There are a number of possible answers to this problem. Firstly just remove all the tax concessions, such as tax deductability of interest payments, and subsidies to anyone buying a property for investment purposes. That will mean that there is a level playing between people buying a property to live in and people buying for investment. If done over a period of years it would prevent large amounts of houses coming onto the market all at once.

Secondly, force those holding on to empty blocks of land which have planning permission for housing to either develop or sell them within a reasonable time period. This could be done by say introducing a 100% tax on the value of any land where building hasn't commenced in say 3 years. This woulsd release a large amount of underused land onto the market.

Thirdly, expand dramatically the number of houses ownwed by housing associations or governments aimed at those on permanently low incomes, such a s pensioners, those who are disabled etc

Cornflower,

I'm 28, I've run my own business, own two cars, and a house. I left home when I was 16, and have worked hard since. In that time I've taken only one holiday which lasted more than a week, and I'm currently doing a Masters Degree despite my lack of HSC. More than most people I've met, hardly lazy, let alone envious of the old.

Maybe I should give you some advice:P

Have you been to a unit selling for 250k? Doubt you'd want your' kids living there, although one has to start somewhere.

The point about people living in their own homes is irrelevant. Author is speaking about "speculative property buying by baby boomers". Those living in their home of 20 years are not going to impact prices since they aren't on the market.
Gadgets are irrelevant. The cost of buying an ipod is so small, as to be insignificant compared to the deposit required for a home, unless you own thousands of ipods.

As for those questioning the qualifications of the author, he works for a highly respected bank, as does the economist whose RESEARCH he is quoting, and I know for a fact he is more qualified than most (I actually checked him out rather than assuming he had none, because they weren't emblazoned on the bottom of his article).

Also, given he's a trader, it can be safely he assumed he CAN afford a house, probably a nice one, so it's doubtful he wrote out of personal grievance.

Iluvatar, do you seriously think the youth voted Howard in? Got any evidence? According to the ABS, the largest proportion of the population's age lies between the ages of 36 & 59 yeas of age, Howard has been in power longer than many young people today have been of voting age, and considering a huge number don't vote at all, your' point doesn't wash. Blaming the young is sadly typical of your' generation, when boomers are in power, they're the majority, and they make all the decisions, it just doesn't add up. Hardly "bunkum"

Damien, in your polemic against Baby Boomers you imply that we're a bunch of greedy capitalists who have grabbed what is not rightfully ours. This line of argument is a simplistic form of scape-goating that confounds the problem rather than contributing to a solution. The market allowed Baby Boomers to buy investment properties, and most did so following financial advice on how to prepare for a self-funded retirement. For most, their aim was not to make money but to acquire a capital asset as a hedge against poverty in old age. In seeking to bring down the Baby Boomers you vastly overestimate their wealth. Most are wealthy on paper only because they bought their homes in a period of high inflation and have contributed to superannuation during their working lives. If you looked further you would see that many of these so-called greedy and unscrupulous Baby Boomers are also parents who are now using their “ill-gotten wealth” to assist their children into home ownership. This unfortunately is a short term fix and not a long term solution to rising house prices. You have also conveniently ignored the fact that a sizeable proportion of Baby Boomers are not adequately prepared for a self-funded retirement, in particular women who as parents gave up careers to care for children. Many are now single, without adequate superannuation and a proportion will undoubtedly fall out of home ownership when faced with living on inadequate super supplemented by welfare payments. Most of us would love more than anything to have grand children however, to use a market term, as with housing, the next generation is also becoming a scarce commodity. In short Damian, we the Baby Boomers are not "the enemy". Most of us are parents who are as concerned about housing affordability as you are.

Wallaby - you make valid points but they don't really address the core issue of what makes baby boomers such an influential group - raw numbers.

That's the entire reason why baby boomers are so significant - they're boomers, as in, a surge in numbers of the population.

So in a democracy, where ultimately, people vote for who will cater to them, the demographic with the largest numbers will win out.

It's not an issue of the boomers being an evil, selfish group - simply an issue of policy and economic prosperity reacting to those who hold the most sway - the boomers.

So no, the boomers haven't made any grand villainous plans to cheat the following generations. It isn't that simple. I'm sure most baby boomers do feel genuine concern for other generations (when they're not blasting them for their Ipods or whatever the insult du-jour happens to be) but they have had a profound impact on the economic and political landscape of the western world.

And it has been to the detriment of other generations, be it intentional or otherwise.

I am a generation Y'er and whinging about the baby boomers having all the wealth is a case of sour grapes.

Good on you baby bomers, youve worked hard, bought property, and done well.

There is nothing stopping all you from gaining the same wealth, except yourselves.

Dont tell me you cant get fiunance, cant tell me you cant enter the property market, dont tell me you cant start a business, you all can and if you choose not to, its your loss.

Dont bring anyone down for achieving wealth. Get out there and do it yourself or praise them for many getting to the point of financial security.

In this world there are the doers and there are the whingers, many being posters here, and the writer.

No matter what year it is, weather 1920's or 2000's there are always difficulties. I suggest we all stop being jealous, be prepared to live modestly and purchase modest property, and stop spending all our money on flat screens, interest free furniture, and luxury items. The silly thing is, you dont even need money to leverage property, so noone has an excuse or reason for not doing it

I don't think it is a conspiracy. Rising house prices are just a result of demographics and the new fiscal environment.

Australia gets 1 million new migrants every five years. That means we need to build a new Perth or Adelaide every five years. That is a lot of new houses and so it is no wonder that unlike the European markets houses rarely go down in price.

Retirements have gone from tax based to super based. Instead of being heavily taxed to pay for current pensioners we are becoming more lightly taxed but have to fund our own future retirements. All the excess money has gone in the stock market and housing markets. The housing market is seen as being more reliable (no dot com bubble) so more money goes in there.

The influx of cheap manufactured goods from Asia has kept inflation and thus interest rates artificially low, allowing the excess money to cause the price of houses to inflate. I don't know how inflation is calculated but I don't understand how the price of houses can go up by over 30-50% every year while inflation remains below 3%.

Demographics have the numerous baby boomers in their high earning years. Gen Xers will always be in the minority as they are outnumbered by gen Yers. Over the years wealth locked into baby boomers will either be squandered in retirement or passed on to the next generation. Global warming is the big unknown, it could make some cities inviable in years to come and thus their real estate worthless. However that is not likely to happen on the time scales of this discussion.

Finally we must ask ourselves if owning a house is all it is cracked up to be. I suspect that would be a whole different topic