Home owners benefit at the expense of renters. However, there are significant distributional effects from increases in housing prices.
This is a point I made in a speech to a Melbourne Institute conference in 2008, which The Sydney Morning Herald’s Ross Gittins revisited in a recent column. The recent sharp run-up in rents reminds us that we do not become wealthier as a nation by trading homes between ourselves at ever-increasing prices. The cost of housing in Australia has grown significantly in recent decades as the prices of houses and apartments have risen faster than average household incomes, with higher purchase prices flowing through to the cost of renting as well. The location of our housing will have a major influence on our day-to-day lives, including how much time we spend travelling to work, school and other commitments, as well as to visit family and friends.Īnd whether we buy it or rent it, housing will account for a very significant proportion of our total spending over our lifetimes.Įconomist Tony Richards at a home building site at Northbridge, in Sydney’s Willoughby City Council area.
Of all the goods and services that we buy in our lives, it is hard to think of one that is more important than housing.
