Rachel Ong writes in The Conversation (4.4.17) that housing has become integral to our welfare system, so even governments can't afford for house prices to decline.
'Whether house prices have been inflated by limited supply, or because of transfers to investors and homeowners, government policy is now trapped in a vicious cycle. The wealth accumulated in our houses has become a central part of the retirement system, and the government itself can’t afford for prices to fall.
'Generous tax subsidies and asset test concessions on the family home have incentivised the accumulation of wealth in property and fuelled demand pressures in the housing market for decades.
'Government assistance to home buyers and owners is provided in the form of the First Home Owners Grants, stamp duty concessions, and the family home’s exemption from capital gains tax, land tax, as well as the pension and other assets tests. These subsidies and concessions combine to make wealth accumulation in the family home more attractive than other assets.
'… In the short-term a significant group of millennials will miss out on the benefits of home ownership. But in the long term, unless governments address some fundamental structural problems currently entrenched within our tax-transfer system, there is a significant weakness in our social welfare system built on housing.'