30/05/2019 - 13:09

Property stress test pressure point

30/05/2019 - 13:09


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OPINION: The economic pressure simmering away below the surface in many households was a key factor in the surprise federal election outcome.

Negative equity is a concern for many WA households. Photo: Gabriel Oliveira.

While many in the business community, particularly the property sector, breathed a huge sigh of relief after the recent federal election, there were lessons aplenty for both sides of politics in the surprise result.

One clear-cut message was that the electorate did not have confidence that a change in government was going to improve their situation.

I am not going to analyse or debate the various Labor policies that may or may not have been the cause of Bill Shorten’s failure. Instead, I was keen to consider a more fundamental underlying issue, an understanding of which is in all our interests.

The problem I see is mortgage stress, an epidemic in many of Perth’s newest suburbs that will become increasingly significant for many Western Australians.

It is far from ideal that many in our society have negative equity in their family home, are insecure in their work, and have seen their wages fall behind inflation since purchasing their property.

Such households invariably develop additional negative baggage. Financial stress puts a strain on relationships, affecting family structures and the health of those involved in ways that ultimately cost us all in some way.

I think readers will understand how such scenarios can be the opposite of the conditions that best provide the opportunities for those with aspirations.

And although we are early enough in this phase to turn things around, leaving things as they are for more than one more electoral cycle may create an underclass that takes root. In any society, that is disastrous.

We all know of cities with areas where the community structure is such that disadvantage is permanent.

Western Australia has a few pockets of this but they are isolated and, regrettably, often regional.

We need to make sure that people who have been caught out by the mining downturn, the collapse in property prices and stagnation of wages, don’t begin to think that continuing to work hard to get ahead is futile.

The coalition clearly won these people over but the longer their struggle goes on, the more they will look for solutions beyond mainstream politics.

So what is the answer?

In the short-term, as Bill Shorten and especially Labor in Queensland found out, it is jobs.

In a period of dramatic disruption where many traditional low-skilled jobs are disappearing, the state has to do everything it can to make job creation happen.

That is not just about the timely approval of resources projects, it is removing the many obstacles to investment across all sectors of the economy.

If someone wants to build a wave park, develop a high rise, put in sporting infrastructure, add some outdoor seating to their bar or many other myriad ways of creating jobs, we need to let them go for it.

Pandering to those who wish to stop progress is, as the word suggests, not progressive.

Out in the mortgage belt, I see another factor that will raise the hopes of those who currently feel they are being left behind.

They need to feel that they have something special. In the end, people ought to be buying houses as their home, not a quick pathway to getting rich.

The value of their residence ought to be in the community in which they live, such that selling their bricks and mortar is not about the financial impact but the loss of proximity to things that have built a lifestyle unmatched elsewhere.

That means great schools (with the best teachers), top-class facilities, a resilient transport network and numerous places where people can find local jobs.

Some of these things require lateral thinking, or at least overcoming views that remain trapped in the past.

For instance, great teachers can be attracted to challenging schools by paying them more.

To afford this, we ought give them bigger class sizes and trainee teachers as assistants. (Decades of reducing class sizes have meant the demand for good teachers has outstripped supply, and the quality of education has fallen).

Immigration is also an option.

Public transport is vital, but expensive. Start doing more to recoup the true cost of public transport, as that will make it work better and be affordable to install.

Allow more flexibility in the community for land uses to change as needed. Within boundaries of noise, danger, emissions and the like, we need to allow people to use their own property as they see fit.

Many an IT giant started in a garage; let’s encourage other businesses to get going in homes or other places where current rules often prevent them.


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