ABC star Alan Kohler reveals why his own kids have suffered due to Australia’s big mistake

ABC financial commentator Alan Kohler has expressed his sadness that his children cannot buy a house as cheaply as he can.

The 72-year-old father of Nine’s financial editor Chris Kohler, 35, said his Baby Boomer generation had it a lot easier.

Alan Kohler, now a grandfather, recalled how he and his wife Deborah Forster, a novelist, were able to buy a house in Melbourne for $40,000 in 1980, the year he turned 28.

At the time, as a young journalist at The Age newspaper, he earned $11,500.

“So we also paid about 3.5 times my salary for the house, even though we were better off than my parents because my wife worked,” he wrote in a Quarterly Essay.

He is sad that his three Millennial, adult children Phoebe, Alice and Chris struggled to buy a house, even with two incomes from high-paying jobs.

‘In the past four years, our three children and their partners have all bought their first home’ he said.

“They do it later than us, and much later than my parents, so they earn better, and of course both partners work, but they paid about 7.5 times each income for their house.”

The 72-year-old father of Nine’s financial editor Chris Kohler (pictured with wife Sussanah) said his baby boomer generation had it a lot easier

In other words, my children – and all young people today – pay more than double their income for a house than their parents – and their grandparents – did, and that is only vaguely possible because both partners are working to pay it off. to pay. .’

Alan Kohler said unaffordable housing prices only worsen inequality.

“It is destructive because of the inequality that results: with so much wealth concentrated in the home, it remains with those who already own a home and with their families,” he said.

‘For someone who has little or no home equity available, it is virtually impossible to break out of the cycle and build new wealth.’

In 2024, the average house price of $925,762 in Melbourne is 9.3 times the Australian full-time salary of $100,017.

In 1980, when Alan Kohler bought his first home, the average house price in Melbourne was $39,500, which was just three times the average annual salary of $13,042.

Alan Kohler blamed a rise in immigration levels in the 2000s for housing becoming unaffordable, just as the 50 percent capital gains tax credit debuted.

That meant that if a house rose in price by $100,000, a real estate investor only had to include $50,000 of that gain on his annual return.

“While in the rest of the world, property investing is about getting rental income from tenants, in Australia it’s about getting an income tax deduction and then a capital gain,” he said.

Alan Kohler is sad that his three adult children Phoebe, Alice and Chris (pictured right with son Johnny) struggled to buy a house even with two incomes from high-paying jobs

Labor lost the 2016 and 2019 elections and promised to limit negative tax breaks for new-build homes and halve the capital gains tax credit from 50 percent to 25 percent.

If former leader Bill Shorten had prevailed against former Liberal Prime Minister Scott Morrison, an investor who made a $100,000 capital gain on the sale of a property would have had to declare $75,000 on his tax return instead of $50,000.

The Treasury Department is now doing economic modeling to limit the number of properties a landlord can negatively impact, with rental losses compared to mortgage repayments and maintenance being claimed on taxes.

Alan Kohler said house prices would need to stagnate for 20 years for wages to catch up and debt-to-income ratios to return to 1990s levels.

He proposed reducing immigration levels so that construction activity could keep pace with population growth.

Annual net overseas migration levels rose from 100,000 in the late 1990s to more than 300,000 in the late 2000s, before reaching a record high of 500,000 earlier this year.

“If the government were serious about housing affordability, it would announce an affordability target like I’m proposing, which is three to four times the average income, and say, ‘We’re going to achieve that target by doing everything we can. can ensure that house prices remain at their level for eighteen years, so that incomes can catch up.’