Housing Costs Through the Roof as Finance Capital Prospers

Ned K.

A recently released study of cost of housing in cities across the globe by Demographic International concluded that after Hong Kong, Sydney was the most unaffordable city in the world with median house prices up to 12.2 times the average wage.

Melbourne was not far behind at number six, with house price to wage ratio of 9.5.

An article in the Australian Financial Review (18-29 January 2017) provided additional information with a table for cities and regions in Australia which listed the percentage of household income required to service an 80% mortgage (20% as deposit) and the percentage of household income to rent such houses. Below is a sample with the percentage of household income for renting in brackets:

Sydney            44.5% (28.9%)
Melbourne        37.9% (25.6%)
Brisbane          30.3% (25.4%)
Adelaide          33% (25.7%)
Perth              29.4% (22.2%)
Hobart            29.4% (27.4%)
Darwin            24.8% (22.2%)
National          36.8% (29%)

Sydney's median house price rose to more than $1.1. million in the December 2016 quarter.

The peak housing advisory organisation National Shelter spokesperson Adrian Pisarski said that private household debt levels were leading to large increases in homelessness and massive levels of vulnerability for low and moderate income families. He said that rents are a clearer indication of housing affordability but they continue to rise as well. In one capital city in the last 12 months only 8% of new houses purchased were purchased by owner occupiers. 

Even the federal government's own State of Australian Cities 2014-15 report identified a widening gap between the haves and the have nots regarding home ownership and affordability. The report also acknowledged that middle and low income families were increasingly being forced to buy or rent in outer suburbs and then spend a small fortune on fuel costs getting to and from work.
Meanwhile property developers continued to build skyscraper units and apartments in the CBDs of Australian cities to the point where many of them remain empty due to their unaffordability for the people who need housing the most.

The absentee owners still benefit though through the government's negative gearing and capital gains tax policies. The government argues that these policies increase the availability of housing available for rental purposes. Adrian Pisarski disagrees, saying that despite investment in the new inner city skyscrapers, 94% of investors invest in existing supply and that if lower rents are the government objective with current policy, the plan is failing miserably.

National Shelter estimated that $150 billion to $180 billion is needed to subsidise affordable housing in Australia for low and middle income earners in the next 10 to 15 years.

Is There Enough Money for Affordable Housing for All People?

The October -November 2010 edition of the Australian Communist contains an article "Finance Capital and The Australian Economy". It reveals that the big four lending banks (Commonwealth, Westpac, ANZ, National) controlled more than 75% of all bank assets and banks accounted for over 90% of all lending by financial institutions in Australia. Their combined profits then were about $35 billion. 

In addition to the high profits of the big four banks, the 2010 article also points out that deregulation of the financial system by successive governments from Hawke to the present day has seen huge profits by overseas owned merchant banks such as Fist City and Chase Manhattan go overseas. 

Just a small portion of this wealth would go a long way towards affordable housing for working people in Australia.

The problem is that under imperialism, investment and profits are decided by and for the benefit of the super-rich financiers and speculators of all sorts.

Affordable housing will only be achieved when the ruling class in Australia is the working class who constitute the overwhelming majority of the population. This will only be achieved through struggle of a scale not seen before in this country. 

The Experience of The Russian Workers Regarding Affordable Housing

In 2017, the one hundredth anniversary of the working class revolution in Russia, it is timely to recall what the Russian working class, as the ruling class, achieved after the 1917 revolution regarding housing affordability.

Between 1923 and 1931, 40 million square metres of living space (living room and bedrooms) were built in the Soviet Union. The number of towns in the Soviet Union between 1917 and 1951 increased from 765 to 1,451.

Between 1917 and 1938 in Leningrad, the average living area per person doubled and in Moscow it increased by 94% and in the Urals by 195%.

The cost of housing in the newly formed Soviet Union was affordable and social in nature. Lowest paid workers paid as little as 2% of their income on housing rent. The lowest paid Soviet worker received about 125 roubles per month. Rent was 2 to 3 roubles per month (see  www.lalkar.org/article/2536/housing-in-the-ussr)