped in on trucks during the recent drought

The Goldfields Water Supply Scheme pumps water over 560 km from Perth to Kalgoorlie; Dubbo is only 380 km from Newcastle. If you were serious about turning Dubbo into the state capital, you would have to give serious thought to building a pipeline to pump water from the Hunter, and then Dubbo would only run out of water if Newcastle was running out of water. (You could also build a pipeline from Sydney to Dubbo, which is only about 20km further, but much more mountainous terrain in the way.)

> I do think we should decentralise, but it will likely look more like Newcastle and Wollongong growing

Newcastle and Wollongong aren't really that much cheaper than Sydney. They are coastal, and everyone wants to live on the coast; also, Wollongong has physical growth limitations due to the Illawarra Escarpment. There's a lot more land on the other side of the Great Dividing Range, and water supply issues could be addressed with sufficient investment in water supply infrastructure.

> Also note, Canberra kind of fits your description - a regional "town", servicing the government. And it's also very expensive. As in, recently reported to be the second most expensive place in the country to buy a house, after Sydney.

Canberra is in some ways Australia's version of Washington DC. Although, DC has a very different social history – e.g. DC has historically (but as of last census no longer) had an African-American majority; and, DC is physically a lot smaller than the ACT is. But, what I am really talking about is an Australian analogue of Sacramento, Albany, Springfield (Illinois), Salem (Oregon), Carson City (Nevada), etc – which is something Australia doesn't have.

All that said, Queanbeyan's median house price is >$50K cheaper than Canberra's, by some measures beneath the average of Australian capital cities. And it is only 20 minutes drive from Canberra. In Sydney or Melbourne, that's what many would call an inner/middle suburb.

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