Interest Rates Don't Need to Come Down.

aimon on 04/06/2024 - 16:38
Last edited 04/06/2024 - 18:57

I was just watching this video from ABC where they used the term "Higher than usual interest rates" of where we are now. This is very misleading we now have normal interest rates. The 30 year average is 4.14% and we are sitting at 4.35% now.

If anything they should probably be higher to balance out the decade of cheap cash flooding the system.

We need to stop blaming interest rates and start blaming the terrible government policies of both parties that fuelled housing speculation. I don't have anything against investing in property but you shouldn't be expecting public funds for losing money on a deal. It's dole bludging for the rich.

https://www.youtube.com/watch?v=KKtSYbHS5Cw&ab_channel=ABCNe…

https://www.rba.gov.au/statistics/cash-rate/

Financial Interest

Comments

  • ginormousgiraffe on 04/06/2024 - 16:42
    +90

    Hey mate, 4.35 is higher than 4.14.

    • aimon on 04/06/2024 - 17:54
      +17

      Thanks for pointing that out though sentiment you hear is that things need to go back to low interest rates as these are "normal". They are not.

      • Ghost47 on 04/06/2024 - 18:11
        +13

        The MSM has a very short memory, they can only remember 2011 onwards where interest rates globally steadily declined over the decade. We are past the age of easy money and that pill is hard for some people to swallow.

      • ginormousgiraffe on 04/06/2024 - 19:07
        -1

        Depends if you base normal off of historical numbers, the RBAs long term interest rate target or the ten year government bond rate.

        The RBA expects the average rate over the next ten years to be lower than it currently is.

      • spal on 05/06/2024 - 08:59
        +3

        30 year average is for the times when we had higher interest rates.
        World economies have now changed. Inflation is tightly controlled so that interest rates are lower and businesses get cheaper credit to invest. This in turn drives growth and general prosperity. Why don't you try 10 or 15 year median to compare apples with apples.

        • JIMB0 on 05/06/2024 - 09:19
          +3

          Inflation is tightly controlled

          The last 4 years tells a different story.

        • aimon on 05/06/2024 - 15:33
          +2

          30 years - 4.14%
          20 years - 3.54%
          10 years - 2.05%

          I wouldn't count the last 10 years as "normal" considering the way this has fuelled the speculation but each to their own.

          • bchliu on 06/06/2024 - 01:56
            +2

            @aimon: I would argue that these calculations of "normal" are "fixed" without considering the rate of housing price rises. The problem is that you are comparing interest rates to house prices from 30 years ago.. which is literally 10x less than the cost now (eg. $1.6M house now was only worth $160k 30 years ago). The real money / wage rises have not risen as much in direct comparisons so even with the reduced interest rates, we still aren't close to being better off as it was back then (<3x as it was 30 years ago).

            So no.. I don't agree the "normal" should be based upon a fixed percentage, when the ratio of housing prices to wages (affordability) has not been taken into account.

            • drfuzzy on 06/06/2024 - 12:31

              @bchliu: This is based on your own desire to own the same kind of home that your parents and grandparents were able to own.

              What is not to say that in the future several generations will pool resources and income to purchase a 1 bedroom apartment between them to share?

              We see that in other parts of the world where expectations of what is achievable is more modest than here. Freestanding homes with a backyard is not something on the radar for many.

          • drfuzzy on 06/06/2024 - 12:28

            @aimon: 30 years is too short of a timeframe. We need to factor in the double digit interest rates of the 70s - people are too young or have forgotten about that.

      • cadwalader on 06/06/2024 - 01:17

        There is no such thing as "normal" interest rates or a historical tendency that they "must" objectively gravitate towards. Just a "neutral" rate where there the cash rate exerts no inflationary or disinflationary pressure on the economy. Higher than neutral, adds disinflationary/tightening/cooling pressure, lower than neutral adds inflationary/stimulatory pressure.

        It is true that we might now even still be on a slightly inflationary rate which means our rate is lower than neutral and when that crystalizes in a consistent trend in unemployment and inflation numbers, then the RBA should hike until its above neutral to add more disinflationary pressure to cool the economy.

        That said, it does not mean that current conditions contributing to the neutral rate is "normal" or something that will or should continue for many years if not decades.

      • Brianqpr on 06/06/2024 - 06:59
        +3

        People have much higher debt levels now so rates bite twice as much at least than they used to. You can thank our wonderful housing market which the government can't/won't allow to fail. Doesn't matter which side is in government either.

        Not much else is the same as 40 years ago either. You can't compare times when houses cost 2 to 3 times an average income to how things are now.

        Our economy depends on low rates now, its a different world. House values underpin spending so the powers that be will do everything to keep them high/rising. Part of this is an obsession with low interest rates. Just look at how much media time is spent on the topic of what the RBA will or won't do.

      • HeWhoKnows on 08/06/2024 - 20:14
        -1

        Yes ginormousgiraffe is just showing thier exellent elementary maths skills.
        Obviously passed primary school maths.
        But ginormousgiraffe obviously has missed the point.
        "Woosh" straight over thier head!

    • Dollar General on 04/06/2024 - 19:38
      +1

      Do you know how averages work?

    • Illyria on 07/06/2024 - 12:05
      +1

      If one considers REAL rates (the difference between the base rate and the inflation rate) then current rates are very low!

    • HeWhoKnows on 08/06/2024 - 20:12

      Its within the standard deviation, so not really.
      You obviously havent looked into what OP is saying.

  • barge-in hunter on 04/06/2024 - 16:49
    +75

    I agree - interest rates are a symptom of a bigger problem. Sure, Covid et al was an unprecedented time for governments, but it wasn’t the cause of our housing troubles and there’s plenty more to be done now.

    Here’s my take;
    - Everyone needs a home, so no tax on buying your primary place of residence
    - some people don’t want to own (or still can’t), so moderately tax a first investment property (stamp duty, higher land taxes, remove negative gearing)
    - tax the living crap out of any subsequent properties, to make them far less viable as an investment

    • Cluster on 04/06/2024 - 17:01
      +1

      Taxing a second property purchase means the landlord passes on those costs to the tenants.

      But… if the landlord had not purchased the home as an investment then maybe the tenant would have purchased it themselves as their first home.

      Just depends on your point of view.

      • freefall101 on 04/06/2024 - 17:29
        +53

        The whole "passes on those costs" thing is misleading. Landlords price in line with the market, which is driven by demand and supply.

        If costs go up with no change in supply or demand, what will happen is returns will drop and the value of houses will drop. Exactly what happens with every market, investors base their decisions on what the returns will be. Lower returns means new investors are willing to pay less for properties. Investors being willing to pay less brings down the overall market somewhat to a stabilised point.

        Instead we've had government after government where big chunks of our MPs own property portfolios and it's in their interest to keep shovelling money into helping people buy houses, which only overcooks the market more. The two issues they need to fix is the lack of supply and the overly high returns on investing in property.

        • SimpleLeverage on 04/06/2024 - 18:53

          If costs go up with no change in supply or demand, then prices will go up to maintain returns. Just like ColeWorth.

          What we need is a stronger push for faster development of housing and infrastructure to increase supply.

          • freefall101 on 04/06/2024 - 19:04
            +8

            @SimpleLeverage: Colesworth have market control, no property owner has that (although it has been a problem in the US where a property developer will buy up every house that goes on the market in an area, so they can control that area. Bit nuts). They prey on the fact that if a packet of chips costs $5 then not many people are going to go hunting around for chips at $4 at another store.

            The same is not true of rent and property. There is a limit on how much people can pay in terms of rent and we're really feeling it at the moment with such heavily restricted supply due to the slowdown in construction from 2019 onwards (it was already dipping before covid, post-covid made it worse with supply shortages and labour shortages) and a dramatic increase in population the past 2 years to eat up any slack.

            We definitely need that push on supply anyway, but just to fill the massive backlog from the past few years. But good luck with that, with low unemployment, land banks being a thing, construction materials still being expensive, councils being (profanity) about land releases and property developers having their fingers in so many pies. It's a hugely difficult thing to fix, it'll take more than a push, it'll take proper government market intervention to have any impact short of a major recession - which none of them are interested in doing.

        • morse on 05/06/2024 - 01:56
          +1

          The whole "passes on those costs" thing is misleading. Landlords price in line with the market, which is driven by demand and supply.

          However, if in the market it’s untenable to be profitable, they won’t invest this way and it will reduce supply. It’s not only as simple as supply and demand, it’s also about costs. If all landlords have the same or similar costs that will set what the base for the market.

          • freefall101 on 05/06/2024 - 10:32
            +1

            @morse: However the base for the market is more attuned to percentages than fixed dollars. Cost of capital, taxes, returns to be profitable, these are all percentage amounts. If the cost of the investment makes those returns untenable, then the value of the investment decreases until the returns the market expects are there. And housing prices fall. If an investor can't make a profit personally, then they have to sell that asset at a loss.

            Like with shares, returns go down then the share price goes down, simple as that. But as the capital price goes down of the asset the returns on those assets increase.

            Investors have done stuff all for supply anyway so far. Supply was falling pre-covid, little is being done to ease the cost of building and plenty of people who would buy if they could can't do so. And the demand doesn't disappear with investors making lower returns, housing prices will drop until it becomes affordable for people who currently rent to purchase instead. Rather than trying to hand out cash to beat investors chasing the same properties, like we do with first home buyer grants right now.

            • SlickMick on 05/06/2024 - 11:30

              @freefall101: The premise was tax the crap out of investment properties to make them unattractive. So few would invest, thus few rental properties available.
              Then everyone has to buy because its cheaper than renting, and people would be forced to sell and rebuy every time they need to relocate.
              I don't see any winners in that world.

              • freefall101 on 05/06/2024 - 14:41
                -2

                @SlickMick: The winning is that the price comes down and takes up a lower portion of people's income. And as prices come down properties make better investments because the returns look better as a percentage. Renting may be more expensive compared to buying but it'll still take up the same or less portion of someone's rent if they want to rent. And I call that winning.

                • SlickMick on 05/06/2024 - 15:11

                  @freefall101: Sorry, I cannot see which post I was replying to now. Did you edit one in this thread?? Maybe I replied to wrong post??

                  In any case, my point is that without landlords, house prices don't get cheaper. Sure there is more supply (nearly every rental property), but there is also mroe demand (every former renter).

                  And no, if rent now takes up a large portion of the paycheck, how does removing 90% of supply mkae it more affordable?

        • larndis on 05/06/2024 - 09:45
          +1

          The trope of

          our MPs own property portfolios and it's in their interest to keep shovelling money into helping people buy houses

          is misleading. Shorten wanted to cut negative gearing, and voters clearly said 'no'. Why would either party go there again?

          • freefall101 on 05/06/2024 - 14:50

            @larndis: True, they're not all like that.

            I'd say a lot more impacted that election than just negative gearing, scaring all the oldies with their tax dividends did a real number on Shorten too. He ran with a fair few unpopular reforms but negative gearing certainly didn't help him. It's always been one of those things that most negatively geared properties are having a small portfolio and politicians fall into that crowd.

            But he's one politician, and one who doesn't own any property besides his own home. You've got Albo who's happy to leave it alone after a string of Labor PMs and party leaders who felt the same, then on the other side of the fence the Liberal party are ready to raid super to keep driving up house prices. They certainly have a self interest there.

            • larndis on 05/06/2024 - 16:20
              +1

              @freefall101: Yes, but the primary self interest is in getting/remaining elected. And that is the primary reason they won't touch tax incentives for investment properties.

              In the end, Australians voted to keep the current tax regime, so if that is a significant contributor to the housing crisis then it is self-inflicted.

      • SBOB on 04/06/2024 - 17:40
        +8

        Taxing a second property purchase means the landlord passes on those costs to the tenants.

        If a rental cost was purely passing on costs, does that mean current landlord without mortgages would have rents cheaper than those raising rents due to interest rate rises?

        • Cluster on 04/06/2024 - 17:47

          No, because the landlord still needs to make a return. If they sold the property and had a million dollars they could park the cash in a bank account and earn up to 5.5%. If they have a million dollar property on which they're paying a mortgage they need to cover the ~6.x% loan.

          Now the landlord could feel really generous and discount the rent progressively as they pay off the loan, but I think you'd find the number of people who do that to be vanishingly small.

          • barge-in hunter on 04/06/2024 - 18:39
            +4

            @Cluster: I disagree - there will be more “fully owned investment properties” out there than you think.

            The rental market still needs to exist to some degree - think non permanent residents, or young people who haven’t had the earning capacity to save yet.

            I know it’s easy to react harshly to the thought of any and all residential property investments, but there is a genuine need for the rental market.

            • mskeggs on 04/06/2024 - 19:11

              @barge-in hunter: Why is it harsh? If landlords sell and put money in the bank, interest rates will fall and owner occupiers will be more able to buy.
              Every owner occupier is one less renter, so no net loss.
              There will eventually reach an equilibrium between the people who wish to rent not own, and the landlords prepared to invest for those returns.

              If the concern is the 10% of investors who buy new builds, give just them a subsidy to promote new properties.

              • Grunntt on 05/06/2024 - 09:13
                +2

                @mskeggs: In your perfect world that you envision -

                Every owner occupier is one less renter, so no net loss

                Maybe no net loss but what exactly do the lowest paid renters who have absolutely no chance of buying property do when they are given the notice to vacate?

                There will eventually reach an equilibrium between the people who wish to rent not own…

                And what about the above group that I mentioned - they may want to own but have no way in hell of ever doing so?

                • mskeggs on 05/06/2024 - 12:44
                  -1

                  @Grunntt: The cost of buying a house decreases, so many more buy. Those that remain landlords may wish to charge high rents, but competition will keep those rents in check.
                  For example, if I don't own a house, but see they have dropped to $300k and the rental market offers a 6% return, I am likely to invest, especially if existing landlords are trying to get a 10% return.

                  I don't need negative gearing or reduced CGT subsidies are needed if houses are priced lower and there is a competitive rental market. That's what a free market does.

              • tomfool on 05/06/2024 - 09:56

                @mskeggs: Why would interest rates drop if someone sold there rental and put that money in the bank? The net flow of money is zero and as such it has neither increased nor decreased the flow of money in the economy. If anything it could actaully increase interest rates as that person is likley to spend the money and thus put upward pressure on the demand side.

                • mskeggs on 05/06/2024 - 12:38
                  -1

                  @tomfool: If you are borrowing less (repaying any outstanding mortgage) and depositing more (into a savings account) the supply)demand favours lower rates as the bank needs to make loans to pay the interest, so needs to be more competitive in writing loans than sourcing funds (deposits).

                  This is a micro economics view. If it happened enmasse, it would be even more pronounced as the RBA would seek to boost housing construction by lowering central bank rates too.

        • Grunntt on 05/06/2024 - 09:25
          +1

          if a rental cost was purely passing on costs, does that mean current landlord without mortgages would have rents cheaper than those raising rents due to interest rate rises?

          Anecdotal but - In one case that I know of - yes it does apply.
          The landlord has increased the rent once (less than $50/week) in the past 8 years. It has also decreased twice since then (more than $50/week).
          This is despite their property manager pushing them very regularly to increase the rent because others in the area are charging more.
          They have also replaced the insulation as it was not effective and also, just recently, installed a 6.6 kW PV system (solar).
          Apparently, really good long-term tenants that look after the property as their home and an owner that appreciates it.

          They both have an interest in keeping the property well looked after and being as fair as possible to each other.

    • SueyJitSu on 04/06/2024 - 22:24

      Are you sure covid wasn't the cause of housing troubles? Didn't covid stop development of pretty much every home being built? Tools down till we flatten the curve? No homes being built caused less stock on the market which in term meant less competitive prices. Now days construction can continue, but from what I've heard there is a serious resource problem in getting certain materials from overseas due to the war. Or am I wrong/misinformed? I'm honestly curious. I am no expert in this domain. Just asking.

      • PonyTable on 05/06/2024 - 10:02
        +1

        I'm not sure it was covid stopping development, but it definitely played a part in the increased cost we are facing now.

        In my experience working in Tier 1 & 2 construction in Brisbane that wasn't the case, while some states had that level of lockdown. QLD Construction didn't stop it slowed as you had to have less people in hoists etc (when it did stop it was usually only for a weekend, as was always deemed an essential service)

        The supply of materials went up like crazy from overseas during Covid, mainly because of Australia's reliance on China for building materials and China significantly limited shipping, and had dramatically slower production in factories during that time. I don't believe the war in Ukraine had much effect on building products specifically, actually I think 4 Corners even drilled down on Grain and other exports from Ukraine and it was barely a 1% increase.

        IMO it was standard supply and demand that has increased prices of construction, people spent a lot more time at home during covid, and decided it was a good time to renovate and speculate on property, given interest rates were 1%, also a lot had access to Free money from Jobkeeper, access to Super early, easily delayed repayments on properties.

        So that meant trades were in high demand, and still are, especially if you are good. I spoke to a domestic builder other day who only does 2-3x houses per year and he has 12x jobs booked in advance - so the problem remains for some time. Add to this QLD + Northern NSW having some fantastic weather events over the past few years that require significant rebuilds/repairs to housing and infrastructure, these are propped up with Government grants, or insurance footing the bill, which only adds to the demand and the price.

        IMO its a Perfect storm for increased cost of building (In QLD anyway) and while people keep paying, it will continue.

      • barge-in hunter on 05/06/2024 - 10:07
        +2

        Fair question @SueyJitSu - my underlying point is that house prices have been outstripping wage growth significantly, for a very long time - and this started happening far earlier than Covid. Yes, covid also had an impact, but it was the icing on the cake in my view.

        Re: covid and the building industry, my probably uninformed understanding was that:
        1. the construction industry kept humming during covid - "construction will keep our economy going"
        2. the government at the time actually encouraged spending on home constructions and renovations with huge grants (which actively drove up demand, and therefore increased the cost of materials on top of what covid was already doing to inflation & supply shortages)
        3. a combination of the two above caused a huge wave of insolvencies through the building industry, as contracts were previously based on fixed price development - with no financial room to absorb the increasing costs of materials

        I'm not sure about "the war is causing material shortages" - it might be true as well, but that would be compounding the previously pent up demand caused by the above.

        • SueyJitSu on 05/06/2024 - 10:25
          +1

          Thank you for the insights :)

        • 91rs on 05/06/2024 - 11:44
          +1

          Except for the great state of Victoria (scoops of sarcasm thrown on top of that line) where if someone sneezed it stopped everything.
          Site managers could only visit like 4 sites a week or something? basically lots of delays and limitations on how many can be on site or go to site, then travel to other sites. Trades working on the sites that made most sense or brought in the most money with least site hopping.
          Renovations that were not urgent (Heating& cooling, plumbing, electrical) were forbidden if anyone was at the property.

          Freight and general transport woes slowed deliveries of materials around Australia, storms in QLD took trades from job sites to insurance work and created shortages of things like roofing materials.
          Canada was playing the same stupid covid games VIC was and timber production slowed to almost nothing, that was a problem for house frames.
          I don't recall what happened with Aussie timber but everything ex-China came to a near stop.

          Things that should have been done during covid like roadworks and other major road construction projects stalled pretty hard with site restrictions, things are still dragging on in VIC from that.

          Bank lending during covid was also much more restrictive and the deals got worse as time went on, proof of income etc was an ongoing monthly check for many as banks were scared, so unless you came in with another property to sell or large amounts of cash they treated you like you were half unemployed.
          A lot more hoops to jump through to secure funding and settle, settlements pushed out and extensions required due to the slow build process.

          Builders were having to either eat the losses or if they didn't have a fixed price contract were re-working contracts to include the new higher price of everything. That also caused lending issues, a few houses near where I am stalled out from that, one is still incomplete 4 years later, hasn't been able to be finished due to funds, can't seem to sell it, meanwhile the weather makes it a knock down rebuild situation.

          But I agree wage growth Vs house prices have been a long term problem for sure.

      • gfjh567gh3 on 19/06/2024 - 14:29

        Don't forget that immediately after lock downs, mass immigration was bumped up. We half at least half a million people NET coming in each year, and I believe that excludes temporary visa holders such as students.

    • samyall on 04/06/2024 - 23:02
      +2

      I whole heartedly agree with this approach. I have one modification though, I would give serious tax breaks for additional homes if they meet certain standards like insulation, double glazing, solar etc. Lets get rid of these glorified tents that are being rented in most of the country.

    • altomic on 05/06/2024 - 08:12
      -1

      down with landlordism

    • reactor-au on 05/06/2024 - 10:01
      +2

      Immigration is probably the biggest driver of house prices at the moment because whether you are renting or buying the demand is outstripping supply.

      If supply was higher than demand then sellers and landlords would have to compete for buyers and tenants thereby driving down or keeping prices competitive.

      Also if prices rise at more realistic pace then like inflation then it would make for an unattractive investment.

    • justworld on 05/06/2024 - 15:32

      I don't agree as it is effectively punishing people for succeeding. You might as well say 'the first time you win the grand final you get a flag, but the next time it's only half a flag, and the third time it's only a quarter flag.'

      I can understand wanting to tax inheritances, trusts and other things that a person did not himself or herself purchase.

      As for the interest rate settings generally, higher interest rates will always benefit the financially capable at the expense of the financially incapable. This is how it should be.

      • aimon on 05/06/2024 - 15:37

        It depends what you qualify as succeeding? Parking all your money in houses without building a single additional home, or starting businesses or making capital available to grow the economy with things we can export.

        • justworld on 05/06/2024 - 15:42
          -1

          I run my own business and put all the profits into investment properties. What else would I choose to invest in? Shares can always be created; new land can't - so in my view buying and holding land has the greatest return over many generations.

      • barge-in hunter on 05/06/2024 - 19:10
        +1

        punishing people for succeeding

        People would still be free to invest their money wherever they want - including in investment properties.

        And besides - property investment isn’t the only way to be successful… other investment options would start returning more, as all that money has to go somewhere

    • frewer on 05/06/2024 - 18:23

      ax the living crap out of any subsequent properties, to make them far less viable as an investment

      Never gonna happens, the current [uneducated in economic matter] PM has 4 IP, has mates probably have some.

    • mrvaluepack on 05/06/2024 - 21:59
      +1

      News flash, they already have. Foreign investors pay close to 5% of land value in tax, compared to citizens at 1.5%. I know a lot of foreign investors who are selling properties and guess what? Property prices are still increasing, therefore dont blame foreigners or property investors, blame bad governments and local councils.

    • Brianqpr on 07/06/2024 - 09:22
      +2

      None of those are bad ideas but just try getting elected with that mandate and our self interested media. Look what happened to Labor/Shorten when they proposed fairly minor changes to negative gearing on property.

      Unless something is done about the ridiculous media mind control in this country, no real change will ever be allowed to happen.

    • barge-in hunter on 04/06/2024 - 16:56
      +8

      Im not a staunch supporter of either side, but I’m always interested in understanding this “high immigration is Albos fault” argument

      I remember after covid how some businesses were closing their doors because they just couldn’t get staff. What do you believe the Liberals would have differently to support all their business voters?

      Edit: completely agree the building industry is ruined, but will leave the politics out of that argument

        • crentist on 04/06/2024 - 17:15
          +10

          And how is that on Albo?
          What's the buyers remorse for?

          • Gdsamp on 04/06/2024 - 17:30
            -3

            @crentist: buying a house and renting is soooo much cheaper now with millions more people in the country and it's definitely all skilled professionals and tradespeople coming in
            and we built enough places for all these new people to live in that time
            good thing wages haven't gone backwards 14 years and we aren't in per capita recession

            • crentist on 04/06/2024 - 17:42
              +18

              @Gdsamp: Correct. The Australian economy sucks and is basically a housing ponzi scheme propped up by high immigration to cover up an inability to generate value, while the valuable resources we struck the lottery with are being stolen from us.

              This has been true and getting worse for many years.
              So again, other than him recently taking a seat at the top of the festering stinkpile, what makes this Albo's Australia?

            • R4 on 04/06/2024 - 23:27
              -5

              @Gdsamp: Australia's skilled migration policy is a joke - the requirement to be highly-skilled only applies to those from Western countries. The standard is substantial lower for those from 2nd and 3rd World, mainly Asian, countries.

              Australia's migration program today is not about building our economy and society, rather it's now reverse colonisation and societal engineering.

            • Grunntt on 05/06/2024 - 09:44
              +2

              @Gdsamp:

              buying a house and renting is soooo much cheaper now with millions more people in the country

              A relatively clear explanation of what the figures actually mean (and how they are manipulated for political point scoring).

              Net Overseas Migration

      • R4 on 04/06/2024 - 23:21
        +2

        Immigration was high under LNP governments immediately pre-Covid, but Albanese turbocharged it post-Covid because we had to 'catch up'. Utter bollocks and now we live with the consequences. Both sides are to blame basically.

      • tomfool on 05/06/2024 - 10:03
        +6

        Let me rephrase that for you.

        Businesses could not get staff that were willing to work for less then the award. There were plently people available to work just not for less then a living wage.

        • spedohero on 05/06/2024 - 13:02

          Its a crime to hurt bosses' pockets. They won't be able to get the latest BMWs and buying up more investment houses.

      • Brianqpr on 07/06/2024 - 09:26
        +1

        Immigration is a factor, but nowhere near as big a factor as Dutton is making out. It can also and probably will be reduced going forward.

        Immigration is being used as a way to control labour costs and also to generate economic activity, only its helped to generate too much recently. It wouldn't be much different regardless of who is in government.

        Immigration is an easy target for the opposition and masks the bigger underlying causes of inflation which is actually a global problem currently.

        Corporate greed is a far bigger contributor but the media depends on it for advertising revenue so the issue is largely ignored in favour of dog whistling.

    • SBOB on 04/06/2024 - 17:42
      +15

      I know right.
      Was way easier back under LNP when houses were practically free, and everything was just sunshine and rainbows.

    • R4 on 04/06/2024 - 23:19
      -5

      I'm certainly no fan of Albanese - he's a left-wing disaster for Australia with the hurt of his destructive policies yet to be seen, but when it comes to migration, recent LNP governments have not been much better. Both sides to blame for our open border policies. The lack of new housing being built is not all of his fault either, much of that is down to state governments, prices of materials and lack of labour etc.

      At the next election, I'll vote for the party that will reduce immigration the most and right now, that's the LNP.

      • mavis30551 on 05/06/2024 - 09:51
        +8

        Labor have committed to cutting immigration and are reducing it next year.

        LNP did not do that in their last 10 years in government when they peaked post covid (guess who was in power). SO if you were actually going to vote for the party that reduces immigration you would not be voting LNP.

        Link https://www.afr.com/politics/federal/labor-determined-to-hal….

        • R4 on 05/06/2024 - 10:34
          -4

          History. Going forward is all that matters now. The LNP have committed to cut more migration than the ALP, so I'm going to vote for them.

          • mavis30551 on 05/06/2024 - 11:17
            +6

            @R4: SMart, go for the party that says theyre going to do things but historically havnt done things.
            What could go wrong. History is useless as they say always take peoples words over actions.

            • R4 on 05/06/2024 - 12:16
              -3

              @mavis30551: Sure, but then you could definitely say the same about Albanese and the ALP.

        • Ghost47 on 05/06/2024 - 12:20
          +2

          Labor have committed to cutting immigration and are reducing it next year.

          Albo said the exact same thing before the last election, i.e. that the ALP didn’t support the LNP’s mass immigration policies. Look at what happened, they brought in something like 700k immigrants the last FY.

          When are people going to wake up and realise that when it comes to house prices (and therefore pumping demand for housing through silly amounts of immigration to the point where our social cohesiveness as a country is eroding entirely) that politicians will happily lie through their teeth to get elected? They basically all own investment properties, it’s wishful thinking that either party will actually do anything meaningful when it comes to slowing demand for housing. They would rather destroy this country, destroy the currency etc. just so their investments go up in value.

      • barge-in hunter on 05/06/2024 - 10:18
        +2

        The lack of new housing being built is not all of his fault either, much of that is down to state governments, prices of materials and lack of labour etc.

        …

        I'll vote for the party that will reduce immigration

        Where would you immediately source new labour for the building industry, if not from immigration?

        • R4 on 05/06/2024 - 10:33
          +1

          Skilled migration only. Prioritise building tradesmen from Western countries (for building standards reasons). For those people make the visa process quicker - both for PR and temporary. Only for those with verifiable English capability too.

          Australia should only have skilled migration (maximum 100k PR visas a year). All the rest is noise and of little benefit to this country.

          • barge-in hunter on 05/06/2024 - 10:36
            +1

            @R4: Wow. There's a lot to unpack there

          • iminabrons on 05/06/2024 - 11:33

            @R4: What makes you think skilled tradesmen want to leave other Western countries in any numbers for a country as isolated as Australia? Maybe Ukrainians?

            • R4 on 05/06/2024 - 11:46
              +3

              @iminabrons: Lifestyle, opportunities, money etc. Walk around the streets and hear all the British and Irish accents. Using your thinking, why does anyone want to move to Australia? Basic fact of life is that they do - which is why Australia has too many migrants and is in a mess. In 2024, with cheap air travel, internet, WhatsApp, isolation is a state of mind.

              Ukrainian tradesmen, if they speak English and can work to standards, are more than welcome.

    • smartazz104 on 05/06/2024 - 07:57
      +5

      You should read something other than LNP propaganda.

    • floorpie on 05/06/2024 - 09:45
      +1

      If your concern is lack of affordable housing then maybe you shouldn't vote for either of the major parties that got us into this position?

    • SlickMick on 05/06/2024 - 13:10

      I witnessed the greatest opportunity for home ownership this country will ever see. First the home loan saver account paying twice the interest of other accounts plus the ato matching contributions. Anybody who kept thier netflix account but didn't maximise that deserve to never own a house.
      This was backed up with the lowest interest rates we will ever see. If you don't like to be in debt and didn't leverage to your eye balls, you don't deserve to have a property portfolio.

  • Cluster on 04/06/2024 - 16:58
    +1

    During the GFC we had a 3% RBA rate. That was seen as an emergency now.

    The good news is there's plenty of room to cut if the economy stalls or goes backwards. The problem is we're probably in a per capita recession right now, judging by the sluggish growth figures and net high immigration, but the headline figure looks rosy so economists and politicians are satisfied.

  • Ghost47 on 04/06/2024 - 17:07
    +12

    Inflation went up in the latest reading. Interest rates need to go up but the RBA is backed into a corner because they know Aussies are struggling to pay off mortgages because people have huge debt-to-income ratios.

    This country is sick, politicians all own property and implement whatever policies they can to pump their portfolios. Immigration is running at silly numbers and even today in the news yoga teachers were prioritised over tradies to be brought over. We haven't been a serious country for a long time and it's showing.

    • tomfool on 05/06/2024 - 10:07
      +2

      Lobbying likely from the trade industry has probably resulted in them not being added to the shortage list. Paying off that new fully optioned RAM every 2 years does not come easy.

      • Ghost47 on 05/06/2024 - 14:33

        Good call. There's just no integrity left anywhere in this country it seems.

    • Nebargains on 05/06/2024 - 23:05
      +1

      Rates don't need to go up because inflation on the metric the RBA don't use went up by like .01 or whatever.

      Inflation didn't go up in a straight line and it won't go down in a straight line.

    • Brianqpr on 06/06/2024 - 07:03

      Tiny increase in monthly number which is notorious for being volatile and often later revised. The annual rate is only a little over the target band and falling.

      Your second paragraph is accurate though.

  • Exprise on 04/06/2024 - 17:21
    +14

    "We need to stop blaming interest rates and start blaming the terrible government policies of both parties that fuelled housing speculation."
    💯

    • larndis on 05/06/2024 - 09:50
      +11

      But Labor did want to change negative gearing, and Shorten got smashed at the ballot, so surely the libs (or really the coalition voters) shoulder most of the blame for the current situation?

      • tomfool on 05/06/2024 - 10:13
        +1

        Negative gearing has been around since the 80s and it was not an issue, the issue is supply an demand, to many buyers not enough property. If by some magic event tomorrow an additional 10k empty porperties were dropped on the market the rental market would pull back significantly. There would be a significant number of rental properties that are positivly geared.

        Issue is
        Developers holding back stock to boost proices.
        Cost to build, trade prices are significant as are material costs
        High levels of population growth

        FYI negative gearing is also available for equities

      • jaimex2 on 05/06/2024 - 11:42

        Shorten needed to just target the half CGT and stfu about negative gearing.

        He over-reached and Labor learned the wrong lesson of 'we should not touch anything to do with investment properties'

        • tomfool on 05/06/2024 - 12:22
          +3

          Half CGT was brought in when CPI indexing of returns was removed. Removing both would remove the incentive to invest post tax $ as your returns need to beat inflation year on year to make your investment viable.

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