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The Forum > Article Comments > How government increases housing prices > Comments

How government increases housing prices : Comments

By Vladimir Vinokurov, published 31/3/2017

Compared to local salaries, Australian cities are among the world's most unaffordable places to live. But you may not know why.

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Zoned zones. Alas, a nations store of value is in it's buildings, Regulations which trap capital to feed larger Government's are restricting creative progress to protect vested interests.
Posted by Dallas, Friday, 31 March 2017 8:08:23 AM
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Article is refreshing and comprehensively explains, hitherto unseen obstacles, to the Australian dream, home ownership.

Regulation, in all its, well intentioned forms, simply has to go, whether it be labour market, superannuation, medical and other areas.

Essentially, regulations are insisting, that 'people', can't be responsible for, or manage, their lives.

Not true, I say.
Posted by fool on hill, Friday, 31 March 2017 8:38:27 AM
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The issue is far wider than zoning and planning regulations.

Other contributors are taxes and charges on developers, and wider controls on land use.

In the ACT the territory government has a monopoly on residential land sales and through restricting supply has jacked up the price of house blocks to a typical $400k. Sydney land supply for housing is impacted by the size of its National Parks to the north, south and west.
Posted by Bren, Friday, 31 March 2017 8:41:37 AM
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It would actually be amazing if there was some more tariffs on goods coming into the country so that oz workers would have more cash to buy a big, nice house. The purpose of trade is for a society to gain the things it cannot produce itself rather than to undercut fellow countrymen.
Posted by progressive pat, Friday, 31 March 2017 8:55:21 AM
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The goose is the housing market, the golden egg is artificial population growth through immigration, increasing at an estimated rate of one million every three years.
The rest of the argument is the smoke and mirrors of distraction!
Posted by diver dan, Friday, 31 March 2017 10:09:57 AM
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diver dan,

Agreed.
Posted by leoj, Friday, 31 March 2017 10:47:16 AM
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I find it odd that so much attention is given to the supply side of housing and so little to the demand side.

Why worry about regulation affecting supply when there are, in my opinion, more important issues in play?

Issues affecting the demand side include (in no particular order):

population growth including immigration
foreign investment (including from Chinese investors anxious to get capital out of China even at a loss)
our generous system of CGT
the taxation advantages of negative gearing

The solutions to each of the above are obvious and have been well canvassed but I would add another - the reintroduction of rent controls (yes, regulation). Rent control would reduce investor and speculator investment in housing. Investment would/could then be re-directed into more productive (hopefully) activities than housing.

Disclaimer:

I own outright (no negative gearing) a basic house in inner Sydney. It has been appreciating at a rate way, way beyond what the great majority of people could save towards a house even with two people working. This is madness.
Posted by Lawson, Friday, 31 March 2017 12:11:46 PM
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It is not just housing that is expensive in Australia: it is everything. Australia is now a very expensive place to live and, as already mentioned, made so in no small way by the high immigration of unproductive people. Very soon, the so-called refugees coming here purely for our welfare payments will have to find cheaper countries or stay where they are. The locals will have to try to get decent people in government who know what they are doing, unlike the current shower of idiots.
Posted by ttbn, Friday, 31 March 2017 2:18:30 PM
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Lawson,

That is cherry picking. There are many investors whose properties have lost value,

"Property investors lose 50pc in Qld mining towns"
http://www.afr.com/real-estate/property-investors-lose-50pc-in-qld-mining-towns-20160302-gn8qv9

Thousands of home owners and landlords 'doing it easy',

http://www.abc.net.au/news/2017-03-29/cyclone-debbie-aftermath-gallery/8395494

Investment property is very long term and high risk for all sorts of reasons. The REA was telling me that a house I previously owned, which was bought by a couple as their superannuation, has been trashed several times since it was sold. That was despite professional management. It is now vacant without income while the police court case involving tenants (some who can't be found) and certain drugs is progressed. Later, the expensive chemical clean-up is to be done and health safety certified. Insurance will cover it? Nonsense, and the bank must still be paid.

The REA was asking if we wanted to buy it back? Investment property? Not on your Nellie!

You want to add rent control to the mix. LOL
Posted by leoj, Friday, 31 March 2017 3:18:56 PM
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I feel so sorry for elderly people and families who are being forced out of their family homes of a lifetime by costs such as increased rates from inflated council land valuations.
Posted by leoj, Friday, 31 March 2017 3:33:15 PM
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Valuations don't have much effect on rates leoj, unless you have a very large discrepancy in values through a council area. This is one disadvantage of amalgamating councils, as it leads big differences in prices.

After valuations are set a council then sets its rate in the dollar to get the amount of money they want to play with.

Council rates are one of the most rapidly increasing price in the country, way above inflation, only rivalled by electricity prices.
Posted by Hasbeen, Friday, 31 March 2017 4:30:46 PM
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Progresive Pat, while i have not yet read the article, are you aware of the importance exports are to our nation?

Are you also aware that many trading partners export to us because they choose to, while we on the other hand export to them because we have to.

There is no easy fix to housing affordability in this country, and wages are likely to go down moving forward simply because big business is now gun shy here, one reason being our ridiculous green energy targets making energy costs unaffordable.

Combine this with the tax witch hunt for multinationals and the result is going to be very painful indeed.

My prediction is that houses will become affordable, but few will have the capacity to borrow for them in five to ten years, mainly due to a huge increase in insecure jobs and/or increased under employment.

The ONLY way to tackle issues like housing affordabillity and the environment is to make our economy a prosperous one and our current path of closing the door to big business and closing affordable power stations in far south of what is required. Of cause it doesn't help when a government wastes so much as Labor did and created a financial mine field like the boat people debacle.

The only way to get out of the hole we are in is to become a major exporter of our key asset, our resources. But our governments have lost their nerve and would rather tax corporations than encourage them.

CSG is the next with its head on the chopping block if attitudes dont change.
Posted by rehctub, Saturday, 1 April 2017 6:07:43 AM
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Decentralization and a dozen or more brand new cities, will create enough supply to put downward pressure on house price as would a return to new estates create by government as affordable commision (rent to buy) housing then with that done just remove negative gearing! As for being able to afford it, why not increase the upfront taxes loading on foreign investor residential investment?

To create an exponentially expanding pool of money used exclusively to fund it off budget?

Decentralization and new cities, replete with their own CBD's, schools, shopping arcades/centres and industrial estates, is more about when rather than how, and every decade of delay just effectively doubles required infrastructure spending/roll out!

The oldies were able to do this and massive, now impossible? Nation building projects!

But we can't? Why? Are our current crop of leaders so abysmally dumb or financially illiterate? Or are they and their clung to with rare determination, self serving, highly flawed policies the actual problem? Which is in no way alleviated by diabolically dumb, up and out expansion of already overcrowded cities!

Up and out suits the needs of established big department stores, office towers and developers, rather than the general (economically enslaved, captive cash cow) general populace!?

Redevelopment just costs more in the long run, every which way, than just building from the ground up somewhere else!

We are not short of room, just ideas and affordable energy, which only needs to be coupled to affordable assured (desalinated seawater) potable water, along with some rapid rail links! And very doable and affordable, currently!

That done and all else will follow!
Alan B.
Posted by Alan B., Saturday, 1 April 2017 9:44:06 AM
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Alan, just how will the removal of negative gearing provide affordable housing?

As for the other ideas you mentioned, you do realise that one, we have a very small population spread out over vast areas, two, our costs are way too high to build just about anything in an affordable manner, and three, with our 'entitlement mentality' too many dislike the tought of having to pay to use something, like tolls.

But i am most interested in how you think the removal of Ng will help the situation.
Posted by rehctub, Saturday, 1 April 2017 9:13:57 PM
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Rechub: Forgone tax, funds negative gearing, which ought only apply to bona fide commercial investment, not safe as houses, virtually risk free residential real estate.

Investing capital needs to be accompanied by a measure of risk (capitalism) to ensure due diligence and financial prudence!

With the money saved by repealing residential real estate negative gearing and subsidized capital gains in that market, poured into rent to buy housing commision estates.

Would #1, put a handbrake on unreasonable rent rises and overleveraged overvalued real estate.

#2, Act to progressively draw down massively overvalued real estate and progressively return affordability to the market.

I've made money buying and selling houses! By buying doer-uppers, and living in them while renovating, mostly kitchen and bathroom updates, installing flat pack BU wardrobes and a paint job.

And cash in when the property appreciates courtesy of affordable upgrades. So the profit component is connected to the sweat of the brow and saved rent!

Who could arguably justify more and not look like a blood sucking (rent roll) parasite?

A rent to buy paradigm roll out by government would put a turbocharger under the general building industry and flow on to the rest of the real economy! And as rent or house payments rolled back in add to the growing pool of funding for that purpose!

A new people's bank would make an ideal vehicle for said pool administration, or credit co-ops?

And that's how repealing negative gearing helps as does removing unearned parasitical profiteering!

Nothing wrong with actually earning it, and in squillions, if that's your goal? And good luck with that!
Alan B.
Posted by Alan B., Sunday, 2 April 2017 11:00:33 AM
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Alan, i will reply to your post shortly.
Posted by rehctub, Tuesday, 4 April 2017 4:26:16 AM
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