paulry

While it would be better for the government to come clean with us, this goes some way to explain the government's apparent out-of-touch-with-voters behaviour when it comes to high property prices:

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GarryP

You've linked to a subscriber only article (and also the fruit-loopy Australian as well).

Assuming you are talking about Hockey's foot-in-mouth statement yesterday - was it really so surprising that he didn't give a stuff if the young couldn't afford the inflated housing prices? He's always been a "everyone can be a millionaire if they just work hard" type loon, so of course his thinking wouldn't stretch to considering that houses were 8+ times average wages, and thus pretty obviously in bubble territory. All he will do is cross his fingers that things don't come apart with the 'investment' led mindset on his watch.

And frankly, with the competence he's shown, it's probably a good thing that he doesn't attempt any reforms.

Swerv-o

What kind of crazy drugs are you on? Property in Australia can only ever go up in value. It can never go down. Now quit your whining and buy yourself an investment property to negatively gear.


S

Alfresco

knockoff nige

His living away from home in his wife's house allowance alone would probably cover his mortgage.... Or his wife's. I'm truely sick of how entitled they are and how blatant they are about using it.

Amazulu

The market decides what property prices are. Something is only worth whatever someone is prepared to pay for it - if people want lower house prices, don't pay the higher price. Simple

Hockey was only speaking the truth but the lefty press and the 'it's not fair' mentality of a lot of the population don't want to hear the truth and would rather believe socialist fairy tales instead. Saying that Hockey needs to know when to say what and why - something that he very often fails to do

knockoff nige

Well no, housing is falsely affordable to investors because of negative gearing who make buying for first home buyers nearly impossible. There are quite a lot of foreign investors who are buying illegally and not getting caught or getting caught and paying the relatively small fine.

There are other factors but the truth is housing is not affordable to the people doing the essential jobs. A government that does not acknowledge this problem is undoubtedly a sad situation. Yet, Joe Hockey was quick to highlight the problem to Wayne Swan when he was in opposition.

renth

I agree with this but IMO it's not the housing market it's the credit market. The lower the interest rates and lending criteria the higher the house prices.

Throw in negative gearing to skew the prices up and the market becomes unaffordable to all who are not prepared to borrow to the absolute max of 2 x incomes plus a helping hand from the bank of mum and dad.

What should the government do? stay the hell out of the market. Abolish negative gearing and first home buyers grants and open the floodgates for building approvals. They won't do that because most of them own multiple properties and so do the people who tell them what to do.

GarryP

Actually one of the prime problems comes when something with one prime purpose gets dragged into another domain. It happened with bioethanol - coupling food with transport fuel; and its happened with housing - coupling housing for individuals with investments. Soon as people saw housing as a way of making money rather than somewhere to live, everything went to sh*t.

So the fix is to deal with that by first removing the government gifting money to those with money, for owning an 'investment' property - and then taxing those looking to rentseek on housing by taxing capital gains on housing that isn't your home. Doing those would kick the entire housing and particularly rental sector in the nuts - so would have to be done carefully, probably including a 'rent to own' component within the tax structure. That's mainly because its such a damn mess today.

The aim would be to make housing NOT an investment, and to stop the game playing at the same time - which would cut the value of houses by over half as things went back to some form of stability. When you think about it, the application of the 'market' to housing is reasonable for both soaking up the biggest chunk of an individuals wages, keeping them poor, AND the GFC, bringing the financial system to the brink of disaster. Sounds like a good reason to treat it as a failure and get it out...

Beoz

Agree completely. Politicians on both sides won't do a thing about NG.

On the brightside, I am seeing 'For Lease' signs going up everywhere in Sydney. These silly grey haired investors are going to get done. Not only are their yields incredibly low, when the bubble comes crashing down, and it will, the new investors are going to be toast. I'm about to negotiate a rental reduction and simply because I can get a better deal elsewhere.

Whilst I can afford to pay the mortgage on one of these ridiculously priced places, why would I when I can pay less than half the monthly mortgage cost in rent.

paulry

I agree with Renth too.

The big squeeze on rental prices is a sure sign that the bubble is ready to burst.

Beoz

Yeah I'm not sure its about to burst soon. But it will one day. I bit of a recession, a bit of interest rate increase. Boom, gone.

Amazulu

NG is a red herring

London does not have it yet property there is seriously 'unaffordable'

Actually, the whole concept of NG and its uniqueness to Australia is also a load of bollocks

paulry

You're not by any chance a negative gearer are you?

paulry

I agree, and the government is well aware of this. When they start selling their negatively geared properties we'll know the game is nearly up