New colleague Isaac Gross
St Kilda boy returns home
“I’m still a St Kilda supporter.” It’s one of the first things he says. And that’s where he grew up, just down the road from his current Caulfield office. Isaac Gross is Melburnian born and bred. Both his parents went to Monash and are still telling stories of the Menzies building and what it was like back in the 1970s.
Contrary to his parents, Isaac – or Zac as most people know him – undertook his undergraduate studies at Melbourne University followed by a stint in Sydney working for the Reserve Bank of Australia (RBA).
All through his school years he was more interested in science than in economics. But with time he found that physics and economics used the same method, then applied it to different areas. And he found it more interesting to apply the methods to people and behaviour, rather than atoms and particles.
Studying macroeconomics is what made him passionate about economic policy. This semester he’s teaching Applied Issues in Macroeconomic policy at Clayton, a very hands-on course for people interested in going to work for the Treasury or the RBA.
In 2013 he moved to University of Oxford to complete his Masters degree and DPhil, only to return five years later. While there were possibilities to stay in the UK or go to the US, in the end Australia won him back.
“My partner is also from Melbourne and I convinced her to move overseas in the first place so the prospect of coming back was just too good to pass up. It’s been great to have an Australian summer again. The department is good, as is the location,” he says.
Zac’s research specialises in the housing market and how buying a house affects households when it comes to expenditure and other household goods.
“Unsurprisingly the amount of smashed avocado you can buy decreases when you buy a house. And I look at how fiscal policies affect the house buyers, the housing market and household spending. Will people buy more or less avocados?”.
He finds that policies aimed at increasing homeownership, such as first home owner grants, can actually slow the economy as they encourage households to save rather than spend their income.
His research hasn’t so far been able to afford him a house of his own. So he’s still renting and looking forward to housing prices falling further while eating more smashed avo.
What do you think about the current housing market?
“While housing prices have fallen quite a bit in the current market the economy as a whole is still fairly stable and unemployment is fairly low at 5 percent. There’s not much to worry about at the moment. This is not a bubble that is going bust,” he says.
”If the prices fall another 10 percent then we’d be concerned but policy makers are actively keeping an eye on it – in fact there are early signs the slump may be over already, with prices rising in the past couple of months. Given that we’ve had a steady climb over the last few years a slight downturn is not the end of the world.”
He would like to see a shift in policy from favouring investors to focusing on first-time home buyers. He believes winding back negative gearing or just targeting it at new builds alone would be a good idea and facilitating for people to be able to afford their first own home.
“The price-income ratio has increased a lot since the 80s and 90s. It makes sense to enable people to buy a house, especially lower income earners. If we are looking at a situation where the bottom half of the income percentile are never able to buy, I think it’s not ideal.”
When Zac is not focused on his research he plays mixed netball at the Caulfield gym and enjoys to travel. Most weekends you’ll find him in his kitchen baking sourdough bread.
“It takes a bit of time but you can put all sorts of good things in there, olives, sundried tomatoes. I like to experiment. It’s always great to make something from scratch.”
Zac’s top three things to do in Melbourne:
- St Kilda beach and Acland Street.
- Walking along the Yarra, especially Southbank.
- Restaurants in the North in areas such as Fitzroy and Collingwood.