Cornflower, the Sunday Times article did not try to "prove" anything.
It was simply a whole lot of tables, dates, suburbs and averages.

Indeed, location is a key when buying property. Yes, owning
property involves rates etc, but you also get your rubbish carted
away and the roads fixed. As Peter Hume has noted, there are good
solid reasons why your average punter invests in their own home,
or in the extra house, rather then more risky ventures like the
stock exchange.

You are preaching to the converted here, for I personally prefer
the stock exchange as an investment. But I also know how risky
it can be for the uninformed and how many sharks are circling out
there to rob people of their savings.

So my point is that for the average punter, investing in real estate
makes perfect sense, from a taxation point of view, from a disciplined
savings point of view, from a safety point of view and from an
inflation point of view.

People really have 3 options. Banks deposits will ensure the Govt
screwing them with tax and inflation. Shares are great for the well
informed, but not for those who don't do their homework. Houses
are still the most tax effective and safest option for most.

Good article, Mr Sayce, and I thank goodness there remain some who don't take a lead from the privileges the tax system grants to property 'investors'.

That means there are at least a few people left to do the work - to produce things - even if they do get it in the neck in comparison to tax system-created property speculators.

I'm tickled by those who consider escalating land prices create broader employment: for lawyers; real estate agents, etc., etc. They don't see it'll also create a far greater, and longstanding, pool of unemployment when the Australian property bubble does finally burst?

Oh, it's not going to burst? It's just 'supply and demand' in action? Pull the other one - it's a bubble!

That 'bubble' has been around for such a long time that prospective home buyers must be wondering if it is just spin to try to dampen prices that are continuously being driven up by demand resulting from federal government immigration policies that regularly set new records in the quest for a 'Big Australia'. Big business must have new record profits every year and government needs inflation to reduce its debt.

Then there is the plethora of taxes applying to development and building levied by all levels of government, enthusiastic to take advantage of the property milch cow. On top of that 'user pays' is increasingly applied to make the developer and by flow-on the eventual home owner responsible for the supply and maintenance of infrastructure that was formerly provided by government.

On top of all that, there is continuing under-supply of trades as a result of the ongoing building boom to keep up with high population growth, resulting in higher labour costs. In view of the chronic under-supply of trades it is incredible that government levies high TAFE fees that deter enrolment. Again, job permanency has all but disappeared, so how can youth commit to and complete education unless they have parents with deep pockets?

Now when did the 'bubble' first appear, pray tell, because it appears as though government just might a hand in it?

The housing bubble really got going in the Howard years, for a number
of reasons. More immigration is just one of them, Govts know that
to win the next election, they need a healthy economy, house building
is a huge industry. So both Howard and Rudd have increased
immigration.

Next we have the problem of town planners, who decided that they did
not want urban sprawl, so less land was released. That did not work
for them, as Australians seemingly don't want to live in dog kennels
and in fact now live in the world's largest houses.

The RBA released some figures around 2007-08, which showed that
a large part of borrowings for housing was by DINKS, who were
uptrading or upgrading, commonly to suburbs closer to the city.
Given that they commonly have two large incomes, they can afford
to borrow, to buy whatever they want.

Some of the more informed seem to think that the bubble could
burst around 2012. Commodity prices are once again heading upwards,
which will lead to higher inflation. Not just here but globally.
Alot of large company loans are due for rollover then too. So global
interest rates are expected to rise substantially and reserve
banks will be forced to raise them to tame inflation.

Once people have to pay 10% or so for their housing loans, those
who have overborrowed, will no doubt be in tears.

But of course the smart money could be wrong.

Bryan Kavanagh>>I'm tickled by those who consider escalating land prices create broader employment: for lawyers; real estate agents, etc., etc. They don't see it'll also create a far greater, and longstanding, pool of unemployment when the Australian property bubble does finally burst?

Oh, it's not going to burst? It's just 'supply and demand' in action? Pull the other one - it's a bubble!

Rehctub here, obviously this is aimed at me, so I will reply.

Firstly, house often change hands simply because they increase in value and owners 'upgrade' with thier newfound welth.

Now if you think this doesn't create job oportunities then you must live on another planet. Proof of this is evedent in that we have specialist 'conveyency businesses', set up just for the purpose of property transfers.

You simply can not deny that jobs are created from lawyers, to building inspectors and even removalists when sales increase.

Housing bubble.
The housing bubble, as always, started with Sydney in the early 00's.

It was largely driven by the 'first home owners grant', which saw many new buyers enter the market which, until then, was simply a dream.

My bet is that any government would not be game to let our property market plunge without some sought of 'mass jobs creation scheme', otherwise unemployment would be out of hand and there is simply no way we can afford that.

Better to create jobs than let unemployment get completely out of control.

There are also the increased complience costs associated with new land and houses. These simply add value to existing homes.

So in essence, I don't think the 'bubble' as you call it will completely burst.

There may however be some corrections, but my tip is many astute investors will be cashing up right now waiting to grab a bargain from the first home buyers who have been sucked in.

End result, higher rents

Rarely, in all truth, have I read a more depressingly negative appreciation of the Housing ' bonanza ' market. KS goes to great lengths to presumably expose the farce that successive Govt's, since the end of WWII, have aided and abetted. Refined, and in cahoots with the Banks, some how created a mammoth hoax on all the battling Mum's & Dad's, who religiously adhere to that great Ozzie dream/maxim of " owning your Own Home, and ( your neighbors too )given the possibility !

The Author claims : Housing is not a productive item ? Has NO economic benefits ? Housing prices have to increase for investors to make money ? Is a recipe for a boom that is set to bust ?

As a professional media exponent i.e Money Morning, his hypothesis is not only flawed, it creates the wrong impression for would-be investors, out to acquire wealth, and at worst derides the Banks for profiteering on the backs of thousands of new home owners, who have worked hard, saved frugally, and bought into the Property market.

From Economic fundamentals : You've got to spend money before you can gain Wealth, per see ( unless it's illegal or inherited) Seminars by the score, and attended by packed fee paying audiences learn the strategies of buying and selling Property, from the ground up. The gurus make a lucrative living from these specialized courses.

The Housing bonanza is about to erupt once again, after the GFC. Property sales on the Gold Coast have spurred RE Agents to employ more sales staff to meet the resurrected boom. Values on Sea frontages, Canal blocks, and even the hinterland, have doubled, despite recent Govt evaluations.

Many investors are buying run-down properties bull-dozing, or renovating for quick sales. People in the building trades are inundated with work to build 6/9 story Units on 16 perch blocks. There are no shortages of genuine buyers, particularly among Architects, Builders, RE Agents and Investors. The Housing bubble is taking on a new meaning, for M & D, who invest in reverse moprtages to gain a foot hold
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