The cliche we know as the ‘Great Australian Dream’ is not new, nor original to Australia. Captain John Truslow Adams popularised a similar but not original idea in 1931 as the ‘American Dream’, which then became aggrandised.
And even before such ideas of mundane, suburban, petit bourgeois prosperity and moderate affluence became clearly defined, we had critics of those concepts.
Perhaps the first such critic was the Roman satirist Juvenal, who sneered at the bread and circuses which kept the Roman populace contented in the time of empire.
My favourite philosopher, the quite insane Friedrich Nietzsche, definitely despised the suburban bourgeois life of mediocrity which contented his neighbours in late 19th century Germany.
American writers, like Sinclair Lewis in novels like Main Street and Babbit, and then, a generation or so later, John Updike in his Rabbit series, did write about the stifling nature of the middle class American life in a way which presented the American Dream as a nightmare.
I do get these people. I occasionally, in my more deluded and megalomaniacal moments, do think that I am destined for greater things than my blog and veggie patch and brick veneer pile in Avondale Heights.
But then I wake up to myself and realise that stifling though the lack of creative expression might be in this existence, I still have far more in material security, educational opportunity, and a peaceful environment than my peasant forebears did, and for that I am truly grateful.
Perhaps it is that few writers in Australia get a widespread platform to sneer at the mundane and materially secure lives of their neighbours. No one reads Jane Caro, nor Clementine Ford (so I rely on reports of their lawsuits and twitter tantrums to know what ideas might pass through their heads), and when I did read something by an actually talented Australian writer, David Malouf’s novel Johnno as a teenager, the self hatred and general loathing of the protagonist was something, to be honest, I found utterly repulsive.
And so it goes that I still believe in some sort of myth such as a banal but materially secure suburban existence, and wish for such both for myself and for all of my fellow Australians (yes, even for smug writers like our friend Clementine). Our local culture does not enable our literary glitterati to impose such self-doubts upon our society.
Let’s face it: what is wrong with having a reasonably secure and well paying job and a modest house with a garden (and a few gumtrees in the front yard, and at least a lemon tree and perhaps a few other fruit trees, in the back)?
It won’t make you a literary giant like Patrick White or David Williamson, but it is better than what Henry Lawson had (plus, if you had Henry’s predilections, you would appreciate a garage and a few vines over the driveway so that you could make your own plonk!).
Which is probably why home ownership keeps getting raised by both parties at election time, and both keep coming up with sad policies which do cause the prices of houses to keep getting inflated.
It is election time this month, and let’s pause and look back at what house prices are right now. Median house prices in Melbourne are about 10 times the average wage. When I bought my brick veneer pile almost 20 years ago, they were 5 times the average wage. In 1980, when a Space Invaders arcade machine was installed at my still extant local milkbar and I was in my last year of primary school, house prices were 3 times the average wage.
The media is full of the speculation about how the high (for 22 years) inflation rate of 5.1% and the first interest rate increase for 11 years (0.25%) are going to impact on current mortgage holders.
Politicians keep coming up, like Albo this week (and ScoMo during the Plague), with ways of making housing affordable by pumping more taxpayer money directly into the pockets of potential homebuyers.
What everyone is missing is economic reality.
Taking government interventions first, first home buyer subsidies just cost the taxpayer and the home buyer by increasing the amount which each home buyer has available to spend on a house, which enables them to borrow more and to bid more on each house, which will force house prices up even further out of reach.
Taking interest rates next. In the late 1970s and early 1980s, or the early 1990s for that matter, double digit interest rates kept house prices affordable for most people, whilst wage inflation kept pace with consumer inflation, making it easier for people to pay their houses off in a a reasonable period.
Trick Question: What would you rather have: a $700,000 mortgage at 1.8%, or a $70,000 mortgage at 19%? It depends of course on what wages are, and wages right now have not kept up with the increase in value of house prices over the past 30 years.
The political debate needs to shift to a more honest level. Do we need to increase the demand for housing through increasing migration? Do we need to subsidise house purchases by providing subsidies to potential home owners which then cause further house price inflation? Do we need to pursue monetary policies which inflate assets generally by keeping the cost of borrowing money artificially low?
And possibly most controversially… do we need to reward people for acquiring real estate, particularly, investment properties, with tax benefits, or should we be broadening the idea of land taxes to a lower threshold – perhaps even to owner-occupiers? This is something which would reduce the tax minimisation value of real estate as an asset class for investors and which might start to deflate its value.
Until such a discussion, raising interest rates is a crude but effective mechanism for reducing real estate prices, and which might make housing more affordable to owner occupiers rather than investors.