Pearls and Irritations

Blaming Baby Boomers for the housing crisis is a diversion. What we need is a complete rethink of our housing supply.

Intergenerational unfairness has become a catchcry, with the most strident complaint concerning the cost of housing and young people’s inability to break into home ownership.

But in the economic debate about disparity between generations, not enough attention is paid to the complex transformation that has taken place in our life span, in our social values, as well as post-war immigration policy, which have collectively altered the way we live in Australia.

It is no longer practical or realistic to expect everyone should be able to own a home on a block of land.

Australia’s population growth has doubled from 1970 (12.7 million) to 2021 (25.8 million) making the “Australian dream” of homeownership for all, unsustainable.

What we have seen is ever-expanding cities, extending their land mass outwards, building remote suburbs, on smaller blocks, deficient in infrastructure, leaving families isolated from workplaces, entertainment, sporting amenities, schools, shopping centres, transport, medical services, and liveable spaces. This growth has been based on flawed policy that has contributed to long work commutes, loneliness, social dysfunction, and marriage breakdown for some, while others remain unable to enter the housing market.

As our population doubled, our lifespan extended by more than 30 years across the life of a centenarian. Our older generation’s experience as pioneers in longer-living is unprecedented. Yet they have been excoriated for remaining in their homes and occupying their life-long places of residence.

If they want to move (and many do not), prohibitive state taxes keep them from downsizing and shifting to an unfamiliar community can be a daunting option. In an earlier time, they would have passed on, and their home been otherwise occupied.

Life for them was not just a bowl of cherries.

Many found it impossible to get a bank loan for a house in the fifties and sixties, and mortgage interest rates fluctuated up to 12 per cent. Moreover, the pattern then was to marry before buying your own home, payment being seen as a life-long project. Most women could not, and were socially discouraged from remaining in gainful employment, so few households had two incomes to sustain mortgage payments.

A good time to end negative gearing and taxpayer subsidised speculation in housing

Since then, there have been major changes in policy which have profoundly affected the housing market.

Large-scale immigration brought many young people to Australia in their family formation years, driving up demand. Land policies kept supply down and the population surge drove the development of the poorly serviced outer suburban areas. The household changed dramatically. The ubiquitous television set which came along in the late fifties, and women entering the workforce led to changes in living with the family room and the bench kitchen.

Migrant families altered living styles. Tightly held inner city suburbs were gentrified, and new tax provisions on negative gearing and capital gains turned house ownership into a commodity, bringing in investors to compete and drive-up prices.

Then the sixties brought the contraceptive pill and the feminist movement along with a massive shift in attitudes to women working, marriage and lifestyle.

The pill meant adult sexual relationships were easier to manage outside marriage, and marriage itself became less normative; the number of households began to outnumber the number of families. Divorce became more acceptable and more common after the Family Law Act of 1975 brought in no-fault divorce, so separated couples now needed two households, not just one.

The census measures the composition of separate living households. In 1996, there were 4.6 million family households (70.6 per cent) and 1.4 million one-person households (22.1 per cent).

By 2001, those figures had become 4.86 million family households and 1.6 million one-person households (23.9 per cent). Twenty-four per cent were one-person households in 2001, an increase of 134,971. Each of these required not just a roof over their head, but also household appliances and furnishings, pushing up consumer demand and a new trend to apartment living.

The conventional nuclear family type, of couples with children, declined in parallel and there was a neglect in building the modest family-sized houses with backyards which were common in the sixties. With two-income, two-car families, many of the new housing estates were built in McMansion size and style with double garages occupying most of the block. Prices rose.

If we look at the 2016 census figures, there were 8.8 million occupied households (average size 2.55 people), but only 6 million of them classified as families. Thirty per cent of those were two-person families, 27 per cent four-person, about 89 per cent were “in-tact”, 3.7 per cent were “blended”, with children from both former partnerships, and 6.3 per cent were step-families (with at least one step-child or adopted child and no natural children). There were 60,000 grandparent families (53 per cent couples, 47 per cent lone-grandparent) and 15 per cent same-sex couples with children.

That is a very diverse picture compared with the oft-assumed nuclear family of political and media discussion.

By the 2021 census there were 7.2 million families (an increase of 17 per cent since 2010), 84.3 per cent were couple families, 14.2 per cent were one-parent families and 3.7 per cent were blended families with step-children. And 24 per cent of all households comprised only one person (a mix of single unmarried, separated/divorced, and widowed).

But adding to that complexity was the trend (first detected in the early 1980s), of young adults remaining longer in the parental home. In 2016, 43.3 per cent of those aged 2–24 were still living at home, 17 per cent at age 25–29.

Many young people today say they don’t want to marry or have children, so home ownership may not be their goal. It is not the norm in many European countries where house prices have also risen since 2010, along with population growth. In Germany 50 per cent of households are tenants, and in Greece where unemployment tops 15 per cent, 62 per cent of 25–34 year olds live with their parents.

Multiple reasons account for this trend to live in the family home longer, not just the higher cost of housing.

As sexual mores changed and single children or young couples could live with parents without opprobrium, many wanted to delay marriage. With no children they had no need of a separate home.

Moreover, mums and dads who can afford to, didn’t ask for rent, did the laundry, and later sometimes financed their offspring to move into separate home ownership.

The social class dimension is a significant factor in the cause of disparity within a generation as “the bank of mum and dad”, the rise in negative gearing by those with money, including overseas investors, and the lack of any inheritance tax in Australia all distort the housing market.

The old as well as the young have been affected by housing policy which has made it uneconomic for older people to relinquish the family home (if they have one), so many are choosing to live in single households, and for some it’s a lonely life.

As well, public housing has been neglected leaving increasing numbers of people, including the poorest, and many single women, living in cars or on the street.

Successive government housing policies have exacerbated these problems.

Pointing the finger at selfish Baby Boomers is one way of diverting the problem. What is called for is a complete rethink about housing supply — the way we may live, given population growth, social and cultural change alongside the new Covid challenge which has up-ended our work patterns. Adaptation with immediate action is called for.

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