The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
The Forum - On Line Opinion's article discussion area



Syndicate
RSS/XML


RSS 2.0

Main Articles General

Sign In      Register

The Forum > Article Comments > Blowing housing bubbles > Comments

Blowing housing bubbles : Comments

By Gavin Putland, published 2/11/2009

When the housing bubble bursts 'first home owners' grants' will be exposed as a transfer of funds from the asset-poor to the asset-rich.

  1. Pages:
  2. 1
  3. 2
  4. All
Gavin's logic is impeccable. Unfortunately I suspect it is too high-level to have much impact on policy development in the hot-house (Canberra).
Posted by Michael T, Monday, 2 November 2009 11:49:28 AM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Isn't this amazing, only one interested party took the trouble to comment so far (and me)! I wonder why?

Maybe no one is interested in all these schemes being put up by the Government to benefit some (read very few, building industry etc) at the expense of the rest of us. Surely an "economist" of note, Mr. Eslake maybe, could make a comment! Why is it that basic economics is constantly avoided, like the population issue, when something of import needs to be addressed. Simple, If you want to change a market then reduce or increase the demand. If you want housing prices to fall then stop the population rising and "voila", no demand and prices will fall to where they should be and the price of money should be the price of money and not the skewed and manipulated commodity it has turned into (Read Freddy Mac and Fanny Mae)!

The same joke is being foisted onto us by "carbon credits" and other ficticious tradeable commodities which do not actually exist but you and I will pay for in our regular mortgage repayments.

Wake up Australia and look at what is happening....or have I missed something?

Anyone care to comment?
Posted by Guy V, Monday, 2 November 2009 2:37:39 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
I noted the use of the term 'bubble' in the title to this article. Saturday's West Australian also used the term 'bubble' in relation to housing. However the defining characteristic of bubbles is that they eventually burst.
Housing prices (at least here in Perth) are yet to see any significant price correction as I can tell and, after a fairly brief easing off courtesy of the GFC (certainly nothing I would call a 'pop'), appear ready to take to the skies again.
I honestly cannot understand how average income earners buy houses nowadays. The average weekly income is apparently $1243.50 (see http://www.abs.gov.au/AUSSTATS/abs@.nsf/mf/6302.0). I assume this figure is gross so net pay would be about $969.50 per week.
Let's assume one income earner and two dependents - your classic nuclear family. No other loans OR credit cards, house is owner occupied. Borrowing power according to Westpac = $201,928. Average house price in Perth = $457,000 (see http://www.wabusinessnews.com.au/en-story/1/76367/No-clarity-over-Perth-house-prices-).
To me this means that current housing prices condemn families to have dual income-earners. No stay at home mums for Perth and I assume other cities are the same.
Are we prepared to live like this? Do we have any choice?
Posted by J S Mill, Tuesday, 3 November 2009 6:48:37 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Correction - I meant MEDIAN house price in Perth.
Posted by J S Mill, Tuesday, 3 November 2009 6:54:35 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
J S Mill

You quoted the average price which was useful for your argument. There are many houses well below that price however some adjustment of expectations and 'wants' might be required to get a place within your means.

There wouldn't be a generation that didn't complain about the cost of houses and I suspect that the problem is much worse now that people's expectations have been influenced by the mansions on TV that are falsely represented to be the homes of ordinary people. The beach-side villa shown on Two and a Half men is one such example.

I saved for years to buy my first house and then worked on it for years to make it presentable and no, it still didn't have an 'en-suite' bathroom, walk-in robe or any of those expensive add-ons that people now demand in a 'starter' home (including being in the 5 km city zone).

Commentators have been talking about the 'housing bubble' for years while prices have continued to go up and they are still going up right now.

Despite all of the sledging of developers, investors, 'up-graders' and suchlike, the pressure on prices is coming from the increasing record numbers of immigrants. It has been that way for years and the effects of extremely high migrant intake levels are obvious in our high taxation, worsening water crisis, housing availability and prices, housing developments overtaking good farming and dairy land and our sustainability problems in general.

Quite simply, the big end of town sees big profits in population growth and expansion and it would take a statesman PM who is thinking about the sustainability of Australia and quality of life of all of Australians to change any of that. Seen any statesmen in federal politics lately?
Posted by Cornflower, Friday, 6 November 2009 3:38:07 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Cornflower
I did correct myself to say 'median' - which actually supports your view that there are many (actually, half) house sales below that figure.
However even if we put aside the notion of whether a family of 2 adults and 2 children should be buying a house significantly below the 'average' we still have a real problem.
That is because a quick search of reiwa.com.au will show you that you cannot buy a 'home' (I am excluding multi-unit type deals ie villas/flats/apartments etc and park homes) in the Perth Metro area for less than $220,000, there is not a single listing below that level - still above the borrowing power figure from my previous post (although of course this fictional family would have had to save some deposit which might just barely make it within their reach). So, my average family might just be able to squeak out a 3x1 in Orelia/Medina with some disciplined saving.
I agree with your point - people need to learn to live within their means and that might mean lowering expectations, - however in comparison the median household income in California is $55,450 (see wikipedia) and the median house price in California is $247,590 (see http://www.svdaily.com/realestateprices.html). Even pre-GFC the California median was less than the current Perth median (see same link above). This suggests to me that there is something very askew in our house prices v income ratios.
I would be interested to know the source of your belief that it is immigration that is powering housing prices. It occurs to me that, using our examples above, I would expect the USA (and California specifically) to see much larger immigration than Australia (and WA specifically). No?
Posted by J S Mill, Friday, 6 November 2009 4:49:10 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
J S Mill, "I would be interested to know the source of your belief that it is immigration that is powering housing prices"

Apart from the ever increasing taxes of governments that regard residential housing as a milch cow for extra revenue, it is demand that powers prices. Where else you think the increase in population and hence demand is coming from if not from the continuing record numbers of immigrants, because Commonwealth government reports have been talking about delayed and low fertility of Australian women since the Seventies, at least. Australian couples are not producing enough children to even replace themselves.

For interest, C'wealth reports also identify the continuing high cost of housing as a prime reason for delayed and low fertility of Australian women.
Posted by Cornflower, Friday, 6 November 2009 8:24:22 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
  1. Pages:
  2. 1
  3. 2
  4. All

About Us :: Search :: Discuss :: Feedback :: Legals :: Privacy