- Hockey’s proneness to mistakes matters well beyond issues around the housing bubble. It’s not just that he has been a serial creator of problems for the government. It’s also that this is a particularly challenging time for the economy, which requires a treasurer who’s seen both as competent and as in touch with ordinary people’s situations.
That excellent quote came from Michelle Grattan. She says of Hockey:
- Hockey is not nuanced or subtle, and often he’s not careful. His detractors have for years nicknamed him sloppy Joe.
The fuss was over Joe Hockey’s contribution to the expensiveness of the Sydney housing market.
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“The starting point for a first home buyer is to get a good job that pays good money,” he said.
“Then you can go to the bank and you can borrow money.”
The same article says:
- The median price in many suburbs of Sydney that are even vaguely close to the city has exceeded $1 million, surging more than 12 per cent last year.
Problem is that couples with two ‘good’ jobs, such as teachers, nurses or childcare workers, are finding it difficult to get into the market.
Hockey was presumably responding to comments by Treasury secretary John Fraser and by Greg Medcraft, the chairman of the Australian Securities and Investments Commission (ASIC) about the Sydney housing bubble.
At that stage Reserve Bank assistant governor Malcolm Edey did not use the B-word but spoke about the situation being “risky” and “over-heated”.
Reserve Bank Governor Glenn Stevens didn’t use the B-word either, he just told a business lunch that parts of the Sydney housing market were “crazy.”
Hockey had plenty of time to think about the issue. However, ABC online business reporter, Michael Janda, is even more worried about Hockey’s follow-up remarks. When you are in a hole, stop digging. For example:
- Hockey’s throwaway remark that “if housing were unaffordable in Sydney, no one would be buying it” makes superficial logical sense, but entirely misses the point economically and socially.
It’s investors rather than home owners that are increasingly purchasing.
Hockey says we don’t want prices to fall, we need more supply. But, Janda says, more supply will bring prices down.
This somewhat undercuts Tony Abbott’s assurances that with Joe the economy is in safe hands.
Hockey can take comfort in that he has Mark Latham’s support who slamed the ‘outrage industry’ led by the left-wing media. Then he came up with this bizarre comment:
“But essentially, the leftist technique in politics is social engineering, trying to control everything and build a society in their image.
“And anyone who speaks out, or is inclined to disagree with that, is condemned.”
What exactly does that have to do with Sydney house prices?
With friends like that…
Update: The AFR today goes into the housing markets and affordability.
In Sydney the median price is $752,000 and you will need a salary of $151,680. Two nurses or preschool teachers won’t cut it, you need to be a CEO, an IT manager or a psychiatrist or similar.
For Melbourne the median is $569,500 and you will need $114,480. For Brisbane the figures are $463,000 and $93,400. Canberra and Perth fall between Melbourne and Brisbane.
The cheapest mainline capital is Adelaide where the figures are $400,000 and $80,720. They didn’t do Hobart.
Update 2: See also John Davidson’s post What is stopping low cost housing?
Update 3: See also at The Conversation:
I’ve put this in as an update at the end of the post.
The AFR today goes into the housing markets and affordability.
In Sydney the median price is $752,000 and you will need a salary of $151,680. Two nurses or preschool teachers won’t cut it, you need to be a CEO, an IT manager or a psychiatrist or similar.
For Melbourne the median is $569,500 and you will need $114,480. For Brisbane the figures are $463,000 and $93,400. Canberra and Perth fall between Melbourne and Brisbane.
The cheapest mainline capital is Adelaide where the figures are $400,000 and $80,720. They didn’t do Hobart.
Why are we talking about median houses ?
First home buyers should start at the lower end and work up.
Hockeys’ statements are correct, I don’t know what the fuss is about ( perhaps Latham it trying to explain it )
jumpy, I agree that first home buyers should start lower down, but if you talk to anyone who knows Sydney lower down can be pretty ordinary or located a couple of hours one way from where you work. ‘Lower down’ is still very expensive.
Mark recently told me about a near-city unit, nice but small and strictly one bedroom – $600,000 a couple of years ago, more now.
Brian
I don’t know about you but, when my wife and I were deciding about where to call our home, weighed up the many pros and cons, can survive with and without , must sacrifice this to have that etc……
I won’t go into detail, only to say, we didn’t start where we hoped to finish and it hurt.
The first home buyers of today need to realise the MAN can’t legislate all their problems away.
Mortgage ownership is not a right, its has to be earned.
Thats all Smokin Joe was making clear.
On the price thing, if ( capitalist pig ) investors are buying up big into a bubble, so what ?
First home buyers wait, bubble pops, then buy in at bargain fire sale prices.
Market regulates itself back up to normal and gain equity.
Then get greedy with that equity and become an investor ( capitalist pig.
This sort of cycle has happened everywhere always.
Timing is king and now is not time to buy in Sydney.
Jumpy, you still don’t get it. The start is priced beyond where people can reasonably reach it. One of the factors is that rentals are so high that they almost preclude saving for a deposit.
This evening Patricia Karvelas in RN Drive hosted a debate on negative gearing between John Daley (Grattan) and Ken Morrison (Property Council of Australia).
Morrison said that the Sydney market had been under-supplied for 12 consecutive years. There is an enormous backlog to make up. He blamed insufficient land release and obstacles in the planning/development process – all fixable.
I seem to recall Bob Carr being paranoid about Sydney growing too big. Perhaps we are living with the results.
Brian: There are a whole lot barriers that stop people starting low cost. Developer covenants, local council rulings, and NIMBY’s that want to fight anything they think might reduce the value of their property.
Then there are minimum block and unit sizes that simply want to ignore the innovative things that are going on like development of smart tiny homes or homes built from containers ranging from mansions to homes that would be easy to move once you had enough money for something better.
Perhaps we could move any further discussion on this topic to John Davidson’s post What is stopping low cost housing?