When homes earn more than jobs: the rentierization of the Australian housing market

Abstract

This article develops the concept of housing market ‘rentierization’ to describe the shift in the treatment of housing away from its use as a consumption good to an asset from which economic rent can be extracted, with Australia as a canonical example. Rentierization encompasses, but goes beyond, the financialisation of housing that has been the focus of attention in recent political economy literature as it involves policy changes and coordination across the land and housing market, fiscal-policy as well as financial policy spheres. In addition, we argue, rentierization offers a better explanation of rising house prices than the decline in real interest rates which has come to the fore in the recent economics literature. Our study of Australia examines the returns to land and housing over time and traces the roots of rentierization to developments that preceded the financial liberalisation of the 1980s, including the privatisation of public housing in the 1960s and 70s. We consider some of the reasons for the resilience of Australia’s rentier-oriented housing model, and policy alternatives which might help reduce the logic of rentierization and, in doing so, reduce housing-related inequalities.