Barefoot Investor exposes the huge cost-of-living issue both Albo and Dutton have failed to solve: ‘Sardine tins sold at caviar prices’
The Barefoot Investor has compared Aussie homes to ‘sardine tins sold at caviar prices’ in a brutal swipe at both political parties’ attempts to solve the housing crisis.
Scott Pape said he spent four hours of his long weekend driving across Melbourne with his 11-year-old son who quickly noticed a key phrase on election billboards splashed around the city: ‘Cost of living.’
The finance guru noted his son was ‘spot on’ but claimed neither Labor nor the Coalition were doing much to address the issue.
‘The biggest cost? The roof over our heads – rent or mortgage. That’s where the squeeze is,’ he wrote in a column for the Herald Sun.
‘Australian homes are now some of the least affordable on Earth. And to afford them we’ve racked up world-class debt.
‘Back in the mid-2000s, the average house cost four times the average income. Now it’s more than eight.’
Mr Pape claimed the current housing market had ‘priced ordinary Australians out of their own neighbourhoods’.
With the election coming up in just five days’ time, many Aussies had hoped the two major parties would battle to come up with the best solution.
Mr Pape recalled seeing dozens of election billboards about the cost of living, while the Coalition and Labor failed to offer a feasible solution to the housing crisis
Yet, Mr Pape claimed both have only offered options that will put more money into the hands of pre-existing property owners.
‘Labor wants to slash deposits to five per cent. Which is as dumb as it is dangerous. Remember, the US subprime crisis was created by politicians making it easier for broke people to buy homes,’ he wrote.
‘Not to be outdone, Dutton, the so-called economic conservative, is promising to allow first home buyers to raid their super and write off their mortgage interest.
‘It’s madness. Both policies are like turning up at an auction and handing everyone a suitcase full of cash. It doesn’t make homes cheaper. It just lets buyers bid higher – and history shows they always do.’
With both policies likely to drive house prices and rent higher, Mr Pape believed the Australian dream of homeownership was all but dead for many.
‘It seems like both sides have designed their housing policies to fit on a highway billboard: Big font. Feel-good slogan. Eye-roll logic. Paid for with borrowed money,’ he said.
‘In doing so they’ve turned the great Australian dream into a financial trap.’
However, there is some good news for borrowers.
Mr Pape wrote that the housing policies proposed by both the Coalition and Labor ‘just lets buyers bid higher’, rather than lowering costs
Macquarie Bank last week cut its one to five-year rates by 20 basis points, with borrowers now able to fix their mortgage for two or three years at 5.19 per cent.
Those wanting more certainty for longer can fixed their home loan for four or five years at 5.39 per cent.
Outside of eco loans, Australia’s fifth biggest lender, Macquarie, now offers the lowest fixed rates.
The major banks and the futures market are now expecting the Reserve Bank to cut interest rates again on May 20, before embarking on more cuts in 2025.
Canstar data insights director Sally Tindall said competition in the fixed-rate mortgage space was heating up.
‘Macquarie has taken the knife to its fixed rates ahead of next month’s RBA meeting as it ramps up competition in the fixed mortgage market,’ she said.
Borrowers who fix now, however, could miss out on more relief for variable rate customers should the Reserve Bank keep on cutting interest rates.
