Just goes to show how dumb the way we calculate GDP is. Housing price increases don’t represent an increase in the size of the economy - they don’t relate to any increase in productive assets. It is pure asset price inflation. In actual fact, increasing house prices are like a chain around the ankle of economic growth, because they mean people have to tie up an increasing proportion of their earnings paying off ridiculous prices for unproductive assets (houses), rather than investing in productive ones like their businesses, or investing in building things, like increased supply of houses!abc wrote: ↑Thu Mar 14, 2024 12:18 amExactly, it was pure cynical politics to keep housing prices buoyant and avoid a technical recession. It will likely backfire at the next election though for Mr 30% as the fallout from this which includes the social cost will be felt for a generation at least. I see it firsthand here living in the City of Adelaide.A-Town wrote: ↑Wed Mar 13, 2024 10:44 pm
One of the key reasons federal Labor allowed for record high levels of migration over the last two years has been to prevent a recession occurring. Whilst the government was successful in avoiding recession, it has led to a huge shortfall in housing stock and unsustainable prices as abc and others have alluded to.
That’s not to mention all the terrible social consequences of the housing crisis.
The media likes to tell us that rising house prices are a great thing, and represent a massive increase in the wealth of Australians. But the fact is, that is a crock of BS. If the average homeowner want to realise the increased value of their home, they have to sell it. But they still need somewhere to live, so they then need to buy another home in the same inflated market, meaning on average they make zero profits. So millions of people may be paper millionaires, but these supposed millions don’t really exist practically unless you are downsizing or a property investor.
Housing prices flatlining or slowly declining would be a great thing for Australia, but no government has the guts to actually tackle the issue at its source by cracking down on negative gearing and other policies which incentive property investment. The increased demand for houses caused by property investors, and their deeper pockets compared with owner occupiers is one of the primary reason for inflated prices. But all the politicians and the powerful interest groups which donate to them have fingers in the pie of property investment. So they do nothing about it, instead offering gimmick populist solutions like first home buyer grants and 5% deposits. All first home buyer grants and 5% deposits do is pump even more money into the housing market, increasing prices further.
