Freediver said: "There is no housing crisis."

Demand is exceeding supply, largely due to high immigration.

http://www.abc.net.au/news/stories/2007/07/23/1985105.htm

The OECD has found that Australia has the most over-valued housing sector in the world. This clearly constitutes a 'crisis' in my books.

"House prices only go up if people are willing to pay that much for them."

Housing is a necessity, not a mere consumer item. Faced with no real alternative, Australians are simply going to dig themselves into more debt in order to put a roof over their heads - all borrowed on the nation's current account. This borrowing amounts to spending future income now, since the foreign debt will need to be repaid out of future income. As the housing market has no capacity to service this debt, the only outcome can be the eventual fall in relative living standards.

Maybe you believe this model is sustainable. I certainly don't.

Will they never learn !
It is very simple;

When the government enforced the demands of women rights advocates
that the financial institutions had to lend on two incomes that
immediately dumped twice as much money into the market.

As Wywong pointed out the market responds with higher prices.

It is as simple as that ! Borrow on two incomes and you need two incomes
to make the repayments. It is there that the problem exists.
They want to be able after a period to switch back to paying with one
income. I have news for you; It doesn't work like that !

Ludwig, I agree with most of what you say, such as we should push the politicians for population control. One minor problem is that even when the population is stabilized, the demand for new housing will still go on for decades because a fixed population divided by a reducing family size equals to an increasing number of dwellings needed. The major problem, however, is that our population is aging, which means a diminishing workforce and an increasing demand for welfare such as health care. Solution to that problem is not easy and may justify a new thread.

Sure wywong, population stabilisation is not the total answer. But it is a necessary prerequisite to getting us off the growth spiral, and being able to affectively address the housing crisis.

There will always be a demand for housing, and it will remain pretty high after population stabilisation. But at least then urban consolidation and a minor amount of new suburbia will be able to cater for it.

I think the negative connotations of an aging population are grossly overstated. There are plenty of ways of dealing with the projected increasing proportion of retirees without having to resort to increasing immigration and birthrate, and then maintaining high population growth indefinitely. In fact, boosting population growth is about the stupidest pseudosolution imaginable.

This has all been discussed on this forum. But I’m going to get out of the house and enjoy this lovely Saturday, and not try to chase it up right now!! (:>)

There is the possibility of allowing landholders greater freedom to subdivide and build. This would release many more new blocks of land and quickly bring the housing price spiral to a halt. I suspect that such options are not considered as they might jeopardise the profits of a few making a fortune from the crisis.

It is good to see that the Bring Back Feudalism society is still in good humour. Freediver ( shouldn’t you call yourself “slave driver”?) makes the excellent point that high house prices are a good thing, and for anyone yearning for the good old days of feudalism indeed they are. Take the example of Mr and Mrs Peasant trying to buy a house in high and low immigration scenarios. They both work full time, save $40k annually, and have saved $100k for a deposit. In the nauseating egalitarian/low immigration scenario(a), the house costs $200k and interest rates are 5%. In the wonderful feudalistic/mass immigration scenario(b), the house costs $500k and interest rates are 8%. When the loan is paid off the savings are invested for a 10% return in both scenarios. The result shows why any feudalist should strongly support high housing costs and open borders. And “Workchoices” will make things even better.

(a)A house and $1740k after 20 years.

(b)A house and $29k after 20 years.

Now how could any aspiring feudalist not think (b) the better way to go?