...This article exposes economists for the "Evil" breed they are!

...The assumption in this article is, that housing prices should ever escalate: That is the “furphy”, and is simply a sophisticated attempt at justifying the unjustifiable.

...If that oversimplified logic was to be applied to all domestic commodities as it is here to housing, then I would be chiseling this response on a block of stone!

...No, the reality before us is that the housing market is so highly manipulated, in order to satisfy every other interest BUT a family of human beings looking for shelter!

Dr Kirchner does not disclose that he writes for the ultra conservative "not think tank" Centre for Independent Studies a group whose support sources are not disclosed although Alex Carey in his essays, published as Taking the Risk out of Democracy, links the group to the USA right wing propaganda machine. The subtitle of the book is interesting, Corporate Propaganda versus Freedom and Liberty.

In his article Dr Kirchner neglects the major problems with Australian housing prices. The two principal problems are people with excess incomes looking for investment opportunities and favorable tax treatment for the savings of those citizens already wealthy.

The solutions to those problems are easily found.

Firstly, any debt funded investment could be treated on a stand alone basis so that only interest costs up to the level of the gross pre-interest income derived from that stand alone investment are allowed as a tax deduction.

Secondly, the franking credit bonanza could be curtailed. Not many people realize that if a taxable income of $250,000 pa is derived from franked dividends the tax payable is only about the same as that paid by someone who actually works for a living and earns about $105,000 pa. Anyone who earns $100,000pa form franked dividends pays no tax. Those figures ignore levies but that makes minimal difference to this argument.

Businesses treat tax as a cost so I agree with the suggestion of Professor Wrandall Wray, UMKC, that company tax should be eliminated (preferably on all but undistributed income in my view). That will reduce costs, and prices, of consumer goods and dispense with franking credits (a company cannot declare a franked dividend if the company has paid no tax). Distribution of dividends to overseas shareholders would still be subject to withholding taxes. Actually no tax need be foregone by the sovereign government.

Of course the wealthy would squeal.

Hawke and Keating fell for a fallacious argument when they introduced franking. Shareholders wanted the protection that came from granting a company "citizenship" rights, and the consequent limited liability, but they would not accept that separation when it came to taxation.

Part of the problem is low interest rates; meaning, investors get a bigger bang for their buck investing in equity, or the housing market!
Australian governments have not assisted, allowing foreign investors into our real estate market.
I mean, it's if they're totally unaware that foreign speculation in the property market killed Ireland's and Spain's economies.
The housing market and equities are on the rise in the USA, not as a sign of solid growth, but as a sign there is not much return on cash these days!
Particularly as quantitative easing in America and Japan, are adding cash to their economies.
An example sure to be followed in Europe, making a tenuous recovery even more tenuous.
Our own economy would be greatly served by exponentially rising house construction and lower prices due to increased supply.
These would be possible by the roll out of very rapid rail.
And this could be paid for by the resale of resumed rezoned urban property along the corridors, near new station sites.
Each station stop, could in effect, be planned as a brand new town replete with a CBD, and an industrial park, and low cost high rise residential accommodation very adjacent to the line.
These very towers would first serve as accommodation for the workforce needed to complete construction, of cities not smaller than around 30,000 people.
30,000 is enough people to create enough demand for any business to prosper, including cafes, restaurants, shopping centres, sport venues etc.
And all waste water, could be first thoroughly cleaned and thoroughly sanitized in the local production of biogas.
The resultant nutrient loaded waste water, could then support an endlessly sustainable, closed cycle, oil producing algae farms?
Then used to support green recreational space/dairy farms/market gardens
Simply put, there is no real downside to a scaled up affordable housing roll-out.
But there could be a huge once ready to hammer us right into the ground, where we could join Ireland and Spain.
That's the problem with bubbles, you never ever know you're in one until it bursts!
Rhrosty.

THERE ARE PLACES TO SLEEP EVERYWHERE
i soon homes unde bridge on top of waterfalls in national parks and in horse paddocks/storage sheds/and garages.

house are too expensive so buy quarter a house
with mate..never rent/but do share/buy

*[except now isnt the time to buy a house
[their 40 percent oveR value here and globally 80 percent over price

we need stop investers getting tax deductions and home owners not
UM..the absurdity is one haS deducability\yet lets it run into A SLUM/THE HOME OWNER WANTS TO BUT CANT AFFORD TO.

NO TAVEL DEDUCTIONS
YET OTHERS GET FREe CARS
[ALL WAGE EARNING EXPENSE rightfully IS TAX DEDUCTABLE/INCLUDING CHILD CARECOST.

SUPER CONTRIBUTUNS FORNOST SHOULD GO INTO HME BYING

Even somebody who votes for the Greens could be smart enough to figure out that house prices have a causal link to immigration. The more immigration, the more flats and houses are needed. Stop immigration and the ever spiralling need for more housing stops with it.

Is there a downside? Yes, at the moment, the housing industry is one of "Australia's biggest industries employing a high percentage of workers. Stop growth and capitalism goes into recession.

But even the most ardent Liberal supporter can figure out that growth can not be unlimited, and too much growth can be just as bad as no growth at all. In any case, many new building projects are "Lebanese" and "Chinese" where Australian standards are ignored along with Australian wage scales. The investors are foreign, the workers are foreign, and the profits generated go to foreigners. In the meantime, it left to that wonderful cash cow, the Aussie taxpayer, to fund all if the new infrastructure needed to service our ever growing need for more flats and houses which is always short of what is needed.

In the unlikely event that house prices ever looked like they might come down, you can bet that the developers and the real estate agents would scream for more immigration to keep the prices high. How this is good for Australians is something this author forgot to examine.

The solution would be to use immigration for the benefit of Australia. Just in case nobody has noticed, Australia is one of the most desirable places in the world to live, because in an overcrowded world, we do have a small population. We have a lot to offer immigrants who are talented and can contribute to our prosperity. Some people would even pay us a a lot of money for the privilege of joining us. But instead we are throwing away our country importing people from some of the worst societies in the world and wondering why our dole queue keep increasing, our prisons keep filling, our streets are less safe, while our kids can't afford to rent a flat.

LEGO,

You are right and as you are probably aware, it has all been said so many times before and on this forum.

However there are some who are forever locked into dependence on others and are unteachable. It is their lack of maturity. The same lack of maturity that causes them to always put themselves first, exhibit an overdeveloped sense of entitlement, lack of gratitude and incapacity to defer short term gratification to save some dollars for a deposit, just to cite a few other unpleasant personality problems. Their stupid arrogance tops it off.

While some of these fools have been swinging from the taxpayers' teats for years and look forward to a lifetime of dependence and whining, recently arrived migrants from Asia have been managing to buy well-located property in good suburbs and are sending their children to private schools.

We count many Asian migrants among our friends. None are happy about supporting other migrants who will not provide for themselves and soon, and certainly not any sponging locals either, including those indigenous who believe that original ownership of Australia qualifies them for eternal support from taxpayers.

There will be interesting times ahead for those who refuse to take responsibility for themselves and prepare for the future.

Sorry, but improved housing affordability starts with ones spending habits.

Going back to 1984 (30yrs) one could buy a house in Bris outer suburbs for $45K and about the only additional spend was for the likes of a hire movie. Now, we all have mobiles, Internet, foxtel, all of which are paid for prior to saving for a home.

Now, back to that house 30 years ago. As an investor myself, I would be horrified if the first house I bought back in the 80's had only doubled in 30 years, so these figures being splashed about by some guru are a load of misleading rubbish.

But, the number one cause of housing affordability is people's spending habits.

Take a late for example. It costs around 60 cents to make yet people will part with up to $5 for one.

Try to imagine the housing affordability issue if a house that cost $200,000 to build, sold for $1.7 million. Because that's the margin many are willing to pay for just for a cup of coffee. Food for thought, Hey!

THE BACkwards butchers/quote..<<..improved housing affordability starts\with ones spending habits.>>

IF/THEIR PAYING RENT/they can buy a home
investers look at recouping their debt[not their spend]
they put u pennies/to collect subisised dollars in rent[plus govt tax advantages/for investors/plus govt subsidy-as-if rent.BUT LETS LOOST THE PROOF

<<..Going back to 1984 (30yrs) one could buy a house in Bris outer suburbs for $45K..and about the only additional spend was for the likes offences turf carpeting landscapping a pool or a car

<<... Now, we all have mobiles,Internet,
foxtel,\all of which are paid for..prior to saving for a home.>>
if you got foxtel-on/you dont really want A H0ME.

<<..if the first house I bought back in the 80's had only doubled in 30 years,>>

FIRST HOME/cost me 25,000/plus a 10%~deposit
sold 15 years later for 90,000
and its been troublingly doubling nears every 7 years since

<<..so these figures being splashed about by some guru are a load of misleading rubbish.>>

yes/just a bit
but/by-who?

<<>the number one cause of housing affordability is people's spending habits.>>60 cent/cot=5 return ex is deleted

here is the fact/hand price is near
the price most spenD ON THE HOUSE/so this imagined 50 cent bone/was really valued at 2 dollars or more/THUMBS ON THE SCALE/ITS A BUTCHERING TRADE/TIRADE.

Oug:

...Rectub is probably referring to a house in one of the notorious suburbs of Brisbane, located in a flood zone: Great for investors that firstly are never forced to live in the house, and secondly, have shares in a “Gyprock” factory.

...And as for the comments of supreme arrogance from “onthebeach”, maybe it’s time to remove his/her head from the “darkspot” where heads should never be; try a walk to the next suburb for enlightenment purposes!

OUG, sorry, I refuse to respond to riddles.

DD, the house I was referring to was in the pine shire and was high and dry, and my own live in home.

I was actually ripped off by my boss and paid far too much, but it was worth $39K. I sold it in 1990, 8 years later for $90K. Today, some 32 years latter it would be worth about mid 300's, not the $80 odd K as suggested.

As for the gurus I mentioned, it was mentioned on the radio a few days ago that houses double every 30 years. The author also says the same.

These people are so out of touch with reality.

@diver dan, Saturday, 12 July 2014 11:18:30 AM

By coincidence or perhaps not, the last three young women who cut my hair were all buying their own homes with their menfolk. All were taking advantage of the very competitive prices for quality, no glitz but definitely not cheap build, two bedroom apartments within 5 km of the cbd. That is better than I had first up and I was in a permanent, better job and better trained. Good for them!

A casual friend who lives not far from me has over twenty years amassed a substantial portfolio of inner city apartments, yet she is a casual security officer for well-known retailer and lives in a modest two bedroom apartment in the suburbs. Single income.

However diver dan you must imagine they do it by luck.

Maybe others can see where your self-limiting beliefs, or is it lack of discipline, could be holding you back. Do you work?

A friend sold a 3 bed high set quite pleasant house near Beenleigh just 15 years ago for $33,000. Market value today about $233,000.

Another bought a house near Nerang, a really nice 3 bed double garage home about 10 years ago for $145,000, & sold it 3 years later for $350,000. It would be worth exactly the same today.

Real estate goes in waves, pick the bottom & you do very well. My property stayed at exactly the same value for over 12 years, then tripled in 3 years. All that means to me of course, is that the council feel that justifies in quadrupling my rates about every 5 years.

Unless there is higher rezoning, the value of property tracks inflation, dragging well behind for seven and more years and then catching up, hopefully. Only the foolish buyers and they are always buying to live in, lead prices beyond inflation (emotional home buyers, not rational investors who have to crunch numbers).

A purchase during any surge beyond inflation is heavily penalised because the buyer pays high interest rates on a property with a sale value well below what s/he paid for it. If things go pear-shaped in the home owner's life the bank is not going to forgive the debt. Home foreclosures are common.

At this stage those with experience in paying a mortgage could comment on the other large overheads of keeping and maintaining their homes. Landscaping and garden alone are often hidden sink holes for money.

I don't believe that much privately owned 'investment' housing is a worthwhile investment at all and it is high risk.

My opinion is that you buy where there is going to be good capital gain, and you rent where you want to live.

There are two reasons for this, One, your mortgage shortfall dollars are tax deductable, and Two, premium properties generally rent for less than a 5% return on investment.

Of cause this only works well if you don't spend the savings.

on the beach

'There will be interesting times ahead for those who refuse to take responsibility for themselves and prepare for the future.'

'Interesting'? Try 'starving' or how about 'destitute' and 'homeless'?

You know, I’m really losing patience with this kind of hate speech.

In a world ravaged by the global financial crisis – caused mainly by people with screw-the-poor attitudes like yours – it’s as dangerous as it is callous. Inciting people to hate the poor and destitute, because they are supposed to have done, or not done, something to deserve it, creates a political climate that, if driven by sufficiently high hate levels, can potentially strip a portion of the population to having no means of livelihood, no food on the table and no roof over their heads.

It also reeks of a eugenics-level superiority complex.

Now that we are living under a conservative government, this kind of rhetoric starts crawling out of the sewers and into our everyday discourse. Whatever the faults of living under a Labor government, at least they don’t hand out megaphones to spruik this kind of hate.

As for your ever so 'responsible' casual friend with the housing portfolio, ask her next time you see her how much she makes out of taxpayer-funded negative gearing every year.

Now you are being silly Killarney. It is not 'hate speech' to note that cultural diversity is having a growing political impact, especially where we have inherited our concept and tradition of social welfare from the UK.

You need to accept that diversity doesn't just affect the variety of takeaway food on offer in cities like Sydney and Melbourne. It is a democracy and the political parties are going to have to change.

It is a fact that many migrants oppose forking out their hard earned to unrelated persons who simply don't make an effort and so often come from families with traditions of dependency on government and who consume inordinate amounts of other services as well, including police.

I am not someone who would recommend 'investment' in residential housing, negative gearing or no negative gearing. The government regulatory risk - as indicated by continual government regulation and interference in the market - is far too high. Matter of fact I reckon that investor confidence in the rental industry could quite easily collapse tomorrow. I am not talking about any illusory 'bubble', it is simply a fact that the returns are not there for tenanted property. A collapse would not be kind to tenants, nor to home buyers hoping to do well out of bad news.

It was worth noting as I did earlier however, that many who whine about not being able to buy their own home are likely lacking self discipline. You cannot have your cake and eat it too.

My reference to hate speech had nothing to do with immigration or with government regulation of the housing market.

It was about people like yourself referring to those who cannot afford to buy a house as whiners and whingers who take no responsibility for themselves or their futures. And as others here note, these whingers and whiners are too busy supposedly squandering their money on lattes (and in other threads, the pokies).

This kind of hate speech achieves nothing more than a feeling of self-righteousness in those who promote it and a feeling of self-justification for those whose policies perpetuate the conditions that are turning Australia into a grossly unequal society.

People who can't afford to buy homes in an overpriced market are in that situation because (a) they are not earning enough money to start with or are trapped in long-term casual employment that does not permit saving, (b) because they live in one of the most expensive societies in the world and even those who do earn a decent living have little left over to save and (c) the housing market has simply become unaffordable for anyone but the well off.

I do not know a single person under 35 who did not get into a first home without a major cash injection from their baby boomer parents. Those whose parents can't fork out the necessary funds are now trapped in rental land - quite possibly forever.

Killarney,

Have you ever wondered if you might learn something from the elderly people you refer to as 'Baby Boomers'? How did they ever afford their first property and what was it like? Maybe you should ask. I am sure you will be very much surprised.

They didn't expect a hand-out on a silver platter and nor should anyone else. Doubtless others have previously mentioned the real estate sites and lenders' sites where most of the leg work has already been done for you.

I have given examples of workers in low paid casual jobs who have saved a deposit and bought in to what they could afford. It is their start.

You really are a bit of work aren't you Killarney, the only hate I see here on this thread is from you, for everyone who is sick of being bludged on.

While I do agree it is hard for many kids who get it wrong, those with a bit of common sense, who don't waste their money, or forget to take the pill, have no trouble. In a development near me you can buy a house & land package for $259,000. Yes it is only a 2 bed on a small block, but makes my first house really look like the hovel it was. That is less than 3 years income for a couple in pretty ordinary jobs.

You must only know dills, as I know quite a few who funded their own homes in their early 20s. My eldest & her husband funded their first home when she was 21, & their current McMansion at 27.

One of my sons mates is not very bright scholastically. He left school in year 11 as he was going nowhere. No he's not bright, he is a great worker. He got a job laboring with a house plasterer. It didn't pay all that well, but was regular work. He is still with him, but is now a partner.

He married a smart girl who kept him on the straight & narrow. They had their first home at 22, & now own 3. Not a great investment, but appears to work for them.

I'm with Beach, I'd never own a rental it is a dreadful investment, all the incentives are to suck fools into doing it, to save the governments having to. You should feel sorry for them, not hate them.

Well, on the beach, I AM a baby boomer, one of the later ones, so I only have to go as far as the mirror to ask one of them a question.

They DID accept handouts, like free university fees and free medical care (before Medicare got thoroughly white-anted). However, the later ones like myself also had to buy into the first wave of the stratospheric housing boom from c. 1989 on, caused by the combination of Keating's negative gearing legislation and almost a decade of financial deregulation. For much of the following decade, interest rates were in the range of 12-18%.

Also, most mid to late baby boomers have had to undergo an unprecedented average 1-3 retrenchments during their working life, which even with severance pay, can take up to 10 years for a family to recover financially.

I could go on and on. Every generation has its hardships. However, the one thing that the boomers and the 20th century generations before them could rely on was (a) permanent jobs for those who wanted one and (b) a consistent and decent income to allow them to save if they wanted to, and (c) a safety net for when and if they fell on hard times or or became old.

The current generations born after the boomers can no longer rely on any of these.

I believe that people like yourself and Hasbeen and Joe ('end of entitlement') Hockey are still mentally living in a world in which anyone who wanted a permanent job could get one and anyone who wanted to save could earn enough to allow them to do so.

That world no longer exists. Thirty years of globalisation, and its partner in crime neo-liberalism, have blown it to kingdom come. Oh ... but the rich are doing just fine, thank you very much.

Killarney,

You only need to refer to one of the real estate sites to know that very affordable properties are available as they always were. You have the example of young hairdressers and their chippie or sparky partners buying homes. The difference is that they are prepared to make some personal concessions to get into the market, as the young have always done. The large home on 32 perches with several bathrooms and all of the European appliances will have to wait, if they ever want that.

The rest of your stuff is the rut of self-limiting beliefs. Maybe get out a bit to meet people and leave that mirror alone

I HAVE BEEN studying the local nAtional parks/and the fire regeme is killing regrowth and the oldgrowth/so i been thinking/there has to be a better way..anyhow i got a stack of hidden building sites/some into MOUNTAINS/others built in trees..but how to get the idea/going

i thought a tv show/where we pick artists /and artizans/to compete with each other in harvesting value from the forrests/and even try different things/like landsites as like the days of old where if you care for it[or value add it it]..its yours[till others come/with HIGHER CLAIM''

pont being there are rare barks saps great tree-tRUNKS 6 FOOT HIGH
THAT GOING TO BURN AT THE NEXT BURN/..all the trees are scared by huge fire scars/masses of litter 3 feet deep/no fire is going to fix that/plus the fire ensured the gums will be he last gums

point being i could easy build a home in there
but i thought a better idea/is we have a concrete path/RUNNING KILOMETERS/THESE COULD HOUSE MICRO HOUSES/that iclude obligation to become pR

I don't know where you live Killarney, but it must be a bad place.

There are plenty of jobs around here. May be not your desired career path, but plenty of them with reasonable pay.

There are still plenty of jobs out the mines too. A neighbors daughter, no qualifications, 4 years call center experience her only reference, now earning $140,000, 6 weeks on 6 weeks off, as a clerk.

Army, navy & airforce are all advertising positions for trainee tradesmen. Kids start on reasonable money, married adults on full money, & they won't have to go fight.

My lady deals with the long term unemployed for a charitable job placement organisation. All 2 years or more jobless. She can find work for all those she believes are likely to turn up & do the job for more than a few weeks.

She used to be a bleeding heart, & still is to some extent, but has become a lot more realistic about how many of them really want a job, & how many are just bludgers. Hell she can even recognise most of those who will only work cash in hand so as not to loose the dole.

A couple of days with her might open your eyes.