"Don't buy" property right now, economist Chris Richardson tells young Australians

"Don't buy" property right now, economist Chris Richardson tells young Australians

‘Don’t buy’ is the advice to young Australians thinking of owning property from one of Australia’s leading economists, Deloitte Access Economics economist Chris Richardson.  

The advice confirms the uncertainties around Australia’s property market, as the government looks at ways to make housing more affordable, although there is scepticism about how much they can actually affect the market.

"The one bit of advice I give to young Australians is right now you know...amid our housing markets of the moment is 'don't buy'," Richardson told the National Press Club recently, as reported by The Australian Financial Review.

"Although there are elements of rental stress, and governments can be involved in helping to do things around there and indeed governments have a bigger role there than in other parts of housing markets, let's not forget that rents today make a lot more sense than housing prices,” he said.

Even Treasurer Scott Morrison spoke at length about the private rental market the same week at a speech on housing affordability ahead of the budget, when the government is expected to deliver an affordability package.

He noted that just over two thirds of households are owner occupiers, and almost a third rent - a quarter rent in the private market, and just under 5% rent through community housing providers at sub-market rates or in public housing.

The Treasurer, while acknowledging the affordability issues for both home buyers and renters, said any measures to deal with the situation “must involve a scalpel, not a chainsaw as advocated by the Labor Party”.

While Morrison – and others in the government – have raised the spectre of a range of measures the government was contemplating to make housing affordable, Richardson put a reality check, saying – relative to recent moves in house prices – the impact of any government policy change would be marginal at best.

Referring to Morrison’s speech, Richardson said:

“The most overlooked thing [the Treasurer] said was that there was no silver bullet around this.

“You absolutely do need to look at renters who are of course the flip side of looking at investors.”

He said the government could do "heaps of things", but when "you have more than nine million homes and families in Australia, you're not necessarily going to change things heaps".

"You need to understand how small the levers they have on how big a market the Australian housing market is.”

"They might affect prices by 2-3%: we easily did more than that over the course of November-December".

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