A popular YouTube documentary channel has revealed why ‘s housing market is out of control and offered solutions to fix it.
In a video shared last month ‘Why Living In Is Impossible’, the American YouTuber team known as 2 and 20 examined the key causes of the nation’s housing affordability crisis.
Immigration, bureaucratic red tape, tax incentives and declining investment were among the many reasons attributed to the eye-watering prices.
‘The country looks like a paradise but if you want to live here, it’s easier said than done. This is the dark side of ,’ the video voiceover said.
‘ has the 13th largest economy in the world, wonderful beaches, access to world class education, universal healthcare and much more.
‘At the same time, n housing prices and rental rates have reached record highs, ranking as one of the most unaffordable places in the world.’
Housing prices outpace income
‘To buy the median home in Melbourne, a family needs to earn at least $170,000 per year. In Sydney, that number balloons to $260,000 per year,’ the video said.
The 2 and 20 team compared this to what they stated is the median household income in both cities of $100,000.
‘It becomes clear that home ownership is far out of reach for most ns,’ the video said.
‘Now some might argue that this is only a Sydney or Melbourne issue, but that’s just not the case.
‘Since 2020 house prices in Brisbane, Adelaide and Perth, have increased by over 50 per cent while wages only grew 12 per cent.
‘Home ownership is becoming less and less attainable for many ns, especially young ns. ‘
To illustrate the ‘craziness’ of ‘s housing market, they used the example of a house in Sydney that was sold without a toilet, kitchen and power for $3.5million.
Immigration
The video states: ‘The first culprit that many point to is immigration.’
‘From 2022 to 2023 welcomed nearly 740,000 people, that’s more immigrants than any year in modern n history, and 200,000 more than pre-Covid levels.
‘The impact of this huge spike in immigration is simple, more demand with the same housing supply equals higher prices.’
The team stated the bulk of immigrants to are temporary visa holders, and 70 per cent of them are renters.
‘The impact hits hard in migrant-heavy suburbs.
‘For example, Melbourne’s southeast or Sydney’s inner southwest saw 18 per cent jumps in rents in the last year.’
The 2 and 20 team revealed how immigration impacts housing prices.
‘The argument that immigrants are a primary contributor to the increase in housing prices is quite weak,’ they said.
The video states that while immigration has continued to grow with the population, ‘housing starts’ (new construction) have declined.
‘In 2023, 170,000 dwellings were completed, the lowest amount in a decade.’
Tax Incentives
The 2 and 20 team believes negative gearing has had a detrimental impact on ‘s housing market.
The video examined the introduction of negative gearing in the 1930s and how the government tried to change the rules in the 1980s, imposing restrictions on deductions that can be claimed.
‘But this was met with significant backlash, and negative gearing was returned to its original form,’ the documentary team said.
‘There is almost no country on Earth that has such a favorable tax regime for property investors.
‘The argument against it is that it materially benefits landowners and older ns, and frankly, the argument is quite sound.’
Declining productivity and investment
The video states this is another contributing factor in the housing crisis.
The 2 and 20 team stated that no one bothers to invest in anything else because has made it so good to invest in non-productive assets including real estate.
”s productivity growth has been slowing over the last few decades,’ they said.
‘The average annual labour productivity growth between 2010 and 2020 was only 1.1 per cent, significantly lower than previous decades.’
The 2 and 20 team revealed that in 2022 only spent 1.7 per cent of GDP on Research and Development compared to other major countries.
They described this as ‘terrible.’
‘As a result, nominal GDP per capita and real GDP per capita have not increased over the last 10 years.’
They said even when comparing business and income tax, it’s clear believes land ownership is the most important investment activity.
The solutions
The video concluded by offering solutions to ‘s housing crisis.