Michael Pascoe: The Great Housing Hijack – what (nearly) everyone is missing

Housing policy failure is plain to see, writes Michael Pascoe.

Housing policy failure is plain to see, writes Michael Pascoe. Photo: TND/Getty

“The vast majority of what is written and said about Australian housing is either nonsense, property porn, clickbait or lies, all more or less to the benefit of interests vested in maintaining the status quo of ever-more expensive shelter with all the social damage that causes.”

It’s rather gauche to quote oneself, but that’s what I wrote in a blurb for Cameron Murray’s new book, The Great Housing Hijack.

The book is the exception that proves the rule as it demonstrates the folly of the general consensus for solving our shelter crisis – that we should keep doing what we’ve been doing for the past three or four decades.

The book distils a lot of Dr Murray’s writing on housing over the recent years.

He pulls no punches – nobody escapes unscathed. The real estate lobby and its myrmidons most obviously cop it, along with hapless governments and shallow journalism.

Core messages

For mine, there are four core messages in the book, all backed with sound economics and research.

  • There is the dispiriting history lesson that the nature of property ownership and renting means inequality and exploitation has been the norm. Our present crisis is a return to that norm after three exceptional post-war decades, the 1950s, ’60s and ’70s, when there was quite massive government intervention in the market to increase both home ownership and public housing.

(A demonstration of that history, starting with Charles Darwin’s observation of 1836 Sydney, is here in an extract from the book.)

  • The market equilibrium we’ve reached means if one side of the renters v owners divide gains, the other side loses. It might sound like stating the obvious, but cheaper rents and/or lower housing prices would mean landlords and existing owners lose. Higher rents and prices mean renters and would-be owners lose
  • That the ratio of owners-to-renters is roughly two to one, that owners are wealthier and backed by the very large and politically intimately-connected real estate/development lobby means owners’ interests dominate policy, perpetuating the status quo – owners keep winning, non-owners keep losing
  • The industry line that “the market” will solve – if it is allowed to rip – the line swallowed by governments of both stripes and most media, is a con.

Supply myth

Last point first as Dr Cameron says the main hoax driving housing policies here stems from “the supply myth”.

It’s the repeated line that the shortage of land, or that governments must release land, or that regulations are stifling supply, or that taxes on property are inhibiting supply.

“The supply myth fills a beautiful niche,” he writes. “It doesn’t question the distribution of property ownership. It doesn’t annoy property owners, as they stand to benefit from less regulation and lower taxes. And it sells a believable story to renters – who can disagree with the idea that more homes are better than fewer?”

Dr Murray says it would be a great relief if it was true – but the economics and money say it’s not.

“Imagine for a moment that the story was true and that letting the market rip by removing taxes and regulations really could achieve the outcome of, say, 25 per cent lower rents and prices over five years. Where is the lobbying to protect the trillions in asset values and the billions in rental income that are at risk from up-zoning? It doesn’t exist.

“In fact, the Real Estate Institute of Australia, the lobby group for landlords, supports mass up-zoning. The Property Council of Australia, representing property developers and major investors, argues that ‘National Competition Policy-style supply and housing incentives could boost state housing supply and spur state housing production within three years’.

“It’s a puzzle that property owners and the development lobby, who make money from selling and renting property, claim that land use regulations that decrease housing supply and should be removed, despite standing to benefit financially from higher prices and less competition.”

Dr Murray says either: 1. housing supply does not operate the way the lobby implies; 2. the industry puts community interests before their own shareholders; or 3. the lobby is incompetent.

Option 1 is the answer as no industry lobbies for deregulation if it genuinely believes stronger competition and lower prices would be the result.

Even under gentle questioning from pro-developer Liberal MP Jason Falinski at a 2022 inquiry, the country’s biggest developers admitted that housing prices wouldn’t fall if state and local governments rezoned more land to allow for greater supply. The best they could spin was that prices would rise more slowly.


Dr Murray posits that the property market is best viewed as a monopoly – property owners own all the property and treat the market as monopolists will by seeking to maximise their profit. Non-owners can only acquire property by buying from the monopoly.

For Dr Murray’s full demolition of the supply myth, you’ll have to read the book. Hint, it involves land banking, the costs of up-zoning, the multibillion-dollar windfall profits that flow from zoning changes and what he calls the absorption rate equilibrium.

“Housing analysts who argue that we need to let the market rip to increase the number of homes always overlook the absorption rate equilibrium. Property owners will not flood the market with new homes just because the rules allow it. They haven’t done that for hundreds of years or more, even before there were planning regulations. To develop new housing gradually is a normal part of the property monopoly.”

Dr Murray offers a solution to the crisis inevitably imposed by the monopoly, but it would require visionary governments not in the thrall of the monopoly.

HouseMate solution

Inspired by Singapore’s Housing and Development Board and the period of successful Australian direct public housing programs, he dubs it HouseMate.

“A one-sentence summary is that HouseMate gives every non-property owner Australian citizen the option to buy a home from a public provider at a cheap price.”

If no household members own property, they would be eligible to purchase a new or second-hand HouseMate dwelling at a price that approximated the building costs, not the cost of the land. HouseMate properties could be on-sold after being occupied for five years, but only to HouseMate buyers who would have the option of buying a new dwelling, thus anchoring the cost of second-hand HouseMate homes and preventing spillover into the private property market.

There’s more to it but, again, you have to read the book or Google Dr Murray’s Fresh Economic Thinking writing.

It is the only proposal I’ve seen that is honest about the problem and the scale of solution needed. Singapore can do it. Australia used to do something a bit like it, but we have indeed become a timid, captured nation.

Lessons from history

As for history, please read this extract from the book. In part, it quotes Henry George’s 1879 book, Progress and Poverty. Then, as now, the association of poverty with progress was a great enigma.

George concluded that the enigma was due to the ability of landlords and property owners to constantly extract from non-property-owning workers their rising wages, meaning that the “prodigious increase in wealth-producing power” of the 19th century was linked to the impoverishment of the landless.

“George’s observation – that private property markets by their nature tend towards concentration of ownership and rents that grow in line with workers’ wages – is still relevant today,” writes Dr Murray.

Now, at the richest time in our history, we’re heading back to 19th century inequity with falling home ownership rates, “increasingly stark clustering of households by income and wealth at certain locations” and housing rents rising in lockstep with incomes.

As the Australian Housing and Urban Research Institute has just reported, even high-income households are increasingly being caught in the rental market, adding to pressures further down the income ladder.

“In 1996, high-income households accounted for 8 per cent of private renters; now they account for 24 per cent,” as Gareth Hutchens reported.

“The share of private rental stock that’s affordable for Australia’s lowest-income renters has fallen from 60 per cent to just 13 per cent.

“As more high-income households have shifted into the private rental market, more low-income renters are struggling to compete for rental housing and are being squeezed out of the formal renting sector into informal living arrangements and homelessness.”

Dr Murray is right, our housing has been hijacked. That is having disastrous consequences for society. Don’t let the property industry shills tell you otherwise.

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