Julia Irwin (Fowler, Australian Labor Party) Share this | Link to this | Hansard source

Today I wish to raise an issue which concerned me greatly in the last days of the Howard government and which is worthy of the urgent attention of this government. That issue is housing affordability. The greater part of my electorate of Fowler is made up of residential areas in the south-west of Sydney. It contains long-established suburbs like Mount Pritchard and Canley Heights, as well as new subdivisions such as West Hoxton, with further land releases planned in adjacent areas. But, because of population changes over recent years, many of the residential areas of Fowler house families with above-average mortgages.

The impact of 12 mortgage rate rises, including additional rises by major banks, has brought the Western Sydney housing market to its knees. While harbourside mansions continue to leap ahead in value, homes in western and south-western Sydney have dramatically declined in value. House prices in Sydney’s Lower North Shore increased by 10 per cent last year, but in south-west Sydney house prices dropped by two per cent. What we have is a two-speed property market and, in many ways, a two-speed economy. While the effects of high interest rates, high petrol prices and an increasing number of distressed sales are dampening property prices in the west and south-west of Sydney, property prices in high-end suburbs are going through the roof.

It has followed that rents have risen to the point where the median rent for a house in Sydney has reached $400 a week, with apartments fetching $380 a week—increases of over eight per cent in the last year. But renters in Sydney could hardly envy those homeowners paying off a mortgage. Declining house prices have left thousands of Sydney families with negative equity in their homes—they now owe more than their houses are worth.

I do not claim to be an economist, and I certainly do not claim to have the answers to the problems of financial stress affecting more and more families in Sydney’s west, but I do have a few questions that I would like answered. Why is it that working families already under great financial stress must bear the brunt of measures designed to curb inflation? It is true that many of those now in difficulty bought their homes at the peak of the property boom, but where was the Reserve Bank when property prices in Western Sydney were going through the roof?

I can recall the former Prime Minister, John Howard, just a few years ago saying that no-one had ever complained to him about the value of their home increasing. Inflation in home values did not seem such a bad thing back then. But today, when we hear warnings about the effect of inflation on working families, the first thing that seems to be forgotten is that they are suffering from deflation in their biggest asset, the family home. While we know that the labour market is tight in the resource states of Western Australia and Queensland, it is hard to understand why parts of other states must be pushed to the brink of recession by the economic blunt instrument of interest rates.

Every new interest rate rise is another bullet in the economic corpse of Western Sydney. At a time when higher levels of migration are increasing the demand for housing, homebuyers and developers are not jumping in to build new housing stock. One major brick manufacturer in Sydney is cutting back production by 100 million bricks a year. In Sydney, skilled building tradesmen are driving trucks because there is no work available in their trade. In a few years we will face a severe shortage of housing, our most important infrastructure. The skilled tradespeople who once worked in the industry will have left and not all will return. And the financial and social stability that comes from high levels of homeownership will be put at risk. As I said, I am not an economist, but I can see major problems ahead if the deflation in home prices in Western Sydney is allowed to continue.