Andrew Bartlett,

I am pleased that you see merit in a population policy. But then you say that we have a pretty good idea of what growth is likely to happen… which pretty well means that you don’t see much merit in developing a population policy, at least as it pertains to housing and the affordability thereof!

While I basically agree with you on this housing issue, our past strong disagreement again surfaces. I refer to;

“However, we already have a good idea of what the population is likely to be in the next 20 years, and where the growth is likely to happen, which is sufficient to develop a national housing strategy on.”

and...

“A national housing strategy should have environmental sustainability built into it as a matter of course”

For goodness sake, how obvious is it that if we just sit back and accept the scale of population growth that we look like getting in the next 20 years, then we will be a million miles away from achieving sustainability, no matter how good our ‘technofixes’ might be.

Ludwig, just because I support a population policy, doesn't mean I support <i>your</i> population policy. As you know, I support Australia having a higher population level than you do. I believe this level of population can be sustainable and you don't.

None of that means that it is not possible to develop a national approach which produces sustainable and affordable housing that takes into account what the population level will be under current projections. If in doing so, serious constraints emerged as a direct consequence of the projected population level, then it would be necessary to consider whether to modify the population policy

I don't expect it would mind you, (although it may well suggest a strong need to encourage internal migration into different regions within Australia) but you can't know for sure until its done on a nationwide level).

Don Chipp,

If any of the Bastards get to heaven, you give'em Hell.

Cheers

Ludwig, house prices have nothing to do with immigration. If you disagree that this is fact, please provide some evidence or at least a logical argument. I have done the analysis personally, and there is NO statistically significant correlation between RATES of house price inflation and RATES of immigration (1). Yes, over time, house prices have risen, and over time our population has grown, but this is meaningless. To jump from these two unrelated pieces of information to “immigration causes higher house prices” is ludicrously illogical, and surely reflects an underlying bias of the person making such claims? Either that or just an inability to process two simple pieces of data separately…

Let’s see. Cane-toads have become far more prevalent (due to breeding) in Australia over the last 30 years, while house prices have been rising. Ergo, it is love between a man toad and a woman toad that has made houses so unnaffordable! Wow, this is easy! Oh crap! No, wait, cane-toad numbers have been rising at the same time as our population has, therefore, cane-toads cause immigration! This must be stopped…

Hmm, perhaps I have a psychological bias towards blaming cane-toads… If this was a bias toward blaming immigrants from other countries, it might look like I didn’t like foreigners…

Here’s a test – If overpopulation is the problem, not foreigners, how about we enforce limits (or reduce welfare) to lower the birth rate of Australian women by 110,000 per annum (to around 150,000), thus offsetting the net gain from immigration? I know, it sounds stupid, but if it makes you angry, perhaps you need to dig a little deeper.

Enough!

The primary cause of rising house prices over the last 30 years has been inflation. Net of inflation, house prices have grown at an average rate below 2% per annum over that period (2). Recently, house prices have grown far in excess of inflation. This is entirely due to a massive capital misallocation, enabled by lax lending standards and unlimited debt creation,and encouraged by the middle-class welfare that is negative gearing.

A mountain of debt is the legacy, and the forces it will apply to our future economic growth will eventually result in more affordable housing. So let’s just let let things be. Up to now, government intervention has only ever ADDED to the market distortions (FHOG, stamp duty relief, etc). The one change they could make that would REMOVE a distortion, it would be to quarantine losses from holding rental property against income from rental property. This would also save hard working honest tax-payers almost 4 billion dollars this year (and rising).

If the politicians can’t do that, lets just hope they leave bad enough alone and let the market collapse under the weight of its own debt.


(1) Using population growth figures from 1971-2004 from the ABS (www.abs.gov.au) and house price growth figures from Abelson & Chung (2004), appendices.
(2) Peter Abelson and Demi Chung, Housing Prices in Australia: 1970 to 2003; Macquarie University 2004

Foundation said "lets just hope they leave bad enough alone and let the market collapse under the weight of its own debt".

Ouch! That would be catastrophic. Lots of B-Boomers would loose their retirement nest eggs, but their grand-kids might be able to buy a house - if they had a job!

Personally, I blame TV and the plethora of programs that talked up the market. How anyone could buy property, paint a room or two, and sell it for thousands extra. This encouraged, not just speculation, but outright predatition.

Andrew is right in some respects. Housing (or more correctly Shelter) is a fundamental human "need". It therefore has what an economist would call a low-elasticity in demand (like cigarettes to a smoker - price increases dont necessarily affect the demand significantly).

To adjust the market to make housing more affordable for non-home owners would mean that investors would suffer. That is why the first home buyers grant was introduced, but it failed when prices went up for reasons others have writen above.

I would be interested to know what Andrew figures Australia's Ideal population to be. How often do you see lawns watered in Canberra when you are there Andrew? Doesn't Canberra now have PERMANENT Water Restrictions? Just next door, Queanbeyan, Yass and Goulburn have no water to speak of at all. Corin Dam just outside of Canberra was supposed to hold 30 years of water....

And what happens, Andrew, when the oil runs out in a few years. It may be 2015. It may be 2008, it may be 45999 - but it WILL run out. How many people can Australia sustain with an 1800's style economy? How do people in Penrith or Paramatta get to work in Sydney CBD?

Ludwig is correct - the growth is not maintainable.