During the COVID crisis, the Australian government stimulated the economy with an additional half a trillion dollars.

The net impact on stocks was minimal, but housing prices surged over 25 per cent - even with closed borders.

If you look back at the data on increases of national income and house price, there appears a direct correlation between surplus income for the rich and rises in domestic house prices.

If we as a nation are going to address housing affordability for young and lower income workers to keep the Aussie dream of a home ownership alive, there is clearly a role for government to investigate changes to the taxation system to improve the equitability in the market.

Inaction in this area simply means both Labor and the Coalition are willing to sell out the dream of home ownership in favour of supporting the rich.

Changes to taxation around house ownership is socially justified.

Australia changed when cracker night on the Queen's birthday and physical punishment in schools was banned, and political correctness gained traction.

What's next?

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Financial markets have been out of balance since cash interest rates fell to historically low levels in 2012.

This has led to an unsustainable dramatic rise in property prices fuelled by such low borrowing costs and easy availability of money.

Much attention has been paid to the monthly RBA announcement of the official cash rate and the effect this will have on home mortgage rates and borrowers' ability to service their debt.

There has been scant discussion of the other people in the community to whom a rise in rates may be beneficial, namely people saving for a home deposit and others whose work income has ceased and who depend on interest on their savings to live.

The usual lifespan of a home mortgage is 25 to 30 years and during that time the borrower may face many economic cycles and it is interesting to note that during the last 30 years the official cash rate has been as high as 9 per cent with a low of 0.1 per cent with an average of 4.7 per cent.

The usual home mortgage interest rate is some 2 per cent above the cash rate, giving an interest rate of 6 to 7 per cent!

So it is naive in the extreme to believe that the home borrowers' interest rates will remain at something starting with a 2 over the 30-year term of their mortgage.

All this raises two questions, namely have home borrowers been cautious in their borrowings with ample provision for an unexpected rise in rates back to their long term averages with the ability to meet the increased repayments?

Secondly, considering that average wages have not risen much over the past few years, were such borrowers in their desire to 'get into the property market' entirely open in their disclosures of their earnings and hence their ability to borrow and service such large loans?

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