Wrong. This bust is different. This one has the potential to be permanent because a substantial section of our traditional housing market has, for the first time in our nation’s history, been locked out of the market. In other words, this slump is structural, not cyclical.

I’m talking about traditional low and middle income first home buyers who in the past were always able to get onto the bottom rung of the housing ladder at about three times the average wage (think back to when you bought your first home). In today’s money that’s around $180,000. A house and land package for $180,000. Established homes were around the same price. First home buyers bought at the bottom end of the real estate market and those selling their homes to those first home buyers moved up and bought more up-market new homes. Not anymore.

There was an article in the newspaper recently reporting a big increase in ‘dual income’ home buyers – how it now takes two incomes instead of one to buy a first home.

This weekend have a look at your local ‘New Homes Lift-out’ in the weekend newspaper. In it you’ll find builders offering starter homes for around $100,000. The cost of building a new home is still as economical as ever (less than $750 per square metre). For the past 20 years builders have been finding ways to off-set the costs of all the new regulations they are constantly bombarded with whilst they have watched the price of land getting higher and higher. The builders and suppliers do all the work and take all the pain (low margins, public pressure) while State Government land management agencies and land developers make all the money and get off scot free.

In Australia we already have affordable housing. What we don’t have is affordable land. Governments create an artificial shortage of land and make millions of dollars profiting from it and then have the gall to say how concerned they are about housing affordability.

When I was National President of the HIA, I went to the US to check out the housing market over there. When I told them there was a shortage of land in Australia they laughed at me. “A land shortage in Australia? You gotta be kidding”. I explained that by ‘shortage’ I meant ‘restrictions’ on land supply which drove up the price thereby excluding a huge number of first home buyers from the market. They asked whether this was an engineering or civil construction problem? I said no, it was a political problem. State governments across Australia had all introduced urban growth boundaries creating this artificial scarcity.

There is an elephant in the room called ‘land prices’. Blocks of land are more than $100,000 overpriced.

Meanwhile, our industry languishes building 50,000 fewer homes a year than it should be. That’s an extra $10bn worth of work a year our industry is missing out on. That’s a lot of houses. A lot of bricks. A lot of concrete. A lot of timber, a lot of tiles and a lot of steel. Is that worth fighting for? If we don’t get that 25% of the market back into the game, this industry slump will be permanent. Or as the late farmer/MP Bert Kelly used to say, “not only is it economically stupid, it is also morally wrong”.

So what to do?

First and foremost we have to realise that political problems have to be solved politically. When the NFF (National Farmers Federation) was under siege in the ‘80s and early ‘90s over live sheep exports, wide comb shearing, and at Mudginberri abattoirs they responded by going political. Their former President Ian McLachlan built a very influential network and entered parliament. They also put together a massive ‘Fighting Fund’ containing many millions of dollars. They never lost another battle.

If we don’t do something like that we’ll be forever treated like mugs, being pushed around and trampled on. Not only that our industry will be subjected to higher and higher taxes, more and more levies and ever increasing regulation.

At the last Federal election the big winners were the Greens. The Greens doubled their numbers in the Federal parliament (from 5 MPs to 10). Labor might be in government, but the Greens are the ones calling the shots. We are losing the war – a Carbon Tax, the Fair Work Act, unworkable and draconian national OH&S laws, a $40bn white elephant called a National Broadband Network, Urban Growth Boundaries, more and more government intervention and interference in business … you name it, our country is going backwards. The once great road to prosperity brought about by property rights, free markets, voluntary arrangements and the elimination of patronage and privilege is badly in need of repair. Or as US writer PJ O’Rourke has observed, “Australia is becoming like a sun-drenched reworking of the old Soviet Union”.

We need to open up a new front in the battle. If we don’t, our industry will suffer badly. We’ll have no skilled tradespeople and this generation of first homebuyers will be the first in our nation’s history to enter retirement with a mortgage (if they can get a house at all).

If you want to be part of the fight-back then make a contribution to the Housing Industry Fighting Fund and forward the details of this website to everyone you know who’s also had a gutful.

Bob Day
Housing Industry Fighting Fund!