The founder of a company now worth $130 million says high immigration and unaffordable housing are stifling the creation of innovative businesses like his in Australia.
Tim Fung, co-founder of Airtasker, where freelancers bid for one-off jobs, said population growth and resulting unaffordable housing in Australia’s major cities had implications beyond the cost-of-living crisis.
“That aspect probably seems fairer because it’s really just a question of supply and demand,” he told Daily Mail Australia. “The more people want a house, the more prices go up.”
However, he said the resulting lack of savings was destroying the ability of potential entrepreneurs to try to start their own businesses, which in turn was holding back job creation.
From Sydney The average price of a $1.5 million home is now so expensive that someone would need to earn $226,621 a year just to get a loan with a 20 per cent deposit.
This borrower would still meet the definition of “mortgage stressed” despite being in the top 2.3 percent of earners, because more than a third of his or her salary would be going toward servicing a loan.
“If you look at the number of double-digit, million-dollar dwellings in Sydney’s suburbs, you just have to compare that to wages and incomes,” Fung said.
“It’s hard to connect the dots between extreme housing costs and people’s incomes.”
Tim Fung, co-founder of Airtasker, where freelancers bid for one-off jobs, said population growth and resulting unaffordable housing in Australia’s major cities had implications beyond the cost-of-living crisis.
Mr Fung, 41, said unaffordable housing meant few could take the risk of starting a business as he did, because all his savings had gone into buying property.
Even those with the ability to start a business saw no point in doing so, as they were more likely to make money by simply selling their house a few years later when prices were still rising.
“It’s so attractive to invest in property and your residence that it stifles the amount of investment that goes into business and entrepreneurship,” he said.
‘Many people who make money by starting a business naturally invest those profits predominantly in fixed assets.
“It would be even better if most of that investment went into the next generation of people who could start companies.”
Mr Fung blamed negative gearing tax breaks for investor landlords and the 50 per cent capital gains tax rebate available to investor landlords for rising home prices.
“The other contributing factor is the tax regime around property ownership – it is quite favourable to own a residence in terms of negative gearing and capital gains tax on a primary residence,” he said.
‘I have no alternative and I don’t want to say that I do.
“I think there is an existing problem.’
In 2023, 547,300 net migrants moved to Australia, the highest number on record in a calendar year.
In the last financial year, which ended in June, that number fell to a still-high 469,140, Australian Bureau of Statistics figures showed.
Sydney’s median house price of $1.5 million is now so expensive that someone would need to earn $226,621 just to get a loan with a 20 per cent interest rate.
Mr Fung said Australia’s skilled migration program was too biased towards people with university degrees..
“It’s a big problem: we need more skills,” he said.
Yaniv Bernstein, host of The Startup Podcast, agreed.
“The higher cost of living means you need to earn more money just to put food on the table and keep a roof over your head, so it’s less attractive to start something,” he told Daily Mail Australia.
‘Another thing that startups rely on is being able to hire employees who work for below-market wages in exchange for equity; that’s very common in the tech sector.
‘Very often you’ll find people who would like to work for a startup but can’t afford the pay cut.
Australia is already losing out due to higher costs of living, he said.
‘Higher housing costs lead to higher labor costs, which leads to lower competitiveness in this global environment.’
Mr Bernstein argued that a less innovative Australia would also be bad for living standards.
“If we rely solely on being a resource-based economy forever, we are really missing the opportunity to raise our standard of living and create the jobs of the future for Australia,” he said.