A top CEO has claimed the wildly expensive housing market that successive governments have let run out of control is the ‘root of all evil’ in Australia.
Freelancer.com CEO Matt Barrie said the staggering increase in house prices has led to widespread ramifications for Aussies’ finances and the way they view the world.
His comments come as more young Australians admit they may be waiting for their boomer parents to die so they can get a foot on the property ladder – a grim vision of their future that makes many of them feel guilty and conflicted.
Despite the Reserve Bank increasing interest rates to get a hold of inflation, property prices in Australia’s capital cities have continued to surge by another 20 per cent in the last year.
Mr Barrie said that a home is considered ‘astronomically unaffordable’ by economists if it costs more than five times the average salary.
In Australia, the average capital-city home is nine times the average salary. In Sydney, it’s an eye-watering 13 times.
‘The root of all evil in this country is the astronomical price of housing. Once you understand all the ramifications of that – it really is the problem that is the root of all problems,’ Mr Barrie said.
Freelancer CEO Matt Barrie (pictured) has taken aim at successive governments for allowing the housing market to wildly inflate and wreak havoc on the economy
In Sydney, the median house costs about $1.6million, according to Domain’s House Price Report for the March 2024 quarter, with the firm forecasting the median price could hit $2million within the next three years.
It’s the second most expensive city in the world to buy a house behind Hong Kong.
Mr Barrie said it was now mathematically impossible for a household on the median income to pay off a mortgage in Australia.
‘The median wage is about $94,000 a year, where your take-home is about $5,900 a month after tax. On a $1.2million mortgage at current rates, it’s close to a $7,000 per month [in mortgage repayments].
‘Salaries can no longer pay for houses in Sydney,’ he said.
Young Aussies may be ‘waiting for parents to die’
The decades-long housing bubble shows no indication of bursting as the supply of housing vastly lags behind demand, leaving many young Australians fearing their only road to home ownership is waiting for their parents to die.
Alan, 43, said his inheritance now constantly weighs on his mind whenever he sees his mother.
‘You know the only way you’ll get your inheritance is if that person in front of you – who you love – dies,’ he told SBS News.
‘How would that make you feel? Because that’s how I feel and it’s pretty rubbish.’
One 22-year-old Sydney resident, who asked to remain anonymous, said despite earning $75,000 a year, she calculated she would need 27 years to save enough for a deposit for a median-priced Sydney house.
She said she felt disheartened upon realising the only conceivable path for her to afford a house before the age of 50 would be through inheriting money after one of her parents dies.
‘It’s just awful that people can’t afford to own a house without having to rely on inheritance… I think it’s unfair and it makes me really upset.’
Ari Sharp, a single mother, said she can’t afford to buy her own home. However, she feels fortunate her parents own four properties, which she will eventually inherit.
This financial security has given her the freedom to explore jobs that are not highly paid.
‘I’ve had the freedom to explore things that I actually want to do,’ she told SBS.
Ari Sharp, a single mother, can’t afford to buy her own home. However, she considers herself fortunate because her parents own four properties that she will eventually inherit
Mr Barrie said an ‘astronomically unaffordable’ home costs over five times the average salary but in Australia an average capital-city home is more than nine times the salary (stock image)
Aussie wages decline as house prices grow
Mr Barrie said it was remarkable that Sydney was only just behind Hong Kong in terms of housing affordability.
‘Hong Kong is a nice, attractive little island that’s extremely dense, very small and next to the most populous nation in the world.
‘So why would Australia… a relative backwater, 10 to 20 hours by air from really any major action around the world, have the most expensive housing in the world outside of Hong Kong?’
‘It’s not because we are making any more babies, because every female on the planet needs to have 2.1 children to maintain the population. Australia is about 1.5 or 1.6.
‘Wages are not going up at the rate housing is going up. In fact, at the moment, wages are at the greatest decline in purchasing power terms ever.
‘For 20- to 24-year-olds in the last year, the real purchasing power of wages went back to 2008 levels. Now the price of everything else isn’t.
‘So what’s going on? Why does Australia have some of the most expensive housing and in the world.’
Who’s to blame?
Mr Barrie said the blame fell on successive governments who have allowed population growth to outpace the supply of housing over the past six decades to the point where it is now unaffordable for the vast majority of the population.
He said successive governments have all had a part to play but the Albanese Government had gone ‘full berko’ with its immigration policy during an unstable economy (pictured Sydney)
Mr Barrie said the Albanese Government could not alone be blamed for the housing crisis, but it hadn’t exactly improved the situation by going ‘full berko’ with its immigration policy during an unstable economy.
He said the policy, which brought 518,000 people to the country in 2022-23 financial year, has increased demand in homes and further inflated the cost.
‘House prices have gone up 61 times in 86 years and the reason why is because politicians have chosen an easy path of relentless growth,’ Mr Barrie claimed.
‘Rather than talking to the engineers, the scientists, the entrepreneurs about what to do to grow the economy and actually build a diversified, strong, complex and sophisticated economy.
‘Instead they’ve pumped the housing market to the mother of all bubbles.’
He said Aussies desperate to own a home are taking on massive amounts of debt which eclipse the rates seen in the U.S. during the Global Financial Crisis.
Homeowners and banks are already twice as indebted to the housing market than Americans were in 2008, he said.
He said that high immigration was sustaining the housing bubble.
‘So we bring in a lot of people into this country, an astronomical amount of people, and they are doing that because it keeps house prices up.
‘The more people you’ve got growth in a certain area, the more house prices go up and stay up.
‘And the path of easy, relentless growth that the governments have is to keep blowing the biggest bubble you can blow.’
The solution?
Economist Yanis Varoufakis told the Equity Mates podcast another one million homes were needed in Australian within the next three years.
He said any measures to increase the affordability of housing, such as lowering interest rates or government grants, would only increase prices.
‘Supply is not happening neither by the private sector nor the public sector… so anything that boosts demand is going to make the problem of affordability worse,’ he explained.
‘You should be screaming from the rooftops, “Let’s find a way of building private and public housing.”‘
***
Read more at DailyMail.co.uk