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Public Transport and the Housing Crisis

Over the last 30 years average house prices in Australia have risen from twice average household income to about four times average household income. Over the same period real wages per person have roughly doubled.

Detailed analysis of these figures will show some variation but will serve to confirm that in broad terms one of the reasons that housing has become unaffordable for so many Australians is the lag in earnings growth.

Negative gearing coupled with capital gains taxation concessions have helped to boost housing prices. There have been no corresponding influences to boost earnings. Also the distribution of earnings has favoured the well to do, with the top 20% of households earning almost 50% of all household income.

So it is hardly surprising that so many people cannot afford to buy a home even in the current environment of low interest rates.

To reverse a 30 year trend is no mean feat. Clearly no single measure will do this and the range of measures required to reverse the trend are probably politically unachievable. So the question is what can be done that will not be counter-productive and that is politically palatable for at least one of the major political parties.

One such practical solution is to invest heavily in improving transport infrastructure. In particular low cost efficient fast public transport.

There are many reasons why investing in public transport infrastructure is a good idea at this stage of Australia’s development. That makes it even more sensible to pick this solution as at least one way to put affordable housing in the reach of more people.

How it does this is by allowing people to live where housing costs are lower and to go to work where the jobs are. For that to happen on a grand scale the journey from home to work and back needs to be fast, comfortable and affordable and that means significant investment in public transport infrastructure.

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