The Australian housing market is in meltdown. Prices soaring. Young people locked out. Rents bleeding households dry. And Canberra is flailing.
It’s a familiar picture. Britain has been there. Still is. But here’s the twist: the Antipodean chaos is now prompting whispers that Labour’s obsession with property wealth needs a dose of Treasury discipline. The kind that used to make Gordon Brown wince.
Insiders in the Canberra press gallery tell me the Albanese government is terrified. Polls are tanking. The opposition is circling. And the root cause is housing affordability. They’ve thrown everything at it: first-home buyer grants, shared equity schemes, planning reforms. Nothing sticks.
The problem is structural. Australia has a tax system that rewards speculation. Negative gearing. Capital gains discounts. Stamp duty that chokes mobility. It’s a cocktail designed to inflate asset prices. And it’s working exactly as intended.
Sound familiar? Britain’s own addiction to house price inflation is well documented. But the difference is that we’ve had a long, painful reckoning. The Treasury has slowly tightened the screws. Stamp duty surcharges on second homes. Restrictions on mortgage lending. The Bank of England’s macroprudential tools.
None of it is perfect. But it’s a start. Australia lacks even that. The political will is absent. The real estate lobby is formidable. And the major parties are beholden to property investors.
What Australia needs, say some Labor MPs I’ve spoken to, is a dose of British-style fiscal conservatism. Not the austerity kind. The kind that says the tax system cannot be a vehicle for wealth accumulation at society’s expense.
This is a radical idea in Australia. Housing is a religion. The idea that the state should deliberately cool the market is heresy. But the numbers are impossible to ignore. Australia has one of the most unaffordable housing markets in the world. By some measures, worse than London.
The PM is boxed in. His left flank wants rent controls and massive public housing spending. His right flank wants supply-side deregulation and tax cuts. The centre is a void.
So they are looking abroad. And Britain offers a cautionary tale. We have tried many of the same policies. We have failed many of the same ways. But we have also learned that tax incentives for property are a leech on productivity. They suck capital away from businesses and into bricks and mortar. They entrench inequality. They create a rental class.
The political game is brutal. In Britain, Labour under Starmer is tiptoeing around housing reform. They don’t want to alienate homeowners. Australia’s Labor is the same. But the crisis is accelerating. The temperature is rising.
One senior Australian Treasury official told me: “We need to do what the Brits did after the 2008 crash. Take the punch bowl away. It will hurt. But the hangover will be worse if we don’t.”
Will they do it? Don’t bet on it. The lobbying is too strong. The electoral cycle is too short. But the pressure is building. And if the polls keep sliding, don’t be surprised if there’s a sudden conversion to fiscal discipline.
The lesson for Britain? We are not alone in this mess. But we have tools Australia doesn’t. The question is whether we have the courage to use them.
