Cheaper houses, or secure investments? We can’t have both

We Australians are simple folk. All we ask of this world is a successful cricket team, an internet connection fast enough to pirate Game of Thrones, and a little patch of the earth to call our own. Ideally with a two-car garage, if you’re asking; and a rumpus room, backyard pool and maybe water views.

Our enduring dream of home ownership is why so many elections have been fought over the sacred turf of the Aussie backyard. John Howard was most explicit about it, campaigning in 2004 with the emotive slogan “Who do you trust to keep interest rates low?”

The former PM understood that his “battlers” in places like Western Sydney were mortgaged to the hilt and feeling precarious, and even though his opponent was one of them in Liverpool’s own Mark Latham, Howard prevailed.”

But this campaign is surely the first time that a Liberal prime minister has begun his defence of our precious castles by standing up for the property portfolios of one-year-olds. Malcolm Turnbull’s doorstop on Monday with little Addison Mignacca, whose parents are negative gearing an apartment for her, bless, was a curious attempt to undermine Labor’s housing affordability policy.

I’m sure little Addison would have thanked the nice man in the nice suit if she’d yet been able to speak in complete sentences. She’s probably been worrying about the valuation on her playpen. And every one-year-old responds positively to government-sanctioned pork, just as long as she’s called Peppa.

But as much as I’m sure we’d all love to get our kids into the property market, the effect of negative gearing is that every Addison with a property portfolio means that other would-be buyers are trapped in the rental market by ballooning prices. Because Addison isn’t just a cute kid – she’s a landlord. And can you imagine how it must feel when you can’t afford to buy, so instead have to pay rent to a kid three years shy of kindy?

But while the PM has pursued the toddler investor market, Bill Shorten has made a gamble of his own by actually having a detailed policy, a sharp difference from the reactive Opposition playbook that worked so well for Tony Abbott. That’s why Turnbull was out in that backyard, campaigning against Labor’s plan instead of being forced to back whatever his own platform turns out to be on budget night.

As a result, we’re talking about substantive policy differences in an election campaign, which feels thoroughly strange.

The major parties have lined up conveniently along class lines. Labor is for the have-nots, who worry about ever getting into the property market. And the Coalition is there for the haves, defending their property values.

There’s been debate this week over whether Labor’s negative gearing policy will “take a sledgehammer” to property values, as the PM has suggested. Many criticised Malcolm Turnbull for pointing to common sense when he defended that claim while talking to Leigh Sales on 7.30.

He might have been better off pointing out that this was precisely Labor’s intended effect. The negative gearing policy is explicitly supposed to make it harder for the Addisons of this world to buy houses – sorry, baby girl – and make it easier for the less fortunate.

Unless you’re one of those weird, rare creatures who believes that policies should benefit others out of some strange notion of common good, your position in this debate will probably reflect your own interests. If you got a property or two, you probably hate your portfolio losing the valuation it’s achieved in recent years, even though – let’s be honest – for many of us, that value is downright obscene, at least if you live in a major city.

But if you’re tired of renting and are desperate for a shoebox to call your own, you’ll be hoping the market tanks so you can jump on board for the climb back up. In other words, you’ll be standing by to scoop up poor little Addison’s apartment if her parents have to sell.

It’s like stealing candy from a baby. If you needed the candy to live in, and wanted it to become your major lifelong investment, and besides, the baby’s parents had their own candy.

Which policy will ultimately prove more attractive probably comes down to numbers. More of us are property owners than would-be purchasers, so the Coalition ought to be onto a winner, right?

Perhaps, but it’s more complicated than that, at least in my case. (Like nearly everyone in this debate, I’m thinking only about how I’m affected.)

Not only am I a property owner, but I’m one of those scammers law-abiding taxpayers who has optimised his arrangements for the current system – in my case via happy accident rather than deliberate strategy.

I have a small apartment which I rent out, and then pay rent on the other apartment that I live in. If I lived in my own place, I’d get no tax benefit, but instead, I get to claim the loss on the other apartment. Basically, I’m a 39-year-old Addison.

But here’s the thing – my apartment’s a one-bedroom. Which was great when I was living alone, but what if I plan to have kids some day, and would like to buy a house that we could all live in?

In the current market, I have Buckley’s. My only chance, unless the market for articles like this explodes, is for the market to drop, so that I can afford the repayments. That would mean that my current apartment drops in value, but I’m fine with that, because bigger properties will drop by proportionally more.

In the long run, I’ll be ahead, even irrespective of the property’s absolute value fluctuations, because I’ll be living in a “forever home”, for which I’ll be probably be able to afford the repayments.

Sadly, I haven’t the mathematical nous to work out which scenario would make me more money in the long run. But like most Australians, the idea of a home appeals beyond the asset column on a spreadsheet. Homes are where we live out our lives, and renting feels inherently less secure than owning.

That’s why housing affordability is so important to so many people, and defending property values is so important to so many others. Many people, like me, have a foot in both camps. How many of us there are in each is going to go a long way towards determining which side moves onto the government benches in the big House down on Capitol Hill.

And as for the PM’s nascent campaign, the next time he does a doorstop with someone who’s also a potent illustration of Labor’s argument, the gear he ought to be thinking about is reverse.

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