‘Ridiculous prices’: Australians’ home ownership dreams turn sour

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Gary Jackson, a freelance photographer in Australia’s second-biggest city Melbourne, started shopping for his first house in 2017.

But after five years of searching, the 40-year-old singleton has given up. During the last 12 months, house prices in Melbourne jumped nearly 20 percent, raising the median house price in the city to more than 1.1 million Australian dollars ($832,000).

In January, the median price for a house nationwide passed the psychologically important threshold of 1 million Australian dollars ($757,000) – although creating a major talking point for the next federal election, which is expected to take place in May.

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A complex web of factors has contributed to Australia’s housing affordability problem, including record low interest rates, easy credit due to financial deregulation, and a mismatch between housing supply and rapid population growth, which saw Australia’s population balloon by one-third during the last two decades.

Critics have also pointed to government policy incentivising middle-aged and elderly Australians to park their wealth in investment properties.

Those incentives include tax rules that encourage so-called negative gearing by allowing property investors to offset losses – such as when mortgage repayments exceed rental income – against their earnings.

“Negative gearing has not only pushed young people out of the housing market by pushing up house prices but the tax concessions also overwhelmingly go to those over the age of 40,” Matt Grudnoff, a senior economist, wrote in a blog for the Australia Institute, a think-tank in the capital, Canberra.

SOURCE: AL JAZEERA

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