Good piece, Karl Fitzgerald. The HIA is correct about taxes adding to the cost of a block of land, but they underestimate the trickle down effect of taxes in ALL prices whilst they also side with developers against taking the necessary remedial action, viz, reformed land tax.

That taxes on land--more correctly understood to be rents by economists--can't be passed on in prices gets a mention in any economics 101 textbook, and that taxes on land also keep the lid on escalating land prices rarely gets a mention at any housing affordability summit - because that's getting a bit too close to really dealing with the problem. And as mentioned above, we know Julia Gillard isn't about pricking this bubble.

The Henry Tax Review's recommendations to abolish 125 taxes and replace them with only two new ones, the mining tax and an all-in federal land tax (to replace state stamp duty and underutilised state land taxes) have a lot to recommend them if we are to have genuine tax reform and address housing affordability.

Housing affordability is just one of the myriad of problems we face in today’s modern world.

Unfortunately we now live in a world based on a fiat currency.

The US, Japanese, ECB and a growing number of reserve banks are printing money much the same as what successive Roman emperors did to the denarius – debasing it to the point of near worthlessness.

Central banks through currency debasement cause increasing taxes and impose ever more stringent regulations and impositions on the lives of individuals.

This is where the FIRE economy is today and for a time it will continue to be able to survive and perhaps even grow in some areas.
However, by doing so, it is vastly increasing its own costliness and decreases the marginal return it can offer to the man or woman in the street.

These continued and growing costs have drained the middle class within America and Europe and you can bet that unless a completely new policy shift or way of life emerges in the very near future, Australia will be faced with an ever increasing drain on individuals and their ability to sustain any fair and equitable level of financial stability in and ever growing corporate driven society.

The existing level of government support to those falling off the cliff is itself deteriorating to the point the added and growing social burden will further undermine any real ability to maintain “business as usual" much further into the future.

The world is in the early stages of financial collapse and those who live off the treasury are growing toward a point where they will become more numerous than those paying into it.

It does not need a genius to realise that our housing ponzi scheme here in Australia is totally unsustainable, bubbles always burst; we have just yet to experience the pain. When we do, it is going to be catastrophic for so many people. At the policy level, both sides of government remain in denial and will do little to mitigate this growing problem.

A house of cards can only stand for so long.

Sheesh, all this chatter and no mention that the boom in house prices has been created and sustained by the mobilisation of women into paid work, thereby increasing the disposable income of two-income families by 3 or 4 times. It is two-income families especially dual-professional or professional-self-employed pairings that are the negative gearers and many of those were assisted into their first property with very little capital by the policies of the Howard government, quite deliberately creating demand.

The problem is much worse than has been suggested, because many of those negative gearers have multiple investment properties which are funded through interest-only loan payments and equity has only been achieved through price inflation. As an aging population tries to sell out of those properties prices will inevitably deflate unless they are artificially supported, meaning the equity of the negative-gearers will evaporate. Many of them are already in that position, with banks foreclosing as equity ratios fall below their comfort level for interest-only arrangements and the investors cannot afford to repay principal.

According to the press today, some 23% of all property advertised for sale is currently on behalf of a mortgagee, receiver, or liquidator, with the agricultural sector - including hobby farms and "tree-change" properties bought by those same negative-gearers - comprising over 50% of that and residential around 20%.

On the Gold Coast some 74% of properties in all sectors were listed by a receiver, mortgagee or liquidator.

The economic disaster is just starting, and it has its roots in the vast social upheaval created by feminist social constructionalists, abetted by short-term and narrowly self-interested thinking within the professionalised petit-bourgeois middle-class and taken advantage of by more pragmatic financiers, who have made record year-on-year profits every year for well over a decade and will demand support from taxpayers when the whole thing collapses.

I neglected to mention the other exacerbating factor, which is that the employment of a high proportion of the female professional and quasi-professional workforce is dependent on Government funding. It is not unexpected that Qld is experiencing the highest rate of forced property disposal, given the reduction in expenditure that has been forced on the Newman Government.

It will come to the rest of the country too as Federal expenditure is reduced, as it must be.

Karl,

No more lies and wishful thinking.
Stabilise the population growth.

Balanced migration, 80,000 out then 80,000 in and get rid of the baby bonus.

1.2 million more people every 3 years is catastrophic.

BETTER NOT BIGGER.

Best,
Ralph

Also remember housing is adversely effected by every (so called) refugee boat arrival, simply because we have THOUSANDS of homeless Australians BUT NOT ONE HOMELESS REFUGEE.

With an expected up to 30,000 to arrive this year there is no room in the detention centers so they will be given houses which will put further pressure on housing availability.

House the Australians give the refugees a TENT just like the UN do in Africa and other places.

Juliar look after your own citizens first.