ABC financial commentator Alan Kohler has expressed his sadness that his children cannot buy a house as cheaply as he can.
The 72-year-old father of Nine financial editor Chris Kohler, 35, said his Baby Boomer generation had it much easier.
Alan Kohler, now a grandfather, recalled how he and his wife Deborah Forster, a novelist, were able to buy a house in Melbourne for $40,000 in 1980, the year he turned 28.
At that time, he earned $11,500 as a young journalist at The Age newspaper.
“So we also paid about 3.5 times my salary for the house, although we were better off than my parents because my wife worked,” he wrote in a Quarterly Essay.
She’s sad because her three adult Millennial children, Phoebe, Alice and Chris, had struggled to buy a home, even with two incomes from well-paying jobs.
“Over the last four years, our three children and their partners bought their first home,” said.
“They do it later than us, and much later than my parents, so they make more money, and both partners work, of course, but they paid about 7.5 times each income for their houses.”
ABC financial commentator Alan Kohler has expressed his sadness that his children cannot buy a house as cheaply as he could.
The 72-year-old father of Nine financial editor Chris Kohler (pictured with wife Sussanah) said his Baby Boomer generation had it much easier.
‘In other words, my children (and all young people today) pay more than twice their income for a house than their parents (and their grandparents), and this is only vaguely possible because both partners work to pay for it.’
Alan Kohler said unaffordable house prices were only making inequality worse.
“It is destructive because of the inequality that results: with so much wealth concentrated in the home, it stays with those who already own a home and within their families,” he said.
“For someone with little or no household equity behind them, it is virtually impossible to break out of the cycle and generate new wealth.”
In 2024, Melbourne’s median house price of $925,762 is 9.3 times Australia’s full-time salary of $100,017.
In 1980, when Alan Kohler bought his first home, the median house price in Melbourne was $39,500, which was only three times the median annual salary of $13,042.
Alan Kohler credited rising immigration levels during the 2000s with housing becoming unaffordable, just as the 50 percent capital gains tax discount debuted.
That meant that if the price of a house rose by $100,000, a real estate investor would only have to report $50,000 of that gain on his annual return.
“While in the rest of the world investing in real estate is about getting rental income from tenants, in Australia it’s about getting an income tax deduction and then a capital gain,” he said.
Alan Kohler is sad that his three adult children, Phoebe, Alice and Chris (pictured right with son Johnny), had struggled to buy a home, even with two incomes from well-paying jobs.
Labor lost the 2016 and 2019 elections promising to limit negative tax breaks on new-build homes and halve the capital gains tax discount from 50 per cent to 25 per cent.
If former leader Bill Shorten had triumphed against former Liberal prime minister Scott Morrison, an investor who made a $100,000 capital gain from selling a property would have had to declare $75,000 on his tax return instead of $50,000.
The Treasury is now developing economic models to limit the number of homes a landlord can negatively affect, where rental losses compared to mortgage payments and maintenance are claimed on taxes.
Alan Kohler said house prices would have to stagnate for two decades for wages to catch up and return debt-to-income ratios to where they were in the 1990s.
He suggested reducing immigration levels so that construction activity could keep pace with population growth.
“If the government was serious about housing affordability, it would announce an affordability target like the one I’m suggesting, of something like three or four times median income, and say, ‘We’re going to achieve that target by doing everything we can.’ “. “We can ensure that house prices stay where they are for 18 years to allow incomes to recover.”
