This interesting article about Christopher Joye answers a lot of the questions about the background of the government’s new favourite plan to ensure the “great Australian dream” of home ownership is available to everyone, including low income earners.
I haven’t yet read any of his works, and so my views have been tainted by the media’s interpretation and coverage of the matter – which is not a good thing. So I am not really in a position to comment, but I do have some questions about the wisdom of such a plan.
Some comments I made in the #ipchat chatroom:
[sim] I think it has some serious flaws based on my understanding – but then I haven’t read the full report, so he may have actually addressed the shortcomings.
[sim]for starters there will have to be some type of cap imposed to limit who can get it and on what value of property, otherwise prices will simply be driven up too far. I honestly don’t think increasing supply will work to keep price growth in check – since new homes generally cost too much to make a difference at the bottom end of the market.
[sim] but as I said, I haven’t read his paper yet, so I don’t know how well he has covered off the assumptions
[sim] from what I understand so far, his plan will have one of two effects – it will either screw the bottom end of the market thus actually making it more difficult for low income earners to purchase property, or it will lead to a three-class society… those who can’t afford to buy, those who can afford to buy, and those who can buy if they agree to give the majority of their profits away. It won’t actually achieve anything overall I don’t think
[sim] The basic assumption is that it is a good thing to have everyone owning their own home. The “great aussie dream” as we like to call it. Sure, it can be a dream – and a worthwhile one too… but suggesting that home ownership is something that we MUST have and effectively legislating to try and achieve that – I’m not sure is such a wise move.
[sim] I have no idea how he could do that [‘cutting development costs’] other than to legislate that houses must be build cheaply
[sim] then, he may have a much more ingenious plan
So, I will endeavour to find a copy of his paper and read it for myself, so that I’m not making assumptions and fully understand his intent. It certainly is an interesting concept.
Naturally, any opinion I develop will be instantly panned as that of a “have” who doesn’t want the “have nots” to get a leg up in life. That’s not me – I’m just a cynic who doesn’t think that a government can pull all the right strings to pull some thing like this off, and I’m also a strong supporter of free-market economics, and I really don’t like it when governments legislate to try and mess with that market (never turns out well).