The Great Aussie Dream

Recent reports that loan defaults and home repossessions have doubled since last year - and are also double the rate seen during the high interest rates of the mid 1990s - are a disturbing indicator of the way the redefinition of economic normalcy has put many ordinary people in deep trouble.

I recently wrote a report on the NSW Government's property vendor tax, and the more I read, the more angry I became about the way such a worthwhile policy was blown apart by self-interested lobby groups. By redefining the `battler' as the small-time property investor rather than the young, financially insecure first homebuyer was a masterstroke of self-preservation on the part of the property and real estate industry.

The housing boom was based on a totally unrealistic expectation: that the main profit from property investment is derived not from rental returns but capital gains. In other countries, rental returns are relatively high (up to 10%) compared to Australia's average rate of 2.5%. Once capital growth stalls, rental returns in Australia do not begin to recover mortgage repayments.

This unrealistic expectation fed unprecedented investment by people who never should have entered the investment market, and are now forcibly exiting it. Increasing lassitude in lending by banks as well as government support for such investment - primarily, that unassailable political sacred cow, negative gearing - has seen the property market placed almost wholly in the hands of one generation at the expense of another, either forced into an inflated property market or pushed out of it altogether.

I am one of the many people who has seen their chances of owning a house almost totally pushed out of their reach. A house should never have become what it is now - endless equity-yielding cash cow, tradeable asset, retirement next egg. It should be an asset open to all hard-working Australians, who should not have to dedicate a larger portion of their pay packet than ever before to achieving this aim.