A government MP has described renters trying to break into the soaring Sydney and Melbourne housing markets as "imprisoned tenant serfs" who are funding the growing wealth of investor "lords".
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John Alexander, the Liberal MP and former professional tennis player and commentator, also compared the current undersupply of affordable homes as like playing Roger Federer 1000 times – and losing every time.
Mr Alexander is chair of the parliamentary inquiry asked by Treasurer Joe Hockey to examine home ownership and the impact of the current tax system on the market.
"My concern is … I think there is evidence of a spike [in property prices] here and it will continue to happen," Mr Alexander told Treasury officials he was questioning.
"It's a situation leading us to fewer people owning more properties where the landlord will – actually you can drop the 'land' off their titles and they will just become 'lords' – and those who have failed to be successful buying a home are imprisoned as tenant serfs funding the gaining of greater and greater properties by the lords."
His assessment of the capital city markets is at odds with Mr Hockey, who has denied that housing is unaffordable as people are still buying property and advised people to "get a better job" if they wish to get on the ladder.
Treasury officials were quizzed about the recent statements of Treasury secretary John Fraser, who said Sydney and parts of Melbourne were "unequivocally" in the grip of a housing bubble and Reserve Bank governor Glenn Stevens, who has described the Sydney market as "crazy".
Research by HSBC bank found Sydney prices have risen by 39 per cent and Melbourne 22 per cent over the past three years.
The first published submission to the home ownership inquiry has predicted a "bloodbath" when the bubbles burst.
Acting deputy secretary of Treasury's macroeconomic group, Jenny Wilkinson, said the fundamentals had not changed since Mr Fraser conceded there was a property bubble but she insisted there were signs that "some pressure is coming out of the market".
Treasury believes slower rates of land release by state government and local councils have kept upward pressure on prices.
"What's interesting is the data on new residential land releases does suggest that they have been declining over time. Land release, redevelopment, zoning is a matter for state and local governments but it's certainly interesting to us that in a period in which we have had ongoing population growth, and if anything slightly higher population growth, new residential land sales seem to have been falling in the trend," Ms Wilkinson said.
Labor MP Jim Chalmers expressed dismay that Treasury had not done any research into the effect of negative gearing on house prices. He pointed to research by Moody's that found an extra $44,000 on average was added to the cost of homes due to the tax deduction utilised by investors.
"So when the Treasurer … is providing advice to his state colleagues about what they should do, and they ask him what his analysis is of tax treatment including negative gearing, he doesn't have any Treasury analysis to lean on? He's just relying on anecdotal and other things he picks up around the place?"
Ms Wilkinson responded: "The Treasurer could always ask to do a piece of work on that but … Treasury hasn't done any work on the impact of negative gearing on house prices."
The ALP has promised to release a negative gearing reform policy before the next election but the government has stuck to the line that when it was ended briefly in the mid-1980s rents rose as a consequence.
