It's almost tragic watching politicians and media puzzling over the two-speed property market and the related issues of low housing affordability and record home repossessions.
The reasons are quite simple.
The common factor pervading these issues is this: Australia's economy is booming but the spoils aren't being evenly shared.
Most of the benefits of the resources-inspired prosperity are being gobbled up by the upper echelons. While the top end is rolling in cash, the average person is no better off than five years ago.
The business elite have never had it so good. Record company profits, generous executive salary packages and a buoyant sharemarket mean those at the top have more dollars than ways to spend them. This is driving the rise and rise of the top end of the residential property market.
But down in the real world, the mainstream where 90% of Australians live, the market is going nowhere fast.
More and more households cannot afford to buy a home, those who already own one are struggling with their mortgages after eight consecutive interest rate rises and banks are repossessing homes at record levels.
The wages report shows that over the period of the economic boom wages have grown at roughly 2% to 3% a year. In other words, not much above the inflation rate. The report states that a significant proportion of households have seen no "real" (after inflation) increase in their incomes over the past five years.
But in the same time frame property prices have doubled in many areas and there have been multiple rises in interest rates.
The problem is this: the typical price has risen a lot, thanks for the recent market boom, and the typical monthly payment has risen greatly also, thanks to all those interest rate rises from the Prime Minister who promised they wouldn't rise if we re-elected him – BUT household incomes haven't kept pace, thanks also to that same Prime Minister who has devoted his life to keeping wages down.
In the property booms of the 1970s and 1980s, prices rose a lot and interest rates were high, but incomes were rising at 8%-9% a year, so affordability didn't suffer too much.
Today, the growing gap between the income needed to get a loan and the actual income earned by the average family is the reason why affordability is at all-time lows – and why we have this strange two-speed property market.
You'll notice that there's no mention in the affordability equation of stamp duty or land supply.
This is a surprise because the development lobby has been desperate to convince us that affordability could be solved overnight if state governments lowered stamp duty and raised the supply of land for new residential development.
It's nonsense but they keep saying it because they have a vested interest in lower stamp duty and higher land supply.
So why is this deception not widely known?
Part of the answer is that media doesn't do its job. There was a time when journalists were proactive in investigating major issues like affordability. Today many journalists simply regurgitate the spin-doctored views of politicians and business lobby groups.
THE POLITICS OF AFFORDABILITY
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