Are Rising House Prices Due to a Particular Political Party?

tomleonhart on 08/04/2021 - 15:19
Last edited 08/04/2021 - 15:41 by 1 other user

Is rising house price caused by a particular political party like this guy has stated ? FOMO occurred due to the Liberal Party socialist handouts creating a false economy while racking up both the biggest budget deficits & national debts in history. That false economy is now exposed

In New Zealand, we have had a Labour Goverment since 2017 and house price has still gone mental since then, even more so since last year. Auckland median has gone up 20%+ since April last year.

If Liberal Party was the reason for house price going crazy in Australia lately, what is the reason for NZ? If people strongly believe the other political party would make a difference?

Maybe Labour and Liberal are not that different after all? Are they just scapegoat for our blames and the real problem isn't properly addressed?

Home & Garden

Comments

  • MS Paint on 08/04/2021 - 15:22
    +25

    Politics + ozbargain = no deal

    • RockyRaccoon on 08/04/2021 - 17:01

      Shock! đŸ˜± Horror đŸ‘» I thought everyone changed their vote based on political views expressed here.

      What was I thinking - Guess I need more Eneloops and Dominos vouchers…. đŸ€«

      • Charlie Sierra on 08/04/2021 - 20:22
        +7

        (in a fast, low voice) Spoken by the Eneloop Party, Canberra.

  • brendanm on 08/04/2021 - 15:25
    +4

    I wouldn't take any advice from someone who advocates for genocide on a bargain forum, but that's just me.

  • MoonlapseVertigo on 08/04/2021 - 15:25
    +5

    the Legalise Cannabis Queensland Party and the HEMP party is responsible for every good thing I've ever seen.

    • SBOB on 08/04/2021 - 15:39
      +15

      remind me again when they were the political party holding majority power and as such made such decisions?

      • Ocker on 08/04/2021 - 17:12
        -8

        If you know how Australian politics work then you would also know even a party with 0.1% of the votes and influence the ruling party decision - that's what politics is all about.

        • SBOB on 08/04/2021 - 18:06
          +5

          Not when one of the two major parties has a majority .

          Feel free to point out a decision or time when 'the Greens' rejected a proposed residential land release?

          I'm not a greens fan, but they always seem to the default excuse even when they have zero influence or power over the decision they are being blamed for.

          In the house of reps they have exactly 1 seat currently. Not influencing many major decisions with one seat. Assuming they were the previous obstacle you claim, I would assume there would be a flood of new land releases over the last couple of years?

          • HelpMeiCantSee on 09/04/2021 - 08:19

            @SBOB: I totally agree with what you’re saying, but in all fairness, greens are two headed marshmallow aliens with a weird fetish. /carryon

    • bargain huntress on 08/04/2021 - 15:42

      they don't build new housing on forested areas anyway

      they build it over farm land because most people don't realise how little fertile land we have, nor how infertile it is comparatively
      that's when they're not just selling it to america and china

    • Boogerman on 09/04/2021 - 08:51

      CBDs are vacant. But not enough land cleared
      And people like you vote - there’s the problem

  • hothed on 08/04/2021 - 15:46
    +6

    House prices are going up because of 2 reasons. Political party wont make a difference.

    Supply and demand.
    The number of houses in close proximity to a CBD(aukland/syd/melb) is fixed. New houses can be built but they will be further away(not comparing like for like). In general, population growth means increased demand, with supply staying the same. Prices go up.

    Reduced interest rates:
    The interest rates are at record lows and forecast to stay there for the foreseeable future. The reduced interest rates means people can service a larger debt.

    Example: Person A can afford 2k/month for repayments. At 4% interest rate they can borrow 416k
    Now the rate has dropped to 2.45% (as per ato website) They can now borrow $506k

    https://moneysmart.gov.au/home-loans/mortgage-calculator

    • tomleonhart on 08/04/2021 - 15:53
      +1

      Now this is what I believe is driving house price.

      Of course people believe different things and will argue their points and I just want to laid my observation in this post. Can't really blame Liberal for house price when across we have a Labour goverment and vice versa.

      • iNeed2Pee on 08/04/2021 - 16:12
        +2

        No you can blame Liberal. Blame Scotty from marketing. Shit bloke.

      • RecklessMonkeys on 09/04/2021 - 10:20
        +1

        You can actually.
        Negative gearing makes it worth taking on investment properties for the capital gains.
        This increases demand and drives up prices.

        NZ is now going to axe NG. We are not, since it is Liberal policy to keep it. Had Labor won, NG would already have been dispensed with.

        It isn't the only factor, of course.

        • tomleonhart on 09/04/2021 - 11:25

          In a couple of months times, if NZ housing cools off works thanks to the abolished of NG then I might agree that a particular government makes a difference. But for now the fact remains that NZ housing has gone up 20%+ since March last year alone and the only reason why NZ Labour is removing NG is precisely that.

          Will removing NG make a difference, we shall wait and see.

          • RecklessMonkeys on 09/04/2021 - 13:09

            @tomleonhart: The recent rally is driven by banks loaning more money, so you can thank the RBA for that.
            The RBA is in dire need of policy review, and the government should be driving that, but won't.

            What I'm arguing is that NG exacerbates those price rises.

            I don't dispute that historically, everybody was happy to goose the market.
            Labor, being more sensitive to the societal impact of concentrating wealth into the hands of fewer and fewer people, seem to have seen the light.

            Remember also, the banking royal commission resulted in responsible lending laws, which the Libs want gone already.

            Incidentally, if the housing market goes on to a ball tearing boom, APRA will step in with macro prudential control.

    • iNeed2Pee on 08/04/2021 - 16:04

      It's funny, 2 houses wanted high 8s. New properties hit the market yesterday on par with those 2 properties. Far less advertised prices (For Sale), and today those 2 properties have adjusted their price estimates.

      Amazing what more stock can do.

    • Ghost47 on 09/04/2021 - 00:29
      +4

      I agree with your two points. I would say there's more to it though. Yes population affects property prices (more people = more demand), and yes interest rates affect property prices (low interest = cheap money = omg I can double my money in 6 months by buying a house), but the reasons why population has increased and why interest rates are low must be considered, and I would say that government policy can have a downstream effect on those metrics.

      Population (relevant to supply and demand)

      For one thing, population growth does mean increased demand, there's no doubt about that. It's sort of like when you culture bacteria on a petri dish. It will grow and take up space. And grow and take up more space. And then the whole dish will be full of bacteria and bacteria poop to the point where all the bacteria die because there's too much waste around and no more nutrients, but I digress. Australia's population growth is mainly driven through net migration as seen here (pretty great info here too). As you can see the "natural increase" has remained relatively steady. But it can be seen that net migration outpaces the natural increase starting in 2005. It seemed that Australians weren't popping out enough babies (unlike India and China, and Becki in Frankston), although the re-introduction of the baby bonus in 2002 by the Liberal Government at the time (it was actually originally implemented by a Labor government in 1912 interestingly enough) did improve the birth rate. So why is this relevant?

      Well we import a lot of skilled migration don't we? The number of permanent skilled visas granted has increased from ~35,000 in 2000 to ~109,000 in 2019, it peaked at 128,973 in 2013. (Reading this back I can't find the source for this as I've looked through a lot of websites but this page has some historical information.) How is this relevant? Because it's ultimately driven by policy. From the year 2000 to 2021 (22 years inclusive) the Coalition has been in power for 16 year and the Labor Party has been in power 6 years (2007 to 2012 inclusive). I'm not an expert in the history of migration to Australia especially when dictated by political policy, but looking at the Liberal Party's 2019 policy on migration to Australia they increased the number of skilled migrant visas (employer sponsored) from 35,528 in 2017-18 to 39,000 places in 2019-20. This article mentions that "left leaning voters want more immigration and right leaning voters want less immigration". Historical migration numbers are here (see the Permanent Migrants table). It can be seen that from 2000 to 2006 (7 years inclusive) that total migration numbers jumped from 80k to 148k (+68k) during Coalition years. Labor years 2007 - 2012 (6 years inclusive) it jumped from 158k to 190k (+32k). Since 2013 it has been relatively steady at 189k-190k p.a.

      Now, Australia's population has boomed. But from the website earlier the natural increase is steady. So what's happened? Look at the chart called "Annual population growth rate" on this webpage. Looks kind of normal right? But wait, what's that drop at the end? It suddenly seems to have fallen off a cliff after December 2019?! WTF? Why would that be? COVID-19. Guess what happened when COVID-19 hit — borders shut, students couldn't come back, migrants couldn't come over and so the birth rate plummeted. It's clear that we rely on migration to boost our population in Australia.

      Anyway, we surely we have educated people in this country, right? I mean we have some of the "best universities" in the world and there's been talks of an innovation "brain drain", so why would we bother importing skilled people if Australians can do the work? Supply and demand. We have the supply of innovative minds, but as a country we do not invest in innovation. Heck we hardly even invest in STEM education. I'm willing to bet there are pollies out there more willing to hand little Timmy a mining pick as opposed to an Arduino. Interestingly that page mentions this:

      Under the next Labor Prime Minister, Paul Keating, investment in research and development began to climb. Even though his government’s main focus was the arts and the economy, and there was little narrative left for STEM, actual support for science remained relatively strong.

      With Keating’s demise and the election of John Howard’s Coalition government, support for basic science was consolidated with the establishment of the National Collaborative Research Infrastructure Strategy (NCRIS) in 2004. Howard’s government invested in research at the pace of inflation, and sought to strike a balance between curiosity-driven and applied research.

      During the Rudd-Gillard-Rudd years, government investment grew in both STEM education and facilities, facilitating both curiosity-driven and applied research and development.

      Why would we need to innovate when we can rely on our natural resources such as coal and iron ore? I mean, China will always be there wanting more, right? It's clear to me personally that we've rested on our laurels as a nation. We are undoubtedly the "lucky" country in terms of our abundant natural resources, just like how Steven Bradbury won the 2002 Winter Olympics (granted he nearly died once through an injury to his femoral artery if I recall correctly). I misquote Rachel Carlson when I say "The real wealth of the Nation lies in the resources of the earth — soil, water, forests, minerals, and wildlife
". This report also states the following:

      Natural resources, both renewable and non-renewable, and ecosystem services are a part of
      the real wealth of nations. They are the natural capital out of which other forms of capital are
      made. They contribute towards fiscal revenue, income, and poverty reduction. Sectors related to
      natural resources use provide jobs and are often the basis of livelihoods in poorer communities.

      As a nation we simply got lucky that China needed us at a time of unprecedented economic growth on their part, and so why would we bother innovating when we can just rely on demand coal and iron ore? We wouldn't. This article, granted it's an opinion piece, states:

      Our ranking on the global innovation index has also slipped over the last 10 years. Australia’s expenditure on research and development (R&D) is 1.8 per cent of GDP, versus an average of 2.4 per cent across the OECD. There has been a steady decline in the nation’s investment in R&D.

      So what's my point? I kinda went on a lot of tangents. Something about Australians not popping out enough babies, so we import people, but we also import skilled people because we don't have the skills, but at the same time skilled people leave the country because we don't invest in innovation. All of this is affected by government policy in one way or another. To fully lay blame on one particular party objectively will take a LOT more research, like PhD level research and I really ceebs.

      Interest Rates

      This took me a while to write this when I honestly should have been doing other things (I seriously have more important things to do), but it is an interesting topic. Population and interest rates may have some level of correlation. But, how? Well, low rates now means CHEAP MONEY BABY! MY HOUSE TRIPLE IN VALUE IN 1 YEAR! WHY NOT BUY??? But guess what? Because of low rates, people are borrowing like crazy for HOUSES. I mean, we've seen how cities like Sydney have boomed haven't we? Guess what happens then? People spend $800 k on a 2 br shoebox shithole unit in Epping NSW (well probably $900k now lel). And then what? Unless these people are rich Chinese (heck they probably are) they will ultimately ask the question "can we afford to have another baby?" I would really like to know if someone has conducted studies on "house poor" Australians and what the data looks like, especially in the capital cities and natural increase by state. Yes, monetary policy isn't controlled by the government. But the RBA manipulates the rate based on how our economy is performing, and our economy is affected by government investment. For example, Skyrail rollout by the Victorian Government created new jobs, creating jobs and boosting the economy by removing level crossings so that people can move around easier resulting in increased road usage efficiency.

      There's way more to talk about in terms of interest rates and how party policy has caused rates to decline since 2000 but I don't have time to research and look into it.

      TL;DR Population is affected by government policy due to net migration from overseas (which outpaces babies coming out of Australian vaginas) and interest rates are affected by policies that affect the economy, everything is intertwined, economics or something like that, I think it's called macroeconomics, if someone can confirm I would appreciate it.

      • Cliche Guevara on 09/04/2021 - 08:18
        +3

        Jebus, you wrote all that and still aren't sure if it's correct and need confirmation? FM

        • SBOB on 09/04/2021 - 09:23

          they like excessively long posts ;)
          https://www.ozbargain.com.au/comment/10301525/redir

          again, some decent points in there.. not sure they needed that many words to get the point across though :)

          • Ghost47 on 09/04/2021 - 09:31

            @SBOB: I don’t really like long posts, I mean I do have things that I need to do outside of commenting on OzBargain (like laundry and ironing and vacuuming and maybe showering) and long posts take time to research and edit, but it’s too simple to say “governments haven’t affected house prices because it’s because of interest rates and population growth” when government policies affect those things in the first place.

        • Ghost47 on 09/04/2021 - 09:28

          That part was a joke. Nice username btw.

      • Dee333 on 09/04/2021 - 09:08
        +1

        Interesting read. Enjoyed it.

  • EightImmortals on 08/04/2021 - 16:14
    +4

    There was a HIAA study a few years back that pegged the tax on a new house in Sydney account to about 45% (was 35% in Bris and Melb). So almost half of what you pay for a new house goes in government taxation. I imagine that has increased since then and neither party EVER talks about reducing taxation to help home buyers. Even home buyers grants mostly or totally go to stamp duty (tax) so when the government looks 'generous' they are merely making sure that they get paid. The other price driver is not as you would suspect, supply and demand but rather the availability of credit. When the banksters open up the taps the prices go crazy and when they clamp them down prices drop. Wonder why we haven't had an interest rise for a while? Even a .5% rise would break the economy at this point.

  • Blue Cat on 08/04/2021 - 16:15
    +1

    It's due to government interventions (not really dependent on party, all of them have interests in housing) which are causing a Cantillon effect - government keeps giving initiatives and "free money" to buy housing, which in turn increases the prices because now demand has artificially increased thanks to government policies, and because people have more "free money", the sellers can increase prices because people can still afford it!

    And the cycle continues forever because there are always people appearing who decide to get into housing after finding out about these "discounts".

    It is an endless cycle I have no idea how or when it is going to end…

    • Ghost47 on 09/04/2021 - 01:00

      And when a government even flirts with the idea of hamstringing home owners they get destroyed in the federal election ala Labor and negative gearing lol.

  • Seraphin7 on 08/04/2021 - 17:01
    -2

    Despite bleating from all manner of people, falling property prices are not in anyone's interest.

    • Crow K on 08/04/2021 - 17:58
      +1

      Apart from those who are interesting in buying them.

      • RecklessMonkeys on 09/04/2021 - 08:59
        +1

        Someone negged you, lol.

      • Seraphin7 on 09/04/2021 - 11:09

        And then the second those parties actually own them?

        • Crow K on 09/04/2021 - 11:40

          I can see what you're trying to do here. If your argument is "oh, by falling property prices, I was not describing a temporary thing but a long-scale future thing", we can do that dance as well. The "disingenous 'falling means constantly falling forever towards zero' tango", we'll call it.

          If you're about to play the "Buyers hate it when the price goes down (and continues to go down in the future is what I'm meaning here), buyers hate declining prices" card, then I'll counter with "Sellers love it when the price goes down (and continues to go down in the future is what I'm meaning here), sellers love declining prices" card because they managed to cash out at the top of the market.

          Heck, they can pocket some profit and then go back and re-buy the asset they had before at a much cheaper price (this makes the assumption that there are other reasons to purchase property besides capital gains. 'Shelter' for instance).

          • Seraphin7 on 09/04/2021 - 11:49

            @Crow K: It's not as complex as all of that. It's simply that, of course, anyone who doesn't hold property and wants to buy it, would prefer prices to be lower than higher. That is obvious.

            The sticking point is that the second they become property owners, they want prices to increase for any number of reasons.

            Therefore, the purchasers of property actually want prices to increase over time, because its simply not realistic that they'll perfectly time the market and they want prices to go up over time. While anyone would obviously love a bargain, in realistic terms, purchasers would prefer a market that is heading upwards, than one heading downwards.

            What's my evidence? Are more people buying property in strong upward markets or where prices are falling (or at least expected to fall)?

            • Crow K on 09/04/2021 - 11:59

              @Seraphin7: Any argument that assumes opposite sides of a transaction (buyer and seller) both want the price to move in the same direction is inherently flawed. You can't have both sides of the seesaw up at the same time.

              You agree that buyers want the price to go down - but you seem to overlook the fact that when a buyer buys a house they are no longer a buyer. They're now a seller. And sellers are on the other side of the seesaw and want prices to go up.

              Incidentally, this theory works for all types of commodities - not just property.

              • Seraphin7 on 09/04/2021 - 12:04

                @Crow K: We are fundamentally at cross purposes.

                You are talking about a transaction. Of course, there is a "win-loss" element to any transaction.

                I am talking about the movement in an asset class generally. In this case, buyers want prices going up, because it indicates that what they purchase today will be worth more tomorrow.

                • Crow K on 09/04/2021 - 12:15
                  +1

                  @Seraphin7: Yeah, you're conflating buyers and sellers. Looking at it slightly differently (given the argument is no longer about purchase price but shift in overall value over time, sure, why not). Note this actually inverts the definition of buyers and sellers. [e.g. why would a "buyer" want the price to continue to increase? Won't that make it more expensive as they continue to buy?]

                  1. Buyers want to make sure they have the most value in the future, they want the asset to increase in value.
                  2. Sellers are the opposite of this. They don't want to lose future value by cashing out of the asset.
                  3. Buyers and sellers have opposite wants. Buyers must absolutely hate falling prices (oh no, all that lost value!), but sellers love them (whew, lucky I cashed out when I did).

                  So, falling property prices are of interest to: "sellers".

  • djones145 on 08/04/2021 - 19:15
    +2

    I blame bikies

    it's a scam

    mspaint?

    I need legal advice from a car crash

    can I claim this with my insurance

    can I get personal.advice on investments

    pick one of the above to blame

  • djones145 on 08/04/2021 - 19:18

    wait "in New Zealand , we?"

    u a new Zealander?

    get off ozbargain and go to
    https://www.cheapies.nz/

  • Kail on 08/04/2021 - 20:05
    +1

    I blame the RBA.

    Every interest rate drop surged housing prices but they just kept on doing it.

    • orangetrain on 09/04/2021 - 09:49
      +1

      "There's no inflation!" Next year: house prices rise 5% "uhh, wages are down. Lets lower interest rates!" Next year: *house prices rise 10%"

      To be fair, RBA blames the Federal government. As LibLab have a property portfolio as conflict of interest, this is going to continue for a while yet. Vote for a minor party instead.

  • SF3 on 08/04/2021 - 20:16
    +2

    Are Rising House Prices Due to a Particular Political Party?

    I blame scalpers.

  • p1 ama on 08/04/2021 - 20:37
    +6

    Basically, no.

    Everyone in the media has been getting it wrong, everyone who wants to purchase a property and cannot afford to is also wrong. I'll try and explain why (FWIW, I'm an economist with a PhD in asset pricing models) - it's all because of two things (i) extreme closed-mindedness about places to live, and (ii) increasing populations, income and level of wealth.

    Myth - It's all because of interest rates:

    Yes, low interest rates do push up the price of housing, however, it also significantly increases an individual's purchasing power.

    For example, let's suppose that your debt servicing limit is $4,000 per month, which is reasonable for a couple making slightly above median income each. At an interest rate of 2.1%, around where it is right now, your borrowing power is $1,082,194. However, if interest rates were higher, say 7.4% (the rate in 2010 - source: https://www.orangefinance.net.au/historical-interest-rates/), then your borrowing power would be $577,717.61, significantly less right?

    Excel Calculations for those interested: =PV(0.02/12,3012,4000) and =PV(0.074/12,3012,4000)

    Now suppose that you can borrow at an 80% LVR. That means that in 2020, you can purchase a ~$1.35m property and end up with a $1.082m loan and pay $270,548 upfront. In 2010, with the same income, you could have purchased a $722,147 property with a $577,717 loan and pay $144,429 upfront.

    Notice that I ignored stamp duty because back in 2010, you would have paid the full rate for stamp duty upfront whereas now, there are stamp duty discounts in some states, and stamp duty is likely to move to a periodic tax rather than an upfront one in some others. That brings the upfront equity requirement even closer.

    On top of that, the wide availability of LMI today allows you to purchase properties with 10% equity deposits instead of 20%, as was the case back in 2010. So what's the conclusion? Yes, you will require a higher equity deposit today (that's expected, it's the return on equity of previous home owners), but the lower interest rates significantly increase your purchasing power, allowing you to purchase for more expensive properties with the same disposable income.

    Remember - higher interest rates means less borrowing power, so property prices are pushed down (this is the part everyone gets), but the amount you can borrow is also proportionately pushed down (this is the part that everyone forgets). My argument is that lower interest rates are actually better for most buyers (if you are not filthy rich) as your purchasing power would likely decrease more than property prices would due to cashed up rich people who are downsizing, flipping 3 investments to buy 1 big PPOR, people who have rich parents…etc. if rates were to increase.

    Be careful what you wish for.

    If you want to get into the property market:

    (1) Getting into the market earlier is key. Too many people have a view of purchasing a "forever home" and feeling discouraged when they see price-tags of $1.5m (for instance). They then simply exit the market, give up on their goal and resign to complaining about their fortunes. However, what they miss out on when doing this is the ability to "trade up" into that home they're looking for. Start off further away from the city, in a regional centre, a smaller place…etc., then as your income (and hence borrowing power) increases, sell off, earn your ROE and trade up to something closer to what you want. If you're persistent in doing this, you will reach your goal as long as you continue to get a pay rise to be able to service larger and larger mortgages.

    (2) Trade-off between renting a more convenient place vs. purchasing a less convenient place. There are loads of suburbs around the CBD (perhaps within 20 mins) that are full of young renters who want to purchase, but cannot as it's simply too expensive. However, many of these individuals can easily afford places further away from the CBD (perhaps 50 mins instead of 20 mins). You end up paying the same in mortgage payments as your rent, but in 5 years time, you have an asset worth much more than what you paid for it, whereas if you rented, you end up with nothing. Basically, always remember that there's a trade-off between short term convenience and long term wealth.

    Basically, the way I see the issue is two-fold. Australia is particularly in a bad shape because we have some of the largest cities in the world. Whilst Melbourne and Sydney might not be traditionally large cities, strict zoning laws and a compact CBD have led to a situation where people are living further and further away from the CBD because of the increasing population, but all travelling to the CBD for work. If you've worked in other cities, you'll generally find that their business districts are much more spread out and intertwined with where people live as opposed to this "star" model that we have here.

    Additionally, this may not be obvious for those who have never lived overseas (particularly in Asia and Europe), but I would say that Australians (in general) are extremely closed-minded about housing. Everyone wants a 4BR brick veneer home on a 650 sqm block of land with a picket fence and nice garden round the back in a suburban neighbourhood around 20 mins from the CBD despite spending around 4 waking hours at home on most days. The issue with this is that there is only so much land which meets this criteria. I don't see the situation improving unless people become more open-minded to other living arrangements.

    This is not something unique to Australia. I remember when I was in Tokyo, there were people who would commute an hour each way to get to work just to be living in an apartment similar to what you would find within 10 mins of the CBD here in Australia. The reality of it is that we have to figure out how to store more people in less space. This is something every country and culture either has dealt with or has to deal with. 50 years ago, the population was 3.78 billion, today it is 7.71 billion (over twice as much). We sometimes seem to forget that Australia is a very young country with very young cities. There are plenty of old cities in Asia and Europe which will show what our cities here would look like given enough time in terms of housing and population density. I think that a big part going forward will be being open-minded about how we live and understanding that we all (on average) have 50% less "Earth" than everyone did back in 1971. We cannot expect to live in the same way that those in 1970's Australia did forever.

    • tomleonhart on 09/04/2021 - 07:04

      I didn't expect a War and Peace response like yours but I like it.

    • [Deactivated] on 09/04/2021 - 07:56
      -1

      TL;DR I got lucky and if you do what I did then you could get lucky, too.

      • tomleonhart on 09/04/2021 - 08:33

        How did you get to your comment from p1 ama comment?

  • HelpMeiCantSee on 09/04/2021 - 08:17

    Nope, people lost their minds all by themselves

  • HeWhoKnows on 09/04/2021 - 08:57

    Its a combination of government handouts (economy has never been wealthier) and ridiculously low interest rates which push up all asset classes to unrealistic and unsustainable levels.
    These combine to create very high confodence in the economy.

    But in the end it really comes down to the ridiculusly low interest rates since those on government handouts arent real estate buyers.
    Remember that interest is the price of money.

    So we have super cheap money which means people can borrow huge amounts for very little money.
    Of course this will push up the price of assets.
    But we also have huge pools of money looking for a reasonable return since and bank deposit doesnt provide that any more.
    Then we also have very high confidence in the economy which means people are willing to take on riskier investments in lieu of cash at bank.

    So magic formula is:
    cheap money + high confidence + bank deposits dont pay = booming real estate market

    But dont worry if the real estate market starts faltering as people are suggesting.
    Even though interest rates cant go any lower the state and federal governments still have a bag of tricks to prop up property prices.

    And right now we have NO IMMIGATION to push up property prices due to COVID19!!!
    So my long winded economist friend above has it all wrong as economists always do!
    Economists live in a fantasy world of unrealistic assumptions.

  • Boogerman on 09/04/2021 - 09:09
    +1

    LNP pollies hold more investment properties than those from Labor, One Nation & The Greens
    It’s in their interests to prop up prices through government handouts, like Homebuilder - a totally unnecessary rort for the building industry, as it has suffered relatively little

    • tomleonhart on 09/04/2021 - 09:34

      Let me take what you said and apply it in a country with Labour led.

      The National in NZ pollies hold more investment properties than those from Labour, NZ first and the Greens.

      Yet Labour is proping up prices through government handouts, like Home Start grants and First home owner grant

      • Boogerman on 09/04/2021 - 09:35

        Do you have the figures?

          • Boogerman on 09/04/2021 - 09:38

            @tomleonhart: When were those policies founded & how have they varied over time?
            (Noting Labour has only been in power 4 years)

            • tomleonhart on 09/04/2021 - 09:49

              @Boogerman: Over the 9 years National was in power from 2008 - 2017, NZ price has gone up 60% an increase of 6.67% yoy
              Over the 4 years to date under Labours, NZ price has gone up 47% an increase of 11.75% yoy

              Now to be clear I am not blaming neither party since I can't be arsed, I just dont believe they make a difference.

              • Boogerman on 09/04/2021 - 09:55
                +1

                @tomleonhart: What you’ve quoted of mine (topic opener) is to highlight the hypocrisy of the LNP voter
                And yes, I agree, there would be little difference between parties
                And no, I don’t vote Labor, but on balance they have more socially equitable policies & value science more, of the 2 majors

                • Ghost47 on 09/04/2021 - 10:08

                  @Boogerman: I definitely agree that Labor places higher importance on socially equitable policies and science.

                  I mean even infrastructure (maybe). Labor’s policy was way better than the LNP. Yes it was probably under quoted and would have blown out in costs (what project doesn’t?) but at least we’d have a good overpriced system as opposed to a poor overpriced system.

                  • Boogerman on 09/04/2021 - 10:58
                    +1

                    @Ghost47: Infrastructure - well that’s obvious with the expensive 3rd world NBN, that the Libs are now upgrading, again.
                    As per my topic, voting weighted by age, education & IQ would have avoided that. Because more critical thinking would have exposed the short term nature of the Libs NBN policy in 2012 (which, BTW, is the year when Joe Hockey as Treasurer stated “the first year of the LNP will be in surplus & every year after that”)

                    • Ghost47 on 09/04/2021 - 11:01

                      @Boogerman: That kind of voting system would be pretty interesting to implement IMO. Does anywhere else in the world use a system like that?

                      Sadly people will often vote for what is best for them even if there are lots of policies that will benefit the nation as a whole.

                      “Wow more money spent on STEM, education and innovation? But you’re going to remove my negative gearing? Well (profanity) that I’m going to vote the other party in.”

                      A weighted voting system might fix that but it’d probably open up a can of worms and lead us to a more dystopian future.

                      • Boogerman on 09/04/2021 - 11:18

                        @Ghost47: Why should the 83 year old high school drop out with early stage dementia get to vote, but the 17 year dux of a school or even a state doesn’t, considering industrial/employment laws affect the 17 year old but not the retired 83 year old, yet the 17 year old has no say?
                        Is someone going to say the former has greater cognitive capabilities than the latter example?

                    • Bjingo on 09/04/2021 - 14:50

                      @Boogerman: I agree with your sentiment but I believe you need to fine tune this.

                      I believe age is good statistic to include in weighting but it can't just be your weighting decreases as you get older, a 40 year old will generally have a much better grasp of societal needs than an 18 year old but both of them have more frame of reference than a 75 year old.

                      Education under normal circumstances would be good but due to Australia's current education system this would essentially be weighting it based on wealth, Going to a better school increases the odds of you succeeding educationally, sure they have a better education but they have underlying bias based on upbringing. If there was a reform in the education system this could become applicable.

                      I think IQ is the entirely wrong measure for politics, The questions in IQ tests are clearly defined problems that contain all the necessary information with a single answer than can generally only be reached through one method. Furthermore the "logical answer" in politics does not exist each individuals will have a varied perspective on the logical answer based on their own circumstances. Think about the number of people with severe personality disorders that a insanely intelligent (think, your Ted Bundies), these aren't the individuals you want to provide additional voting power to.

                      If you wanted a testable figure to apply, EQ would be far superior for the purpose of weighting their vote. It is a measure of multiple aspects including; Self-awareness, Self-regulation, Social skills and Empathy (which I would argue is one of the best qualities a voter can have, what good is logic if you are incredible selfish and only vote based on self interest).
                      Two of the biggest contributors to EQ are crystallized intelligence and processing speed, So your ability to retain and utilise information and the speed at which you take on information, comprehend it and formulate a response, which are good qualities to have as a voter.

                      overall a weighting system would be interesting but you have to find measures that are not influenced by things like historic family wealth or the issues will persist.

                      • Boogerman on 09/04/2021 - 18:44

                        @Bjingo: Correct me if I’m wrong (as my knowledge may be outdated) but there is no such thing as a standardised EQ test, unlike IQ

                        • Bjingo on 09/04/2021 - 19:44

                          @Boogerman: That's true, there is not, I would assume for something as serious as weighting the value of votes they would consider creating one.

                          The only reason I disagree with IQ being used is because of the intrinsic grayness that exists in politics. There is no one logical, perfect answer, It is like trying to logically decide the perfect answer to an ethical dilemma such as the trolley problem, you can get correct answers for each ethical belief but there would be no answer to satisfy all beliefs. which is why for something as important as weighting votes I would prefer to weight it towards an altruistic person rather than a classically intelligent individual. Tony Abbott is an example of this in my opinion classically very intelligent but aweful in politics, he supports an Australian Monarchy, ruined NBN, tried to bring in an optional at fault agreement for marridge, tried to block same sex marriage and denied the the science behind Climate change. That is not someone I would want with additional weighting in his vote.

                          Though not having a standardised method of testing EQ does present issues it is something that could be overcome.

                          • Boogerman on 11/04/2021 - 08:09
                            +1

                            @Bjingo: Also regarding your statement “a 40 year old will generally have a much better grasp of societal needs than an 18 year old”, that might be so, but doesn’t change the fact that brain declines with age (from 25 it has peak volume) making you more staid as you become older. I would argue, on balance, the 40 year old is more cynical leading to greater selfishness. The 18 year old is yet to be ‘ground down’ by the world.
                            The 40 year old labels the 18 year old ‘blissfully naive’ to justify selfishness & laziness & any need for self reflection

              • orangetrain on 09/04/2021 - 10:02

                @tomleonhart: They are responsible when they flood the property market with money, inaction, etc. For example, say there's a property costs 500k, I give you and everyone 100k to buy it. Oh look, property is 600k. Next political party raises it to 150k. Oh look, property becomes 650k… and so on.

                Governments can do this but piss off their donors/voters (developers, companies, unions, etc):
                - First step. Any grants are for first home owners. Not for existing properties. Eventually phase it out because keeping it shows failure to understand basic supply and demand.
                - Buy land, build properties, set up trainline, shopping mall too, etc (Japan I heard is doing this). Turn an amazing profit. Instead of cutting taxes and services.
                - Improve infrastructure, and jobs in outback. I would like to work there but, its shit. Look at USA, similar land size and far more infrastructure, etc. Instead of giving it to big ag.
                - Maybe fix auctions so that they're not one-sided. I want the reserve published at least and highest offers above it accepted. Unless they specify that its a conditional auction where buyers and sellers can jack around with conditions

                • Ghost47 on 09/04/2021 - 10:10

                  @orangetrain: I’m not sure if we can spread out like the US. Their land seems to be somewhat arable across the nation, whereas we have a lot of deserts in the middle of Australia. Due to that I think the amount we can spread over the country is limited.

                  They should build more solar farms in the outback though IMO, but nah because COAL.

  • rod1709 on 09/04/2021 - 11:14

    everyone seems to be ignoring the impact of globalisation on the economy. migration, society in general and political decision making (or lack of).

  • TEER3X on 09/04/2021 - 12:06

    Has the CCP began buying up more properties now?

    The area I live in is basically just average (actually closer to bad if you ask me) and there aren't that many Chinese folk but what I've been seeing is that most properties lately are being bought up by this demographic. An open house that I walked past had no other demographic. Is the Chinese government giving these guys money to buy properties and if so, how do I get in on it?

    • Ghost47 on 09/04/2021 - 12:50

      China’s rise out of poverty is nothing to be scoffed at. Plenty of cashed up Chinese come to Australia, if the CCP government was giving them money to buy properties here that would be scandalous. I wouldn’t put it past the CCP though.

      Maybe move to China and vow to be a CCP spy then come back lol.

      • TEER3X on 09/04/2021 - 16:16

        Marked you down as a CCP member.

Login or Join to leave a comment
Login Join