We are in the middle of the Covid-19 pandemic. The real estate prices went 20% up in one year. The cost of renting is growing in a similar manner. Yet our political heavyweights play games with words working hard not to address the real problem. They all talk about (non-)affordability, first-buyers, property ladder. They never use one word: “expensive”. They never say that houses are expensive.
So let us play their game. Let us not use the word “expensive”, but stick with “affordable”. What is affordability? I would suggest is it a relationship between one’s income and the price of something, a property in our case, that the one wants to buy. If I earn $50,000 a year and a house costs $1,000,000 I need to pay my 20-year income to get the house. That is much less affordable than if I earn $100,000 a year and a house costs $300,000 so I need to pay “only” my 3-year income to purchase it.
There are only two ways how to improve affordability. We can increase incomes. However, if we increase incomes without any other changes in our work and our businesses, we increase the cost of products and services. So the cost of houses as well. That is called inflation. We earn more, but everything is more expensive.
The only option left is to lower the prices of the houses. We can improve affordability of our housing only by making the houses cheaper. No magic words can change that. With the current incomes there is no other way how to make house affordable to more people. But who wants that? I reckon the majority of our population (the property owners) does not. The majority wants the increase of prices, the majority dreams that dream of having gain without work. That dream that somebody else works for my gain. It sounds like it is a moral issue, not an issue of policies. But is there anybody around willing to address this issue?