So, hold on a second – just, why is it? Well that’s because the answers and outcomes are so convoluted where I have stated on many occasions in the past that the problems lie at the hands of governments at all levels. Now we simply have a blame game with no intelligent outcomes.
We need to break down the property tiers to find the answers to the problems.
1. Traditional Households – Family Home. When home prices increase at unprecedented levels as has been the case in Sydney and Melbourne which also attract the greatest populations. Stamp Duty is killing property markets to the extent that households are renovating over paying massive transaction fines. In-turn this has changed the markets where we are now seeing less and less transactions each year as a result which is driving prices up.
2. Investors – why does the Turnbull government endorse one hundred per cent of new construction to be sold offshore to non-residents of Australia? Why is mainstream media not asking these questions? No coincidence that when these changes were made in December 2008 prices skyrocketed. Needs to be taken back to 50 per cent immediately.
3. Renting – local councils have caused the issues for high rents by refusing to move with the times by refusing to rezone new developments. Then of course you have overseas investors who now own over 200,000 CBD apartments that are land banked and never hit the rental markets. Ease the rental markets and see if that becomes more attractive to Gen Y where cheaper rents allow them to save more.
All that is required is simply an intelligent discussion although it is also not that easy. For example, this week the prime minister was questioned again on housing affordability and his response was “the fundamental point is we are not building enough dwellings and that point has been made again and again by the Reserve Bank.” Wrong!
So, what did the RBA governor have to say this week? Dr Lowe said, “the root cause of the housing boom was the failure of governments to provide the transport infrastructure needed to support growing populations, particularly in the big capital cities.”
Remember the discussions about Very Fast Trains linking the east coast of Australia? That is the answer where all we see today is thousands and thousands of new apartments being built in Sydney and Melbourne which is simply another disaster. Then those apartments are sold off-the-plan to overseas residents who then land bank.
What we have today is a property industry that is unmonitored with absolutely no planning and dialogue between governments. As each month goes by it becomes stranger and stranger where we now see ridiculous dialogue about releasing superannuation to buy properties, and now ASIC and APRA have stepped in to correct ridiculous lending policies with interest only loans. You must ask the question why was this not acted on years ago?
But then the prime minister again added “All of the warnings that the Reserve Bank and APRA have made about rising levels of debt are well made,” Mr Turnbull said in Sydney on Wednesday. “That’s their job, the system is working. They’re making changes and adjustments to the prudential rules that will take some of the heat out of the market, just at the right time.” If it is the right time then why are they in panic mode?
All eyes now have turned to next month’s federal budget where we are reliably informed that housing affordability will be a key participant. Thus far, the only intelligent discussions that I have observed is for the federal government to kill stamp duty – the only problem is that it came from the Greens, so it will probably be ignored. Stamp duty is the worst tax in Australia and is killing our productivity.
Enter one tax, land tax, and remove stamp duty once and for all. Treasury modelling identified that swapping stamp duty for land tax could boost the economy by a staggering 82 cents for each dollar swapped. So, what happens is the federal government borrows money to lend to the states and territories to make-up the shortfall which should be met by 2030.
The benefits to the Australian economy are huge as household savings then end up directly back in our economy which is not the case today. This then supports business and employment where the circular flow of income has just received a massive injection of capital funds.
Will this happen? Probably not, although the Turnbull government is well and truly on the nose and needs a mammoth boost and this policy would deliver that. No doubt they will be watching this weekend’s upcoming by-elections in the seats of Manly and North Shore which are both blue ribbon Liberal seats.
I had a meeting with the Liberal candidate for the North Shore Felicity Wilson last week, who asked me how I thought she would go? I told her I thought she would lose and an Independent would win the seat. Voters are furious about traffic congestion and council mergers where these seats have been completely ignored for years. I am hearing a massive protest vote will happen on Saturday, which will then give the NSW government two years to prepare for the next state election.
There is a lot of anger out there and it’s not hard to see why, those two words keep popping up Political Paralysis or Pork Barrelling?
MOSMAN – 2088
Number of houses on the market this time last year – 43
Number of houses on the market last week – 56
Number of houses on the market this week –39
Number of apartments on the market this time last year – 48
Number of apartments on the market last week – 39
Number of apartments on the market this week – 41
CREMORNE – 2090
Number of houses on the market this time last year – 6
Number of houses on the market last week – 7
Number of houses on the market this week – 5
Number of apartments on the market this time last year – 14
Number of apartments on the market last week – 14
Number of apartments on the market this week – 13
NEUTRAL BAY – 2089
Number of houses on the market this time last year – 11
Number of houses on the market last week – 4
Number of houses on the market this week – 5
Number of apartments on the market this time last year – 27
Number of apartments on the market last week – 23
Number of apartments on the market this week – 19
Source – Pricefinder