The Great Divide: Australia's Housing Mess and How to Fix it: Quarterly Essay 92, by Alan Kohler

Finance journalist Alan Kohler looks at Australia's current housing crisis

According to Alan Kohler Australia's housing crisis is some twenty years in the making and is so baked in it will take at least a decade to unravel. And that unravelling will require not the current policy drift, but firm action and consensus from the electorate. As it currently stands, the majority of the electorate either own outright or have a mortgage, meaning any change to the status quo, that is, lower prices, is against their financial interests.

Alan Kohler takes two historical views, the longer and the more recent. Australian property in early settler days was pretty much a land grab. Land was often gifted in large slabs by the British Crown. Some simply squatted on land and claimed it as their own, without a murmur from government. Australia was considered terra nullius – it was free for the taking.

The shorter historical view, starting around the early 2000s, illustrates how the seeds of the current crisis were sown. A mixture of tax breaks and increased immigration under the Howard Government was rocket fuel to house prices. Everyone was happy – until they weren't. Prices were increasing at a rate of knots; it was money on a loop. Even if you hadn't entered the market, there was cheerful news that once you did, a pot of gold awaited.

The results of those twenty years of rampant price increases are now in. What has turned housing into such a wicked problem is how entrenched it has become. It will take years to build our way back to housing affordability. It will also require national focus, of which Kohler says there is little, if any.

A brilliantly lucid essay that explains how we arrived at such a mess.

The Great Divide: Australia's Housing Mess and How to Fix it: Quarterly Essay 92, by Alan Kohler. Published by Black Inc. $27.99

DEC23