...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.