Australia's housing crisis has entered a new phase: a little less conversation, a little more action.
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crisis → enter → phase
The first seeds were planted three years ago, with a landmark national agreement to build more homes.
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seeds → plant → homes
The target, 1.2 million in five years, is likely doomed.
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target → doom → years
But what mattered was that a target was set at all.
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target → matter → ?
After years of lip service, leaders had promised to act on the root cause.
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leaders → promise → cause
After much fanfare, the closed-door event had seemed like a fizzer.
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event → seem → fizzer
But for Treasurer Jim Chalmers, it helped build the case that Labor's old policy to wind back negative gearing could be reinvented, and framed as a leg up for home buyers over investors.
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policy → help → investors
Throw in the highest interest rates in 18 years, and all of a sudden a housing market that seemed as if it would never turn is turning very fast indeed.
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it → throw → years
This week saw the steepest drop-off in new home loans ever recorded.
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week → see → loans
Commentators had long wondered whether, for all the hand-wringing about the housing crisis, Australians would actually want a solution when it came, since, one way or another, cheaper homes for the young can only mean less valuable homes for those who already own them.
But no more need to wonder: we're finding out.
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we → wonder → them
A tumbling market may not have been federal Labor's ideal pathway to affordable housing, but after months of dithering, the government took a tentative step this week towards embracing the chaos, framing it as a win for homebuyers.
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government → tumble → homebuyers
In the coming weeks and months, Labor governments in Australia's two largest states will put their own higher-density plans to voters.
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governments → come → voters
At federal and state levels, Liberals are betting voters will dislike the prescribed cure worse than the sickness.
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voters → bet → sickness
A falling knife
Labor did not expect its changes to the capital gains tax and negative gearing to tank house prices.
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changes → fall → prices
Treasury analysis predicted prices would still grow, but by 2 per cent less.
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prices → predict → less
Chalmers has repeatedly said he is "not targeting a particular price".
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he → say → price
Nor did it want prices to tank.
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prices → want → ?
In 2024, Housing Minister Clare O'Neil said it was her "strong view" that falling prices would be bad.
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prices → say → 2024
"Our policies are not going to reduce house prices.
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policies → go → prices
We want house prices to grow sustainably," she said then.
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she → want → ?
But now they have fallen.
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they → fall → ?
The drop-off has been sharper in Melbourne and Sydney, and some analysts predict double-digit declines.
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analysts → predict → declines
Other indicators point in the same direction.
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indicators → point → direction
The auction clearance rate has plunged below 50 per cent, compared to its long-run average of 60 per cent.
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rate → plunge → cent
And new figures this week showed a record 15 per cent dip in new loans between June and September.
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figures → show → June
First home buyers (8 per cent) fared worse than established homebuyers, but still far better than investors.
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buyers → fare → investors
High rates have clearly played a role.
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rates → play → role
But they do not explain why investors are falling away by "so much more than in previous interest rate increasing cycles", as Reserve Bank governor Michele Bullock observed last week.
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Bullock → explain → cycles
"[That] suggests something else is going on here, and [that] is the tax changes," she said.
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she → suggest → ?
In other words, the tax changes are doing what they were designed to do: discourage investors.
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they → do → investors
Until this week, the government had been skittish about embracing that.
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government → embrace → that
Even after opinion polls suggested a majority of Australians believed that prices needed to fall, ministers were nervous about embracing the nosedive.
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ministers → suggest → nosedive
But on Wednesday, O'Neil ditched the script and stopped equivocating.
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O'Neil → ditch → script
"We've had a housing market geared towards investors for a generation, and where did it get us?
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it → have → us
," she said.
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she → say → ?
"These numbers show the balance is shifting back …
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balance → show → ?
It is absolutely the case that volumes are down, as you would expect in a period where prices are softening.
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prices → expect → period
But these figures also clearly show a strong shift away from investors and towards Australians buying a home to live in.
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figures → show → home
First home buyers may be getting a leg up — CBA's Matt Comyn said yesterday their share of new loan applications doubled last month.
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share → get → applications
But a fast-falling market is a risky one to enter, especially with high rates, and it can also chill housing supply.
Liberal housing spokesperson Andrew Bragg seized on the comments, calling them "strange".
"
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Bragg → fall → them
…and 21 more, not listed.
The Aporia
