John Howard & Peter Costello: Masters Of A Runaway Property Market
Former PM John Howard and his treasurer Peter Costello were warned about the dangers of rapidly rising Australian property prices back in 2004. These two were the architects of the capital gains tax concession. The Productivity Commission flagged the interaction between negative gearing and the capital gains tax discount as driver of the huge increases in property prices. John Howard and Peter Costello: Masters of a runaway property market downunder. It is interesting to note that Howard was a real estate agent prior to entering federal parliament.
Unaffordable Property Prices Thanks To Howard & Costello
Could the moral of the story be beware of former real estate agents bearing gifts in the form of tax relief? Howard and Costello did not heed the warnings from the Productivity Commission and shelved their advice on this. Twenty years later and we are in the midst of a housing crisis with unaffordable homes everywhere you look in Australia’s capital cities. Interestingly, they were pointing the finger at a shortage of housing stock as the culprit back then. In truth, this has remained a common theme throughout the history of the nation. The call to build more houses has been an enduring, if not successful, one.
It is easier to cry out into the wilderness than change the settings already in place.
Aussie Property Prices & The Voter Split
Of course, those who have bought into this overinflated market at the top do not want their property prices to go down. Thus, you have a split electorate between the haves and the have nots. The rental residential property market has been a driver of record inflation for several years now. Therefore, we have a third of the adult electorate in stress over the housing crisis because of unaffordable rents and property prices making buying a house impossible. Another third, who have bought into the property market and are stressed because of steeply risen interest rates on their home loans. And a third who already own their homes outright and may be a mix of investors and simply content property owners. Of course, they may have kids and friends who are renting and/or have mortgages. This is the Australian electorate in 2025.
Australia & Its Private Property Culture
John Howard and Peter Costello: Masters of a runaway property market. For the last 20 years, both sides of politics in Australia have been listening to the property owners and mortgage holders living in the suburbs. Labor and LNP have been courting their vote primarily. Renters have always been second class citizens in the bigger scheme of things. Their voice, however, is growing louder and more numerous in the economic wasteland left to them by Howard and Costello. There are more folk unable to buy a home in 2025 than there were 20 years ago. Rents on residential property have never been higher in Australian history. This is what you get when one section of the community are looked after to the detriment of the rest of us. The result are spikes in crime and civil unrest, as the ‘have nots’ eventually get angry and desperate at their economic poverty.
No Voice For Some
Take a look at the neglected Indigenous communities up in Alice Springs and other parts of Australia. Locals are wondering why they are copping it from this disaffected youth. Well, their parents are in gaol and these kids have no opportunity and no hope. White residents are saying poor us but don’t lift a finger to do anything to help – its not their problem, apparently. This is the Australia we live in, where everyone is looking out for themselves. This is the progeny of Howard and Costello.
Community spirit does not extend to some and does not exist for many modern Australians full stop.
It’s All About The Economy Stupid
Economics has become a byword for 21C Australians in their understanding of their place in the world. It is all about the economics these days. Comprehending macroeconomic trends is factored into our little worlds. These things affect our incomes and expenses. Interest rates are at the very top of Australian’s macroeconomic concerns these days. You hear more about interest rates and the RBA than anything else on the news, economically speaking. We choose to go into great debt to service a huge home loan to buy a house. Many Aussies will spend large parts of their lives in debt to banks that are among the most profitable in the world. These are the settings left to us by Howard and Costello. John Howard and Peter Costello: Masters of a runaway property market in Australia.
“They knew their tax policies were crushing housing affordability and yet with trademark arrogance, they did nothing. A whole generation of younger Australians have already paid a high price for their inaction, and it could take another 20 years to fix the problems Howard and Costello failed to address. Beyond housing, the 2004 cabinet papers are a litany of poor decisions and inaction, which have created decades-long problems for this country and our neighbours.”
Robert Sudha Hamilton is the author of Money Matters: Navigating Credit, Debt & Financial Freedom.
©HouseTherapy
