The Elephant in the Room
The property podcast for the thinking person.

Episodes

Episode 418: Australia’s Housing Incentives Are Backfiring

Australian house prices rising year after year have become so normalised that they’re often treated as proof the system is working. Rising values are framed as prosperity, while any hint of decline is seen as a threat. But this episode of The Elephant in the Room takes a step back to ask a more uncomfortable question: what happens when inflation and property prices are allowed to rise together — and who actually pays the cost?

Joining Veronica and Chris is Adam Schwab, founder of Luxury Escapes and a forthright commentator on economics and incentives. Coming from outside the property industry, Adam brings a contrarian perspective to housing — questioning whether Australia’s obsession with rising prices has created a property Australia bubble that now shapes everything from interest rate decisions to household balance sheets.

A central theme of the conversation is how interest rates affect property prices, and why monetary policy has become so closely tied to housing outcomes. Adam argues that whenever prices wobble, policy responses tend to prioritise stabilising the market, even if that accelerates inflation across the broader economy. This feedback loop helps explain why Australian house prices keep rising, regardless of wage growth or productivity.

The discussion also dives into Australia house debt and the role of bank lending in inflating housing values. Adam outlines why excess debt — not equity — is the common ingredient behind housing bubbles, and why Australia’s banking system remains heavily exposed to residential property. As debt levels grow, the risks are increasingly borne by households navigating higher repayments, tighter conditions, and rising living costs.

From there, the conversation turns to affordability and access. Policies like the shared equity housing scheme are examined through a critical lens, with Adam questioning whether such initiatives genuinely improve outcomes for buyers — or simply support prices by boosting purchasing power. Against this backdrop, many Australians are left grappling with the same question: is it better to rent or buy in Australia, or has ownership become more about system design than personal choice?

The episode also explores the growing divide between asset owners and everyone else. As inflation rises, property holders are often insulated, while renters and buyers face mounting pressure. This dynamic is reshaping household decision-making and intensifying debates around fairness, opportunity, and long-term economic resilience.

This is a grounded, sometimes confronting conversation about inflation, debt, and housing policy in Australia, and what they mean for the future of the market. If you want to understand how inflation and property prices are connected — and why the cost of housing keeps rising even when conditions worsen — this episode offers the context most headlines leave out.

Episode Highlights:

00:00 — Introduction to the Episode and Guest

00:56 — Adam Schwab's Contrarian Views on Property

01:37 — Debating Property Prices and Investment

02:49 — Renting vs. Buying: A Financial Analysis

05:43 — The Impact of High Property Prices on Society

19:02 — Monetary Policy and Housing Market

26:50 — Reverse Mortgages and Their Implications

27:32 — The 40-50 Year Loan Debate

28:31 — Government Policies and Housing Market

29:09 — Economic Logic vs. Political Motives

29:33 — Risks of New Property Incentives

31:22 — Banking System and Housing Bubble

33:41 — Immigration and Housing Affordability

35:28 — Leveraging and Property Investment

42:20 — Comparing Property to Other Investments

47:53 — Global Talent and Property Prices

49:51 — Concluding Thoughts on Property Market

About the Guest

Adam Sherry is a Professor in Macquarie Law School and Executive Member of Smart Green Cities. She is a leading international expert in land law, with a particular focus on high density development. Her book Strata Title Property Rights: Private governance of multi-owned properties (Routledge, 2017) is the first academic monograph on Australian strata title. It has been cited by the Privy Council and the New South Wales Court of Appeal. Professor Sherry's research focuses on the complex legal, economic and social relationships created by collectively owned land. 

Professor Sherry regularly advises governments, domestically and internationally, on the laws governing multi-owned properties. She was a member of the United Kingdom Law Commission Technical Committee for the Reform of Commonhold from 2018-2020, and was engaged by the International Finance Corporation (World Bank Group) to reform the Fijian Unit Titles Act 1985 in 2021. She has advised governments in Asia, the Pacific and Middle East. In 2012, Professor Sherry was employed by the Administration of Norfolk Island to write a White Paper on the introduction of strata title to the Island, leading to the Community Title Act 2015 (NI).

Resources:

Chris Bates