Despite what some governments say, the housing affordability dilemma won’t go away, until they learn how to treat the symptoms. Better still, where to commence proceedings to better manage the property markets that are simply out of control and if you have money, you are assured of making plenty more in the years ahead. First stop would be the rental markets where in NSW the state government has been on a hiding to nothing, because investors no longer trust them. This explains why they moved out of the property markets to invest in the share market. The state government taxed them out of the market with Vendor Exit Taxes and Land Tax and who could forget the Premium Property Tax.

Property markets are influenced and driven by those two simple economic levers of supply and demand. Those starting off under the current regime, are in for turbulent years ahead as rentals face a minimum of 5 per cent increases per annum. Somehow in NSW, investors have to be encouraged back into the property markets and that won’t be easy given the atrocious record of the NSW government for blatant lying. When investors moved out of the property markets in 2003, vacancy rates were at 4.6 per cent. Today, they are at 1.3 per cent.

You can expect the vacancy rates to remain around this figure for at least 24 months. It will take this long for rental equilibrium, where supply and demand interact and the vacancy rate will have to be north of 4 per cent.

Some are suggesting that now is a great time to purchase real estate. What really needs to happen, is for the State governments to be held to ransom, with a guarantee that they won’t be increasing property taxes nor introducing any new taxes for that matter. Investors need to be offered tax incentives so that this near extinct breed can be saved and encouraged back into the markets as was the case in years gone by. You won’t hear anyone arguing today, that you are better off renting in Sydney than owning, which was the case just a few short years ago. When you look at the respective graphs, building approvals just like rentals, resemble identical twins.

The NSW government has moved these markets to Western Australia and Queensland and we need to get this specialised work force back as this is why approvals are at ten year lows. Again, unless this is stimulated, rents will continue to climb as demand continues to dictate supply. When you look at the Building Approvals graph, it would be fair to suggest that the patient is in a critical condition. However, if you have money you need not worry as the Wealth Graph suggests.

As you can see, the infections set in some time ago, but the respective governments preferred to ignore the Key Performance Indicators.

During a government enquiry back in 1991, the late Kerry Francis Bullmore Packer repeatedly berated the politicians conducting it and when asked about his company’s tax minimisation schemes, said “Of course I am minimising my tax. And if anybody in this country doesn’t minimise their tax, they want their heads read, because as a government, I can tell you you’re not spending it that well that we should be donating extra!”

Now that was to the Federal Government. In NSW the woes continue and very little will change in the near future because it appears that we have a Part Time Premier !! Cheers ^__^

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