'Get a good job': Joe Hockey accused of insensitivity over advice to first-home buyers

Updated

Treasurer Joe Hockey's political opponents have labelled him out of touch after he said that people looking to buy their first home should "get a good job".

"The starting point for a first home buyer is to get a good job that pays good money," he said.

"Then you can go to the bank and you can borrow money."

Mr Hockey was speaking at a press conference to announce an Australian Tax Office (ATO) investigation into nearly 200 cases where restrictions on foreign investment in real estate may have been breached.

It is part of the Federal Government's move to reassure home buyers that residential property prices are not being driven up by overseas buyers.

While conceding that house prices in Sydney were "inflated," Mr Hockey denied the market was becoming unaffordable for first-home buyers.

"If housing were unaffordable in Sydney, no-one would be buying it," he said.

"It's expensive as a multiple of average weekly earnings, it's expensive, it's an expensive city to live in."

The median price in many suburbs of Sydney that are even vaguely close to the city has exceeded $1 million, surging more than 12 per cent last year.

The life cycle of a housing bubble

Low interest rates, loosening lending standards bring borrowers into the market

Demand for property increases in the face of limited supply

Supply takes a relatively long time to replenish and increase

Speculators enter the market believing profits can be made through short-term buying and selling

Demand increases further

Interest rates rise, lending standards tighten

Demand decreases, or stagnates; supply increases

Prices drop sharply

The bubble bursts

(Source: Investopedia)





(Source: Investopedia)

Earlier this month, Treasury secretary John Fraser warned that Sydney was "unequivocally" in a housing bubble, as the latest data showed annual growth rates picking up again.

Mr Fraser told a Senate hearing the same applied to some parts of Melbourne, and did not totally rule out potential problems in other parts of Australia.

Mr Hockey said with the official cash rate at 2 per cent, "that's readily affordable — more affordable than ever".

"If property is proving unaffordable for people with interest rates at record lows, then they should think carefully about how much they really can borrow."

He said the rising prices were good news for those already in the market.

"A lot of people would much rather have their homes go up in value rather than fall in value," he said.

"To have increasing equity in a home is a good thing."

His comments have drawn fire from the Opposition.

Shadow treasurer Chris Bowen said Mr Hockey's comments were offensive to middle-income earners.

"That's just an insult to the nurses, the teachers, the people who are working hard, who just are finding it very hard to break into the housing market," Mr Bowen said.

"This is Joe Hockey's 'poor people don't drive cars' moment all over again.

"The Treasurer is completely out of touch, he completely misunderstands the Sydney housing market, and he just can't help himself. He just insults people who are hard workers at every opportunity.

"To say to young Australians in particular who are trying to crack into the housing market that what they should do is get a well paid job is just an insult to those Australians, those younger Australians, who are working hard, saving hard, and all they get from the Treasurer is an insulting lecture."

Labor MP Tim Watts tweeted: "Life must seem pretty easy to Joe Hockey. Can't afford a house? Get a higher paying job! Don't dwell on the highest unemployment rate in 12y".

Greens leader Richard Di Natale said Mr Hockey's prescription was "fantasy land... let-them-eat-cake" kind of stuff.

"His mates might be buying the [houses], the big end of town might be buying them," he said.

"[But] I've got to tell you, if you're a young kid trying to get into the housing market, you're struggling at the moment.

"We do have a crisis when it comes to housing affordability."

Topics: hockey-joe, federal-government, economic-trends, sydney-2000

First posted