Thursday, 23 February 2017

Dick Smith again right on immigration and housing

You know the immigration policy in your country must be bad, when an esteemed and long standing public figure like Dick Smith lends support to One Nations immigration policy.

Dick Smith has again called out the destructive effects of mass immigration, making what should be an obvious point, that rapid population increase through immigration puts pressure on the demand side of the housing equation, causing price rises.

Dick Smith says...
The main point that's driving our unaffordable housing is about 200,000 immigrants come in a year. That's five jumbo loads a week that go out empty,

“All of our problems are from this unbelievable population increase. You can’t drive in Sydney at the moment. The housing prices are enormous.
“The most fundamental right is to get a house with a backyard. Young couples can’t do that anymore, purely driven in 95 per cent of cases by the enormous population increase, mainly driven by ridiculous immigration”… 

Dick Smith went on to say that non-essential items like holidays and LCD TV's were cheap, but essentials like housing were unaffordable.

Pro-immigrant SBS quickly put forward a counter argument.  They sought the opinion of all people, Shane Garrett, a senior economist from the Housing Industry Association.  We can safely assume that Mr Garrett wants to maintain a "strong" housing market, so what he opposes will reveal where his personal interest lies.

“Difficult affordability in the housing sector is primarily the result of supply side issues, like taxation of new housing, infrastructure funding, the slow release of land, and bottlenecks in the planning system,” he explained.

This is a flat out lie.  There are more cranes and apartment towers going up in Melbourne than ever before, so much so, there is a glut.   On top of this, subdivision is occurring at a rapid pace.  There is barely a suburban block in Melbourne which doesn't have a house torn down to make way for townhouses or "boutique units".  I have never seen so much construction of housing ever in my nearly 40 years in Melbourne.  This argument can't be true.  If there is still a shortage of housing, despite all this construction, then it follows our immigration level must be too high.

Subdivision to increase supply actually leads to increase prices.  By relaxing restrictions on development, in particular, increasing the number of dwellings which can be built upon what used to be a free standing home on a block of land, the potential profit to be gained from subdivision increases, and so to does the price the investor is willing to pay.  As they bid more for land, overall price goes up.

That was all the HIA shill had to say.  The SBS article continues...

Dr Dallas Rogers, a senior lecturer in architecture, design and planning at the University of Sydney, says Australia’s housing problems are due to historic practices.
“The reason that we have a housing affordability crisis in places like Sydney and Melbourne is because of an at least 50-year history of housing practices, where housing after the Second World War started as somewhere you lived in,” he said.

“Progressively we’ve been thinking of housing as somewhere to park capital as an asset class.”
Dr Rogers also called Dick Smith’s comments “problematic”.
“And that’s because Australia’s whole history is a history of immigration from the point of first contact with the Indigenous people,” he said.
 “In one way, Dick Smith is right that immigration has a role to play in housing affordability problems, but it’s not the newest wave of immigrants that’s the problem – it’s the 230-odd year history of immigration that has underwritten the housing affordability problem.”

Dick Smith has previously expressed support to restrict migration levels to enable, what he calls, a “sustainable” population. 

There is truth to the argument that housing is seen as a place to store capital, instead of a home.  The fact the government also sees it this way, by supporting policies which put investors over owner-occupiers is testament to this.  However, while this no doubt has some effect, one has to ask why housing has historically been affordable in Australia, and why unaffordability started to increase in the early 2000s?  Australias increase in net overseas immigration coincides with the ramping up of prices, and relentless and continuous immigration has prevented prices correcting.

Dick Smith is right.  Housing prices aren't the result of unfettered market dynamics within Australia, but through government policy, mass immigration and cheap credit.  There is a clear interest in keeping Australians locked out of home ownership to benefit the few speculators.

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