The future of Australian property prices

[wayneL]

Now I've heard it all.

Essentially, Magoo is correct. Although the banks abrogated their responsibility to ensure sensible borrowing by their customers, no bank forced individuals to bid up the price of housing to the currently absurd proportions.

We Plebeians did that all by ourselves.

 

[Mrmagoo]

Now I've heard it all.

Banks are good. They will loan businesses money. When the business is in difficulty the bank will work with you. When the home owner is in default, the bank will work with you.

Compared to a property investor, if your rent is but 14 days late, you get evicted.

Banks care about their customers and their financial well being. That is why they have lending criteria and are happy to loan people money to achieve their dreams of putting other families out on the street and into poverty. A bank doesn't force up the price of a property, if I borrow 10 years ago or I borrow now, the cost of the loan is the same (market interest rate). Banks will loan you money for a business, so you can employ others. Unlike property investors who only do evil. Banks loan to business owners who are also really good guys, they employ people, follow labor laws, pay taxes. Property investors are the bad guys who try to take homes away from children, don't pay taxes and don't create any jobs they just harm society by making basics of life expensive. They drive society backwards. While hard working business men create jobs and increase the size of the economic pie so that everyone can live a better life, evil property investors (and speculative home owners) try to shrink the pie for their own personal greed.

The Banks are the good guys in all of this. The evil ones are the individual investors who do activities that HARM society. The Banks only ever benefit society.

 

[young-gun]

Essentially, Magoo is correct. Although the banks abrogated their responsibility to ensure sensible borrowing by their customers, no bank forced individuals to bid up the price of housing to the currently absurd proportions.

We Plebeians did that all by ourselves.

We need banks, we don't need their reckless fractional reserve system that creates debt that helps to inflate prices more than anyone who buys a house could on their own.

 

[young-gun]

The Banks only ever benefit society.

lol

 

[Mrmagoo]

We need banks, we don't need their reckless fractional reserve system that creates debt that helps to inflate prices more than anyone who buys a house could on their own.

Fractional reserve is a good system. Greedy little Australians are not a good system.

 

[young-gun]

Fractional reserve is a good system. Greedy little Australians are not a good system.

If the banks are so wonderful, why didn't they put a cap on how much people could borrow for a house? Oh thats right they were too busy thinking about profits, oh sorry i mean the good of society.

Fiat money and FRB is not good, and you will see that as that as everything unfolds over the next couple of years.

Look Magoo I'm with you, I think that prices are way too high, it's bubbled blah blah blah. But you can't blame one entity. There is a multitude of reasons that prices are as high as they are. It doesn't stop with houses either.

There's the banks, mortgage brokers, property investors, the current banking system, the recent sub-prime lending uncovered here in AUS(still the banks), and I'm sure many others that I can't think of right now, all tied up in this. You're barking up the wrong tree, and clearly have a chip on your shoulder over investors.

If it's any consolation our prices will fall substantially soon, and you will be able to put a roof over your head at a much more reasonable price.

 

[numbercruncher]

Start preparing for your date with destiny Oztraaalia ...

'Australia faces a run on its currency, a deeper collapse in housing prices and a bank funding crisis to rival Europe's as it tries to come to grips with life after the mining boom, according to a report from a boutique US advisory firm.

'Entitled Australia: The Unlucky Country, the report from Variant Perception argues that Australia faces a classic case of Dutch Disease, the erosion of capability that flows from a resources boom and an overvalued exchange rate.'

 

[Mrmagoo]

If the banks are so wonderful, why didn't they put a cap on how much people could borrow for a house? Oh thats right they were too busy thinking about profits, oh sorry i mean the good of society.

Fiat money and FRB is not good, and you will see that as that as everything unfolds over the next couple of years.

Look Magoo I'm with you, I think that prices are way too high, it's bubbled blah blah blah. But you can't blame one entity. There is a multitude of reasons that prices are as high as they are. It doesn't stop with houses either.

There's the banks, mortgage brokers, property investors, the current banking system, the recent sub-prime lending uncovered here in AUS(still the banks), and I'm sure many others that I can't think of right now, all tied up in this. You're barking up the wrong tree, and clearly have a chip on your shoulder over investors.

If it's any consolation our prices will fall substantially soon, and you will be able to put a roof over your head at a much more reasonable price.

What why should they put a cap on it ?

I blame the greedy property speculators, be they investors or home owners.

The reason prices are high is because little Australians in general are greedy, selfish and manipulative people who do not care about their fellow man.

 

[young-gun]

Start preparing for your date with destiny Oztraaalia ...

strap yourself in, it's gonna be a bumpy 12-24 months. To start anyway.

 

[tech/a]

What why should they put a cap on it ?

I blame the greedy property speculators, be they investors or home owners.

The reason prices are high is because little Australians in general are greedy, selfish and manipulative people who do not care about their fellow man.

Looney Tunes

 

[Macquack]

I blame the greedy property speculators, be they investors or home owners.

The reason prices are high is because little Australians in general are greedy, selfish and manipulative people who do not care about their fellow man.

That may be true, but those "greedy, selfish and manipulative little Australians" are NOT responsible for increasing the money supply which causes inflation in house prices. The private banks are soley responsible for increasing the money supply so you can stop "patting them on the back".

 

[Mrmagoo]

That may be true, but those "greedy, selfish and manipulative little Australians" are NOT responsible for increasing the money supply which causes inflation in house prices. The private banks are soley responsible for increasing the money supply so you can stop "patting them on the back".

An increase in money supply would allow many Australians to borrow money to buy reasonably priced high rise apartments close to where they work. Many of these dwellings could be constructed, because builders would find borrowing easy due to availability of credit.

Instead the behavior of Australians was to buy $1 million dollar 2 bedroom townhouses and to act as NIMBYs to disallow development all in the hope of making a quick buck at the expense of their fellow man.

The banks have no control over that so I can't see how we can blame them for the misuse of credit by every day
Aussies who's only dream was to make accommodation an item of desperation for others.

 

[Macquack]

Mr Magoo,
1. Do you work in high rise construction?
2. Are you are fan of the corrupt high density developer and capitalist pig Harry Triguboff?

 

[wayneL]

We need banks, we don't need their reckless fractional reserve system that creates debt that helps to inflate prices more than anyone who buys a house could on their own.

The fractional reserve system has existed through times of price stability in relation to income.

It can be successfully argued that FR is inherently inflationary, but the key figure is house prices in relation to incomes.

Therefore I don't believe FR itself is the problem, the problem is due the extraneous factors.

 

[wayneL]

That may be true, but those "greedy, selfish and manipulative little Australians" are NOT responsible for increasing the money supply which causes inflation in house prices. The private banks are soley responsible for increasing the money supply so you can stop "patting them on the back".

Hang on, there is some logic missing increase in money supply and rising prices. While increasing money supply makes price increases possible, it is not causative in and of itself. It is much more multifaceted that that.

 

[Mrmagoo]

Exactly. I firmly believe that the current house price paradigm represents a shift in the Australian way of thinking. You're going to have a generation of people, who will not understand the concept of why someone else's poverty is their problem. You're going to have a generation of people who are not going to understand the concept that once upon a time in this country if you got a job and worked hard you could buy a house and raise a family in relative comfort. That was the social contract and it is now gone. To buy a house these days you need a high income. That is the bottom line. This last decade saw the social contract torn up and where that will lead this country I don't know. During the Howard years houses were still affordable so it was the ALP that screwed it up and did nothing to correct it so I don't think it has anything to do with evil capitalist it is just the Australian way of thinking.

 

[cynic]

...During the Howard years houses were still affordable so it was the ALP that screwed it up and did nothing to correct it so I don't think it has anything to do with evil capitalist it is just the Australian way of thinking.

Whilst I'm no fan of the ALP, I am somewhat puzzled as to how you arrived at this opinion. The value of all of my real estate holdings more than doubled during Howard's term as PM.

 

[young-gun]

During the Howard years houses were still affordable so it was the ALP that screwed it up and did nothing to correct it so I don't think it has anything to do with evil capitalist it is just the Australian way of thinking.

I'm confused, is it ALP's fault, or the satanic property speculators??

 

[young-gun]

The fractional reserve system has existed through times of price stability in relation to income.

It can be successfully argued that FR is inherently inflationary, but the key figure is house prices in relation to incomes.

Therefore I don't believe FR itself is the problem, the problem is due the extraneous factors.

True, but as I stated previously, there is a large number of contributing factors. FRB is simply something that most certainly doesn't help prevent wildly inflated prices.

 

[Mrmagoo]

The obvious solution is to dump negative gearing, CGT exemption and use part of the extra money for tax breaks for the well off because in reality the poor end up paying for it anyway. Either through lost tax revenue, higher rents and higher property prices. So what you do is you figure out what rich people buy and put a freaking sales tax on it.

They should do similar things to get rid of family tax benefits and other such middle class welfares and put the money into schools and hospitals. Not give a single bloody red cent as a pay rise to dead **** teachers who don't know anything but for training which provides skills.

The reason it is the ALP's fault is because they've been in government almost 6 years and have not changed the tax situation to be in line with the economic situation. Taxes should have been lowered and tax breaks for property removed and this would have led to increased investment in commercial ventures and lower house prices. This would have caused higher employment and consumption outside of the mining sector as people would have more disposable income.

When everything slowed back down that is when you would raise taxes again as most people won't be over the thresholds anyway and you can use that money to build infrastructure projects to create jobs.

Instead now we've just got a lot of capital tied up in assets that are going to drop in value when income drops and no investment in non-mining commercial activities or building and no lower levels of consumption.