Canberra’s ridiculous house prices mean the death of the social contract
This piece was originally published in the Canberra Times. Please consider a subscription to support organisations that encourage the exchange of ideas.
As secure housing becomes inaccessible for more and more in our community, the incentives that have shaped our society in the past are being redrawn.
The full costs of this unspoken realignment are dangerously high — and yet to be anywhere near fully realised. By examining the consequences of this shift, we can better evaluate what’s truly important to us and assess what is and isn’t worth trading away.
Despite the ACT being largely in lockdown, residential property prices rose an eye-watering 8.2 per cent last quarter. This was the fastest rise in the country and an ACT record since the ABS started reporting on it. Prices have risen by more than 20 per cent in the past year- and we were hardly marvelling at how cheap houses were in the middle of 2020.
The causes of this long-term rise are multifaceted but they are well-known and discussed. The consequences however, don’t seem to be of universal concern. This is understandable, because they have a vastly different impact on different people.
Most Australians own the property they live in, so while high prices may seem nice, they’re typically only of consequence at the margins given that most will buy and sell in the same market.
If you own many houses and can flick a few and retire, then congratulations — these are halcyon days.
But there are those on the boot end of this trend, of course: those locked outside the market. And as the line sweeps up, that’s inexorably more and more of us. Even if you’re a multi-millionaire, I think by now it’s more than clear that the cost that they wear is worth concern as it is quickly growing into a big cost worn by us all.
Historically, the non-owning brigade has largely been made up of people of low incomes, limited employment-capacity or lifestyle choice — and social efforts to redress the gap have been targeted accordingly, if not perfectly. But as the line rises and those with higher and higher incomes are also permanently locked out, the flow-on will impact new and unexpected realms.
This poses a genuine threat to liberal society, because although property is a tradeable financial asset, secure housing is an inalienable baseline requirement for full participation in society.
Weeding parties on Mount Majura, coaching a kids’ sports team, helping elderly neighbours with the mowing, volunteering at a soup kitchen, being involved in the local school, setting up a business, making friends on your own street, engaging in local politics, picking up rubbish on your daily walk — there’s really no good measurement or exaggeration of the invaluable social externalities that come from being able to securely build a life.
But there will certainly be an impoverishment as the social participations we take for granted become tourniqueted exclusively to the shrinking demographic of those who already own homes, or those able to leverage high incomes or family support to enter the market.
Then there are the more measurable participations: a shrinking labour and talent market for the essential industries that yield lower incomes. Fewer people choosing to have the children they may want. The total loss of certain lifestyle participations.
This strain is already visible as even medium-end apartments struggle to fill their compulsory groundfloor commercial leases. After all, who wants to invest in a life of $40,000 a year to make coffee for people in an area they will never live in themselves?
Ownership isn’t everything, nor should it be — and these same securities are attained by many renters. But short of some significant reforms, this will remain far from the universal experience. And in a market where the dynamics incentivise systematised property-management and the frequent turnover of tenants to maximise rental increases, the stresses are more routine than exception.
The ACT has historically pursued a “salt and pepper” approach to housing — with government housing distributed across most suburbs. The ideal is that an integrated society is stronger, given we all share stakes in each other’s future.
But the rising price barrier forges a new apartheid. As more and more have no access to larger and larger parts of society, we are all robbed of the dynamism and energy that comes from a demographically-integrated society. A lawyer friend already complains that the inner north is being weeded of people doing interesting things.
It’s a lose-lose where the trade-off for prioritising ownership is also increasingly bad. The equation: work more for less, and exclusively in higher-income lives — which may not suit your own work ambitions or natural proclivities. Full-time parenting; unwaged social contributions of caring; significant participation in community arts or sports; lower-waged industries of great social value such as passion-driven small businesses and many other celebrated spheres of life are already largely incompatible with attaining secure housing in the ACT.
But the line sweeps further up.
I have friends in a two-income professional household with two babies who have recently been unsuccessfully navigating an entry into the housing market, and now feel they have to move to find the future they want. We risk the talents and energies of many.
It’s a phenomenon with a wide range of impacts felt at the individual level, but it’s high time we started integrating the collective costs of unaffordable housing into our discourse. We don’t want to lose the chance to explore how to respond to a very high pricetag that we all wear.
