Hello? Context, Please–Housing Is Not a Pretty Picture

Jul 4, 2012
Essential Research

I’ll bet this happens to every person at least, say, once a week: you read something in the newspaper (that’s the thing that you actually hold in your hand and leaf through–I’m just practicing an explanation I’ll need to use with young people in ten years) but it bears no relation to what you see happening in YOUR real life. If you are aching for that feeling, you only need read most coverage of economics–as in a column today in the Sydney Morning Herald.

Ross Gittins, who I hasten to say is relatively sane compared to the free market, knuckle-draggers who write about economics and business over at The Australian and The Fin, muses about housing prices today. Here are his two key points:

FOR years when people at dinner parties worried about houses becoming too expensive for the younger generation to afford, I used to tell them not to worry: it was logically impossible for prices to rise to a level no one could afford. Why do I remind you of this? Because it’s starting to look like I was right.

And, then, at the end:

I take the present small falls in house prices as a sign the limits to affordability have been reached, and won’t be exceeded.

As a matter of supply and demand, Gittins might be right: prices may not be going dramatically higher. But, c’mon, “limits to affordability”? You got to be kiddin?

The real world is explained by our friends at the Australians for Affordable Housing. To wit:

  • Almost one in ten households is in housing stress
  • On any given night over 105,000 people in Australia are homeless
  • Both house prices and rents have risen well above inflation. For people on low incomes this means that housing costs are eating up more of their income and leaving less for the other essentials in life. [emphasis added]

So, my problem with Gittins’ column is really context. It’s a bit misleading to wax on and on about how terrific it is that housing prices aren’t skyrocketing without balancing that with an insight into the real life people face trying to actually find housing, whether buying or renting.

Context, context, context!!!


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