It’s grim, isn’t it? This week, we’ve heard ANZ’s chief executive declare home loans are now “the preserve of the rich”, seen the Rental Affordability Index conclude that renting is less affordable than ever, and learnt that our social cohesion is at the lowest level ever measured by the Scanlon-Monash index. All are clearly related.
Home loans are so expensive because high property prices are now meeting high-interest rates. Naturally, landlords are passing this on to renters. And those interest rates are increasing because inflation is stubbornly high, meaning however unaffordable housing is, everything else is costing more, too.
Finding an affordable place to buy or rent has never been harder for Australians.Credit: Joe Armao
The ensuing financial stress is seeping through the community and straining our social and even political relationships. That last point isn’t my speculation. It’s what the Scanlon report found. Taken altogether, this is a picture of slow-motion breakdown.
So, more than three quarters of people who are struggling financially feel socially isolated. Meanwhile, 12 per cent of us are skipping meals, the same amount are failing to pay their rent or mortgage, and a remarkable 22 per cent have found themselves unable to pay for medicine or health care. And when you’re financially struggling, you tend to lose trust. That’s a problem because trust is the very basis of any functional society. So we should be unsurprised that the Scanlon report found lower levels of trust in government, which in turn delivers lower trust in each other, and everything that comes along with that: greater political polarisation, less national pride, a weaker sense of belonging, and a loss of faith that hard work brings a better life.
I can’t escape the conclusion that housing is central to this. Partly that’s because it’s so elemental: without it, we literally risk dying of exposure. For that to become broadly precarious, secure only for the rich, is to place a great insecurity at the heart of all our most important civic relationships. But even more than that, a housing crisis of this kind can end up stratifying society in insidious ways. One of the Rental Affordability Index’s more sober findings is that the unaffordability is now more or less everywhere: cities, suburbs, even regions. That means the stress is everywhere, but also that people are being pushed further and further out.
Consider what that means, even for wealthy areas. To take merely one example already observed in places like London, it means teachers can never possibly earn enough to live anywhere near the wealthier schools in which they work. That, in turn, means they aren’t part of the school’s community in any thick sense. In the process, schools become transformed into something a little more transactional, and the building blocks of community a little more brittle.
Illustration: Andrew Dyson
This, I suppose, is the nature of inflation. By definition, it hits those who can least afford it the hardest. And unfortunately, the same is true right now of the tools we’re using to fight it: namely repeated interest rate rises. To do this in a housing crisis is to visit profound insecurity on the most exposed, while leaving the wealthiest – and the mortgage free – to keep spending. And that seems to be what’s happening. To borrow from Danielle Wood, the new head of the Productivity Commission, people over the age of 55 are “living large”, continuing to outspend inflation, while younger people’s real consumption has “substantially shrunk”. Obviously, these are broad, crude descriptions that admit many exceptions, but the trend seems clear. For decades now, young people have spent more on essentials and less on discretionary things. That’s only getting worse.
Australia is at social breaking point. Where to from here?
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16.11.2023
It’s grim, isn’t it? This week, we’ve heard ANZ’s chief executive declare home loans are now “the preserve of the rich”, seen the Rental Affordability Index conclude that renting is less affordable than ever, and learnt that our social cohesion is at the lowest level ever measured by the Scanlon-Monash index. All are clearly related.
Home loans are so expensive because high property prices are now meeting high-interest rates. Naturally, landlords are passing this on to renters. And those interest rates are increasing because inflation is stubbornly high, meaning however unaffordable housing is, everything else is costing more, too.
Finding an affordable place to buy or rent has never been harder for Australians.Credit: Joe Armao
The ensuing financial stress is seeping through the community and straining our social and even political relationships. That last point isn’t my speculation. It’s what the Scanlon report........
© The Sydney Morning Herald
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