Abstract: The financialisation of housing and the housing affordability crisis in Sydney
Over the last decade house prices in Sydney have soared and it is now one of the most expensive housing markets globally. In mid-2017 the median price for a detached home reached $AU1.18 million (about $$US900,000). This paper, drawing on documents and existing research, first outlines the features of the crisis and then examines the key contributors. What is argued is that the fundamental underlying cause of the crisis has been the reconceptualisation of housing in Australia so that it is viewed “as an instrument for profit-making” (Madden and Marcuse 2016: 4). The financialisation of housing has been actively encouraged by government policy. The extremely generous tax-breaks for investors in a context of record low interest rates has resulted in a massive increase in the number of small investors in the housing market. At the end of 2016 there were 2.03 million landlords in Australia representing 15.7 percent of all tax-payers. The tax breaks offered make purchasing a residential property as an investment an eminently sensible investment strategy and investors are prepared to pay a higher price than a conventional home purchaser. Besides the local dynamics, Sydney’s status as a global city that is perceived as a safe haven, has resulted in a substantial inflow of foreign capital into its residential property market. In many new apartment developments, most notably in inner-city areas, the majority of purchasers are foreign investors. At the end of 2014, it was reported that Australia, the US and Britain are the first choices for Chinese property investors and that within Australia, Sydney is the favourite destination. Unless there are major policy shifts, it likely that for a large part of Sydney’s population, housing will continue to be a source of anguish rather than comfort and security.