Top CEO Matt Barrie exposes the huge problem with Australia that’s the ‘root of all evil’ – and why many young Aussies may have the same grim vision of their future

A top CEO has claimed Australia’s hugely expensive housing market, which successive governments have allowed to spiral out of control, is the “root of all evil”.

Freelancer.com CEO Matt Barrie said the staggering rise in house prices has led to widespread impacts on Australians’ finances and the way they view the world.

His comments come as more young Australians admit they may be waiting for their boomer parents to die so they can get a foot on the property ladder – a grim vision of their future that has left many of them feeling guilty and conflicted.

Despite the Reserve Bank raising interest rates to control inflation, property prices in Australian capitals have continued to rise by a further 20 per cent in the past year.

Mr Barrie said a house is considered “astronomically unaffordable” by economists if it costs more than five times the average salary.

In Australia, the average home in the capital is nine times the average salary. In Sydney it is eye-catching thirteen times over.

‘The root of all evil in this country is the astronomical price of housing. Once you understand all the implications of that, it really is the problem at the root of all the problems,” Mr Barrie said.

In Sydney, the average house costs about $1.6 million, according to Domain’s House Price Report for the March 2024 quarter, with the company predicting the average price could reach $2 million within the next three years.

It is the most expensive city in the world to buy a house after Hong Kong.

Mr Barrie said it is now mathematically impossible for a middle-income household to pay off a mortgage in Australia.

“The average wage is about $94,000 per year, while your take-home pay is about $5,900 per month after taxes. With a mortgage of €1.2 million at current interest rates, that is almost €7,000 per month [in mortgage repayments].

“Wages can no longer afford Sydney homes,” he said.

Young Aussies may be waiting for their parents to die

The decades-long housing bubble shows no signs of bursting as housing supply vastly falls short of demand, leaving many young Australians fearing their only path to home ownership is waiting for their parents to die.

Alan, 43, says his legacy now weighs constantly on his mind whenever he sees his mother.

“You know the only way you’re going to get your inheritance is if the person in front of you – who you love – dies,” he told SBS news.

‘How would that make you feel? Because that’s how I feel and it’s pretty nonsense.’

A 22-year-old Sydney resident, who asked to remain anonymous, said that despite earning $75,000 a year, she calculated it would take her 27 years to save enough for a down payment on a median-priced Sydney home .

She said she felt discouraged when she realized the only conceivable way she could afford a house before age 50 would be to inherit money after one of her parents died.

‘It’s just terrible that people can’t afford to own a house without relying on an inheritance… I think it’s unfair and it really upsets me.’

Ari Sharp, a single mother, says she can’t afford to buy her own home. However, she is fortunate that her parents own four properties, which she will eventually inherit.

This financial security has given her the freedom to explore jobs that don’t pay well.

“I’ve had the freedom to explore things that I actually want to do,” she told SBS.

Wages in Australia are falling as house prices rise

Mr Barrie said it was notable that Sydney was only just behind Hong Kong in terms of housing affordability.

‘Hong Kong is a nice, attractive island that is extremely dense, very small and the second most populous country in the world.

“So why would Australia… a relatively remote area, 10 to 20 hours by plane from absolutely any major action in the world, have the most expensive housing in the world outside of Hong Kong?”

‘It’s not because we’re making more babies, because every woman on the planet needs to have 2.1 children to maintain the population. Australia is about 1.5 or 1.6.

‘Wages are not rising at the rate the housing market is rising. In fact, wages are currently experiencing the largest decline in purchasing power ever.

‘For 20 to 24 year olds, the real purchasing power of wages has returned to 2008 levels over the past year. Now the price of everything else has not.

‘So what’s going on? Why does Australia have some of the most expensive housing in the world.’

Who is to blame?

Barrie said the blame lies with successive governments, which over the past sixty years have allowed population growth to outpace the supply of housing, to the point where it has now become unaffordable for the vast majority of the population.

Mr Barrie said that the Albanian government could not only be blamed for the housing crisis, but that it had not exactly improved the situation by going ‘full berko’ with its immigration policy in an unstable economy.

He said the policy, which brought 518,000 people to the country in the 2022-2023 financial year, has increased demand for housing and further pushed up costs.

“Housing prices have risen 61 times in 86 years and the reason for this is that politicians have chosen an easy path of ruthless growth,” Barrie claimed.

‘Instead of talking to the engineers, the scientists and the entrepreneurs about what they need to do to grow the economy and actually build a diversified, strong, complex and advanced economy.

“Instead, they pumped the housing market into the mother of all bubbles.”

He said Australians desperate to own a home were taking on huge amounts of debt that dwarfed US interest rates during the global financial crisis.

Homeowners and banks already owe twice as much to the housing market as Americans did in 2008, he said.

He said high immigration was perpetuating the housing bubble.

“So we’re bringing a lot of people to this country, an astronomical number of people, and they’re doing it because it keeps house prices high.

‘The more people you grow in a certain area, the more house prices will rise and stay there.

“And the path of easy, ruthless growth that governments are following is to continue to inflate the biggest bubble you can possibly inflate.”

The solution?

Economist Yanis Varoufakis told the Equity Mates podcast that another million homes are needed in Australia over the next three years.

He said any measures to increase housing affordability, such as lowering interest rates or government subsidies, would only increase prices.

‘The supply is not made by the private sector, nor by the public sector…’ so anything that stimulates demand will only make the affordability problem worse,” he explained.

“You should shout from the rooftops, ‘Let’s find a way to build private and public housing.’