Month: February 2011

In Australia, we have so far tried to ameliorate the effects of our unaffordable housing market only with first-time buyers grants and public housing. To make the whole market much more affordable, perhaps we should copy the German model instead.

Europe’s political class finally acknowledges that their pet project of free-for-all multiculturalism was a delusion. But to correct its disastrous consequences requires more than carefully crafted speeches at international conferences.

The strong link between local government finance and housing development fully explains why German and Swiss house prices have been steady for decades. To say it with Sherlock Holmes, improbable as it seems “all other explanations are more improbable still”. If Australians really cared for making housing more affordable in the long run, they should be studying the German and Swiss experiences more closely.

A dip into Australia’s history, seen through the eyes of a foreigner, is revealing. The pragmatism and egalitarianism so closely associated with Australia today are certainly not an invention of our times. Australia has obviously changed over the past 140 years, but perhaps not quite as much as we think.

The theory of an Australian housing market bubble shows all signs of a proper religion. There are rituals like the recurring publication of house price indices. There are miracles when house prices rise despite interest rate hikes. Then there are true believers in the theory that Australian house prices are not in any way exaggerated. And finally there are heretics who take great pleasure in questioning just that.

Australia’s abandonment by Britain was the salutary shock that this country needed. Britain may have sought to profit from its turn to Europe, but it was Australia that gained most from it.