Finance Property Who are you calling lazy, Mr Hockey?

Who are you calling lazy, Mr Hockey?

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On Tuesday, Treasurer Joe Hockey offered this advice to first home buyers: “Get a good job that pays good money.”

The Treasurer appeared to be suggesting that the only reason first home buyers are struggling is because they aren’t working hard enough.

In other words, they’re lazy.

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• Sydney, Melbourne ‘in a housing bubble’: Treasury
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We tested Mr Hockey’s claims, and found them dubious to say the least. Here’s why.

Even Joe Hockey will be wondering why he said what he said.

Wage growth is way behind house price growth

In 2014, Australian house prices increased by 7.9 per cent on average. House prices in Sydney, meanwhile, grew by a massive 12.4 per cent. Wage growth, however, was only 2.5 per cent.

In other words, the cost of houses in Sydney is increasing five times as fast as income, and three times as fast in the rest of the country. That means, simply, if you want to own your own house, you have to pour more and more of your income into it.

House prices are off the chart in Sydney

Currently, the median house price in Sydney is around $914,000 (and that won’t buy you something on the Sydney Harbour foreshore, despite what Barnaby Joyce might say). At the very minimum, that would require a deposit of $182,800.

At monthly mortgage payments of $3955, it would take 30 years to pay off, including interest to the bank of $692,979.

So who can afford that?

Let’s take a profession that everyone will agree is worthwhile and hardworking: nursing. The average nurse earns $68,910 a year. A married couple who are both nurses would therefore take home $107,178 per year after tax.

If this couple – let’s call them Chris and Joan – were to buy the median Sydney house, they would end up spending at least 44 per cent of their income on mortgage payments. You’re not meant to pay more than 28 per cent.

If Chris and Joan took Mr Hockey’s advice, they would give up nursing and become investment bankers. This is even more true for teachers, firefighters, paramedics, police officers, social workers and soldiers, all of whom earn less than nurses on average.

Agriculture Minister Barnaby Joyce said a total of $400 million has been allocated to drought support in the Federal Budget.
Agriculture Minister Barnaby Joyce suggests Sydneysiders struggling to buy a house consider leaving Sydney and moving to rural NSW.

What if the bubble bursts?

If there is a housing bubble, and it bursts, then it will be poorer people who are hit the hardest. If an investment banker buys a house worth $914,000, and its value crashes to, say, $500,000, she is rich enough to absorb that hit. But for Chris and Joan it would be very painful.

If Chris became ill or lost his job, meaning they couldn’t continue paying the mortgage, selling the house would not raise enough money to pay off the mortgage. That would leave them in debt with nothing to show for it.


That brings us to the final point. Unemployment is on a rising trend, and the government’s efforts to curb this are yet to make an impact. The Australian economy is struggling to pick up the slack from the flagging mining sector and there is little evidence that other sectors are demanding workers in great enough numbers to take up the slack.

For all those reasons, for a Treasurer who delivered a moderately popular budget recently, his ‘get a job’ comments risk making him and the government sound out of touch with the reality facing ordinary Australians.

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