Terry’s View: Most Don’t Want House Prices To Fall

We hear a lot in the media about the desire to make housing more affordable, but when it comes down to it, the majority of Australians don’t actually want house prices to fall.

A recent survey by Newspoll found more than a third (34%) of respondents want prices to increase relative to inflation, another 30% want prices to remain the same, and 30% want prices to fall.

And among mortgage holders, the appetite for price drops is even lower: just 18% want prices to fall, with the vast majority preferring price growth or price stability.

It’s understandable, real estate is the cornerstone of the wealth of most Australians, and few of them want the value of their asset to decrease.

The idea that the country is crying out for falling property prices doesn’t match the numbers revealed by the survey. This may explain the lack of meaningful action from politicians on the level of property values.

While politicians of all levels claim to care about housing affordability, none have implemented policies to improve it.

Indeed, most policies and actions taken by federal and state governments are making affordability worse by pushing up property values – including the expanded federal government scheme that allows first-home buyers to purchase with a deposit of just 5%.

Federal Treasury modelling shows the expanded 5% deposit scheme for FHBs will bring forward demand and exert some upward pressure on prices – a trade-off it appears happy to accept in exchange for increased home ownership.

It provides further evidence that politicians’ rhetoric about wanting to improve housing affordability is just hot air.