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The Australian politics thread

Burgey

Well-known member
Turns out Albanese owns a couple of investment properties himself. So will he actually do anything that will drive down prices generally, or just things will stuff more money into builders pockets? Sure you can talk about building 'x' amount of social housing, but driving prices down more generally is the only thing that will solve housing affordability. Also this talk of using superannuation to do it. Ah, how about super is invested in a way that produces the best return, and that's it. Seems like both parties are eying it off as a pot of money for either 'nation building' or filling favoured pockets without spending more taxes.
You realize he was in on the policy work which developed the policy they took to the last election,right?
 

Starfighter

Well-known member
You realize he was in on the policy work which developed the policy they took to the last election,right?
I don't have their minutes to see who came up with what, and that was then, when there was less overt need to prop up something unsustainable to try 'save' (in reality kill) the economy.
 

Burgey

Well-known member
Yeah but youre suggesting he won’t take steps to make things better because he owns an investment property. If you’re going to say that you’ll need to do a bit better evidence-wise than that thought bubble.
 

the big bambino

Well-known member
Ultimately a massive growth in credit and the de facto expansion of the amount of cash floating around isn't in itself a bad thing so long as that cash is being used to facilitate growth in the truly productive sectors of the economy; i.e. not endless financial speculation on housing, but actual expansion in the productive capacity of the economy to make stuff and do useful things.
In some quarters housing is considered a useful thing.
 

Starfighter

Well-known member
In some quarters housing is considered a useful thing.
Much of the housing 'boom' investment was on existing housing, not new. And in any case developers build far less than they could to keep prices rising. The supply-demand thing is totally broken.

It's as clear an example of a loose credit-induced speculative bubble you could ask for (aside from the current stock market, which is just absolutely nuts).
 

the big bambino

Well-known member
The general impression I have is that housing start up rates move within a range but are generally good. There are administrative reasons and costs that keep demand and prices high - governments have a vested interest in the price of land. Whereas the developers I've listened to would like to build more than regulations would otherwise allow. I also wonder if another reason for the continued speculation on housing mirrors my own personal one - low interests rates encouraging speculation into a sector with comparably better returns but is still low risk. I sympathise with people trying to buy a home. But I don't know if forcing housing prices down encourages them (buy an asset that is being depressed? - I'd quibble) while removing an investment option for people trying to build wealth before they have the capital to commit for riskier returns is also an issue.
 

Starfighter

Well-known member
The persistent gap between approvals and completion is new, not extant prior to 2010. Actual costs of building have little to do with price rises - they have been only a little over inflation. Of course the governments have a vested interest - NSW in particular is addicted to stamp duty. Developers can tell you things, but actions tell another. They would rather hold off building at all to value capture zoning changes on already profitable projects. While Australian planning rules and admin could be better they're actually pretty good with most developments approved, and that in 3-4 months.

But that's missing the point, as it's been driven almost entirely by investment in existing houses. Since negative gearing was reinstated in 1987 the proportion of existing dwellings in all investments has gone from 45% to 92%. Of course low interest rates are a factor, especially as they distort credit markets (secured loans such as housing see rates fall further than unsecured ones). That's loose credit. The real change is price-to-income ratios, which blew out from about 4 to over 6 during the boom, as banks leant more against the same income. Investor lending doubled between 2010 and 2015.

Also worth mentioning that foreign buyers were up to 15% of new and 7% of existing dwelling purchases (even though supposedly they can't buy existing). That's not a small amount. It's a sad indictment that the government thinks foreign investment returns are a greater good than affordable accommodation.

You clearly don't sympathise enough to actually propose a workable solution, as the only genuine solution is lower prices, now and long term. Of course people will put off buying when they fall, but they'll buy when they've stabilised at a lower level. Rents will go down too, which will help them buy. If you can combine it with wage growth then prices don't even need to fall very fast. 2% fall a year with 2% wage growth decreases price to income from 6:1 to 4:1 in only ten years (all hail compounding). I don't think many will put off buying to try capture a 2% yearly fall.

Why should people invest in housing that they don't need to build wealth at the expense of people who do? Especially as investment in existing housing produces nothing, and is only an exchange in the sector, yet as prices rise faster than incomes it decreases long-term the amount of money available for value added consumer purchases. It's as good an example of a malinvestment as you could ask for.
People aren't purchasing houses to provide a wealth backstop to make riskier investments later on, they're predominantly making highly leveraged investments that rely on prices rising at a steep rate to make a capital gain and provide a cash windfall, at the equal expense of new buyers. I know housing-as-a-retirement-plan is a thing but it misses both the moral implications of impoverishing future generations (who won't have the same option open) and the economic ones.
Land might be safe in isolation and short term, but long term it has been a primary risk factor and was responsible for the catastrophic 1893 depression, which saw half of Australian banks fail.

It seems that investors have been bestowed this 'God-given' right to make a return at the expense of, well, me for starters, but pretty much everyone under 28. Where's the morality in treating houses not as places for living but as speculative commodities?

If you want someone to blame for lack of risk-free returns, blame the RBA. You think that we'd now know from Japan that long term suppression of interest rates doesn't help, and indeed harms, an economy, but it's more convenient to cling to failed theories and models (and enriching your mates via the Cantillon effect).
 
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Starfighter

Well-known member
In other news Frydenberg yesterday slipped that the official unemployment and reality are well removed. I'm surprised to see someone admitting it, to say the least.
 

Burgey

Well-known member
Yeah that struck me as a bit of a surprising admission too. Makes me wonder whether they are going to extend Jobkeeper at all or otherwise limit it further - sort of softening the blow when the numbers are published is they remove/ reduce its scope.

How terrible was Craig Laundy (and Morrison for that matter) saying people are knocking back work to stay on Jobkeeper, when there's 1200 odd applicants for every published job vacancy. smh.
 

Redbacks

Well-known member
He's meant to be a moderate also. The aim of Jobkeeper was meant to be: We pay people through their business to keep the engagement for when the economy opens back up (i.e. it's going to help a V shaped recovery compared with a nike tick). So if Laundy has his way people quit their company which then struggles after job keeper. e.g. imagine if all airline staff take these mythical jobs, Qantas and Virgin wouldn't be able to fly :blink:
 

Starfighter

Well-known member
So, anyone wanna opinionise of the palace letters? Be surprised if anyone still cares by Friday meself. A rather nothing story.
 
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