The House Price Thread

[Rear Admiral]

Define "resources"

In regards to resources, please read below:

Link

Link

"Australia’s wealth primarily comes from our mineral and energy reserves and our agriculture. The size of the ‘wealth cake’ is pretty-well finite. In effect, double the population and each individual Aussie is likely to be worth half as much."

But a big part of the problem is in regards to outsourcing and technological unemployment. We used to have a thriving manufacturing sector in Australia. Not just cars, but whitegoods and textiles, just to name a few. Now we're attempting to base an economy entirely on primary exports and the rest on service industries. There was a post above that mentioned:

All the muppets who think they will pick up a cool hipster pad in Fitzroy for 1998 prices and pay for it with their retail/hospitality job are clueless.

This is a perfect example of what I'm referring to. I strongly agree that a widespread and thriving service sector is vital, but to try and base the majority of your economy (in terms of the majority of your workers) in service industries is absurd. A fair proportion? Sure. But almost all? Ridiculous. And that is exactly what the current Federal Government is trying to achieve. I have seen a number of discussions and documentaries in the media, and what I've seen mentioned repeatedly is that we need to value-add to what we produce and consume. Cars are gone, but there are all manner of other essential items that we can produce, but are simply choosing not to. At a very basic level, for a developed nation to be able to realistically employ it's own population, it needs to manufacture a large proportion of the goods/products it uses, not continually import them in from elsewhere. I'm not at all saying we should not import anything, but the manner in which we've structured our economy and terms of trade is ridiculous. But now that the Federal Government is trying to force the vast majority of the population into the service sector, they are importing more and more people to fill these roles, as the more you increase the labour pool, the more you suppress wages. Better for businesses and land/capital owners, but not better for workers already living here. As I mentioned above, wealth and employment comes from access to resources, not by simply having more and more people. When people attempt to preach that increasing our population (particularly via immigration) somehow "creates more jobs and wealth" for everybody....I am not listening.

As for increased demand, that's the domain of the jew hating pervert not your typical right wing economist.

I don't understand what you're referring to in the second comment regarding demand.

 

[Rear Admiral]

the phenomena re employment you highlighted really started in the 70s

Agreed . And not unique to Australia, but throughout the developed world.

 

[Rear Admiral]

Many Gen Xers have made money from property. I went to school with quite a few of them. Even I have made money. It wasn't that hard when prices more than doubled from 2000 to 2006.

Some? Absolutely. But most? Definitely not. When looking at this, it's entirely incorrect for anyone to suggest that all the people from any one demographic have always fared better than some other demographic. But in general terms, most young people now are struggling. Again, not all, but most. One of the big factors when considering all this is employment and income (in relation to rent/mortgages), and this has a major effect on the housing market.

Have a look at what's discussed here:

These links below are but a few of the discussions on the related issues:

Insight Web Extra on Housing

https://www.sbs.com.au/ondemand/video/11721283529/insight-web-extra-on-housing

IN WK Desperate Housing Part 1 of 3

https://www.sbs.com.au/ondemand/video/11647555908/in-wk-desperate-housing-part-1-of-3

The Jobs Game

http://www.abc.net.au/4corners/the-jobs-game/6247206

http://www.abc.net.au/4corners/the-jobs-game/6247206#transcript

"But there's one fundamental problem: there are many more unemployed people than there are available jobs."

Bill Shorten claims 77pc of 457 visa workers excluded from checks thanks to FTAs

http://www.abc.net.au/news/2017-04-...7pc-of-457-workers-exempt-from-checks/8455300

 

[Scotland]

This is a perfect example of what I'm referring to. I strongly agree that a widespread and thriving service sector is vital, but to try and base the majority of your economy (in terms of the majority of your workers) in service industries is absurd. A fair proportion? Sure. But almost all? Ridiculous. And that is exactly what the current Federal Government is trying to achieve. I have seen a number of discussions and documentaries in the media, and what I've seen mentioned repeatedly is that we need to value-add to what we produce and consume. Cars are gone, but there are all manner of other essential items that we can produce, but are simply choosing not to. At a very basic level, for a developed nation to be able to realistically employ it's own population, it needs to manufacture a large proportion of the goods/products it uses, not continually import them in from elsewhere. I'm not at all saying we should not import anything, but the manner in which we've structured our economy and terms of trade is ridiculous. But now that the Federal Government is trying to force the vast majority of the population into the service sector, they are importing more and more people to fill these roles, as the more you increase the labour pool, the more you suppress wages. Better for businesses and land/capital owners, but not better for workers already living here. As I mentioned above, wealth and employment comes from access to resources, not by simply having more and more people. When people attempt to preach that increasing our population (particularly via immigration) somehow "creates more jobs and wealth" for everybody....I am not listening.

Value add isn't just goods and manufacturing.

We can sell tourism, education, financial services etc. which are intangible. If thousands of people each day are visiting the Eiffel Tower and all buying a coffee and a baguette etc. then it doesn't really matter if the coffee beans come from Brazil and the wheat for the flour was grown in Russia because there is still a benefit to France in that example.

The issue we have here is that we are dependent on imports for so many things but outside resources and agriculture we don't have much to offer. The whole 'I'll just import something cheap then sell it at a profit, then I'll spend my profit at a cafe, then the cafe owner will spend his money on my stuff' cycle isn't sustainable. I feel sad that we don't have a car industry any more but we're a tiny fish a massive pond full of bigger, better fish. The car industry is global and producing a few hundred thousand cars a year for a single market will never be able to compete with lower cost centres producing much larger volumes. Typical of the lack of foresight here we spent billions over decades propping up the car industry to make cars no better than are available elsewhere that eventually our market didn't want to 'save jobs for Aussies'. I mean the govt helped build the Holden ******* Cruze, a car that is already made in about 10 countries around the world. If Holden and Ford were kept on the tit then by about 2025 they'd be asking 'hey how about we look at electric cars' a decade after that horse has bolted.

One thing I do not understand at all is baby formula. We have a nation of 23m people running out of the stuff because private buyers are hoarding it and mailing it to a nation of 1.3b people where it's pretty much got half kilo tin of cocaine street value. At the same time we have a dairy industry which is struggling with price wars, milk surpluses etc. How have we not jumped on board this export market? We could easily sell more baby formula to China per year than we need here, and we have the capacity to do so. But instead we have a pseudo black market trade and angry Mums venting that Coles and Woolies never have any of the stuff.

 

[Power Raid]

A property tax offset-able against Australian income tax would fix this issue overnight

 

[Scotland]

The only people that want to fix the issue are those that don't own any real estate.

 

[Power Raid]

The only people that want to fix the issue are those that don't own any real estate.

That may be true but affordable housing is a reasonable social issue. Often the solution by government is to promote higher density and shittier housing which exacerbates social problems and lower standards of living. Perversely by re-zoning land for higher density, it actually increases the land value and perpetuates the issue. It might cause short term supply relief but overall it increases the value/ cost.

Investment in the sector to bring on more supply is also not the issue. That's why I shake my head at the focus on negative gearing and CGT. That said CGT discount on property though should be addressed but the changes should only be limited to residential property but this is a minor issue in the scheme of things.

The biggest cause of the issue is foreign investment, especially where foreign investment is made and the property isn't held out for lease. The other reason why it's an issue is the foreign investment is often not made for the "property" driven purposes. Often foreign investment is actually money laundering, tax evasion and parking wealth in safe jurisdictions. Thus the price a foreign investor is willing to pay is far higher than the investment alone is worth.

By introducing a property tax, rebate-able against Australian income tax, addresses this issue. The complexity here is the property tax needs to be done at a state level and offset against a federal tax. It can be done but requires co-operation.

 

[Scotland]

That may be true but affordable housing is a reasonable social issue.

I didn't suggest it wasn't, but no govt genuinely wants to do anything about it.

The "solution" to housing affordability is either people having more money or houses costing less.

The govt can technically just print more money, but inflating our way out of the problem will just create more problems.

The problem with the more money solution is that people will just spend it on real estate and push prices up. Australians are conditioned to do that.

The problem with the houses costing less solution is that banks, super, rates, stamp duties etc. are all based around values where they are now and rising over time. We don't want a US style crash with $500k houses being $200k tomorrow, that is actually very bad for the economy.

Governments are only interested in fudging the numbers to make GDP growth look good, so they keep allowing foreign investment, keep allowing population growth, don't want to talk about meaningful change to the tax system etc. They aren't interested in anything sustainable, it's all about total growth.

 

[Power Raid]

I didn't suggest it wasn't, but no govt genuinely wants to do anything about it.

The "solution" to housing affordability is either people having more money or houses costing less.

The govt can technically just print more money, but inflating our way out of the problem will just create more problems.

The problem with the more money solution is that people will just spend it on real estate and push prices up. Australians are conditioned to do that.

The problem with the houses costing less solution is that banks, super, rates, stamp duties etc. are all based around values where they are now and rising over time. We don't want a US style crash with $500k houses being $200k tomorrow, that is actually very bad for the economy.

Governments are only interested in fudging the numbers to make GDP growth look good, so they keep allowing foreign investment, keep allowing population growth, don't want to talk about meaningful change to the tax system etc. They aren't interested in anything sustainable, it's all about total growth.

I wish I could put forward an argument that suggested our governments actually had meaningful plans to evolve our legal, financial and social framework to reflect the changing pressures of globalisation, automation etc

Real change requires planning, policy signalling, open and HONEST communication, staged implementation, monitoring and appropriate resources dedicated to execution. Conversely politics is about egotistical campaigners, focused on a short term goal of being elected and the only area they excel at is misleading and deceptive conduct.

It seems we need to reform our political system and processes first. I'd strongly support civil and criminal charges for politicians engaging in misleading and deceptive conduct. Reduce the number of politicians at both state and federal level, spread the same wages across less people (pay rises) to attract better candidates and increase state powers/ reduce federal powers (the biggest power you can give citizens isn't voting on election day but voting with their feet).

 

[Rear Admiral]

the phenomena re employment you highlighted really started in the 70s

If you watch at least the first 15mins of this video below, this bloke explains the issues better than I ever could -

Link

Because at the moment, we're not addressing this problem.

 

[Rear Admiral]

The "solution" to housing affordability is either people having more money or houses costing less.

The solution to housing affordability is simply a Supply & Demand equation. We need to either build more houses (ideally like this), or have less people buying/renting houses, or ideally a combination of both.

Governments are only interested in fudging the numbers to make GDP growth look good, so they keep allowing foreign investment, keep allowing population growth, don't want to talk about meaningful change to the tax system etc. They aren't interested in anything sustainable, it's all about total growth.

The second part....spot on.

 

[Rear Admiral]

Conversely politics is about egotistical campaigners, focused on a short term goal of being elected and the only area they excel at is misleading and deceptive conduct.

 

[Pessimistic]

If you watch at least the first 15mins of this video below, this bloke explains the issues better than I ever could -

Link

Because at the moment, we're not addressing this problem.

With the market forces bulldust. The capitalists always win cos they suspend the market when they're losing

Meanwhile the rank an file turn on each other cos a perceived lucky few got ahead a bit more

 

[Scotland]

The solution to housing affordability is simply a Supply & Demand equation. We need to either build more houses (ideally like this), or have less people buying/renting houses, or ideally a combination of both.

The govt loves more houses being built. They just let more people in so it happens.

 

[Rear Admiral]

With the market forces bulldust. The capitalists always win cos they suspend the market when they're losing

Which is (precisely) what needs to change.

 

[Rear Admiral]

The govt loves more houses being built. They just let more people in so it happens need to stop letting more people in.

 

[Power Raid]

If you watch at least the first 15mins of this video below, this bloke explains the issues better than I ever could -

Link

Because at the moment, we're not addressing this problem.

I'm listening now. Interesting to hear both major crashes referred to coincided with high energy prices.

The answer to this problem is a high capex/ low opex energy policy rather than relying upon volatile energy inputs.

 

[Power Raid]

If you watch at least the first 15mins of this video below, this bloke explains the issues better than I ever could -

Link

Because at the moment, we're not addressing this problem.

great insights:

- expectation of life improving for every generation
- labour shortage and wage increases for 150 years............but computers, automation and globalisation has changed all that

Perhaps our issues are simply, the realisation we now face the reality that the other 9B people face every day.


I do like the bit where he says there has been no real wage increases since 1978. Sure 300m people's wages haven't improved but conversely how much better is the lives of the other 8.7B? Imagine if we can continue to improve the lives of the 8.7B without reducing the quality of lives of the 300m.

 

[Rear Admiral]

Imagine if we can continue to improve the lives of the 8.7B without reducing the quality of lives of the 300m.

Great in theory, but not possible.

The problem is, every economy is based on finite resources. Sorta like a carton of beer between family/friends while watching the footy....the more people there are, the less beer per person. And it's this very concept that (most) people on the Right-Wing just do not comprehend. The stupidity where people suggest "just go start a business and this creates wealth"....idiocy. In most cases now, when someone starts up a business, it's not "creating wealth"....it's just stealing market share from a similar business up the road. Just go ask most retailers what they think of ebay and Amazon.

In numerous documentaries/discussions (often with millionaires/billionaires mentioning this)....they say:
"The pitchforks are coming."

Not my words....this is from economists and (extremely) wealthy business people.

 

[Power Raid]

Great in theory, but not possible.

The problem is, every economy is based on finite resources. Sorta like a carton of beer between family/friends while watching the footy....the more people there are, the less beer per person. And it's this very concept that (most) people on the Right-Wing just do not comprehend. The stupidity where people suggest "just go start a business and this creates wealth"....idiocy. In most cases now, when someone starts up a business, it's not "creating wealth"....it's just stealing market share from a similar business up the road. Just go ask most retailers what they think of ebay and Amazon.

In numerous documentaries/discussions (often with millionaires/billionaires mentioning this)....they say:
"The pitchforks are coming."

Not my words....this is from economists and (extremely) wealthy business people.

I really enjoyed that and agreed with ~90%

you're reference to resources though is based on a false understanding. Resource economics proves that a slight increase in price means there is more and more resources. This goes as far as to make new technologies economic, ie renewables are an example of this.

yes I agree with a lot of what's in the link however, it is just as important to understand a step he failed to properly discuss in further detail. He touched on it in regards to displacing the native people in the US but he failed to go on with the fact the US was built up by cutting out other nation from participating and competing. We now recognise this was not appropriate and lead to a range of other issues. So how do we rebuild without being insular? I strongly believe we need a global co-operation in introducing social security, health care etc etc. If we don't........we are all doomed. By that I mean we are doomed without these important social frameworks and we are doomed without global co-operation otherwise other nations will white ant ours.

So how do we rebuild what is great about the west with automation and globalisation? I dare say his solution wasn't quite on the mark but the sentiment was right. Personally I felt he took too much from the 1930s politics and economics which also failed. What made his magic pudding work was a global war. Hopefully it won't take that this time but sadly I'm thinking history will repeat.

 

[WeetBixKid]

Great in theory, but not possible.

The problem is, every economy is based on finite resources. Sorta like a carton of beer between family/friends while watching the footy....the more people there are, the less beer per person. And it's this very concept that (most) people on the Right-Wing just do not comprehend. The stupidity where people suggest "just go start a business and this creates wealth"....idiocy. In most cases now, when someone starts up a business, it's not "creating wealth"....it's just stealing market share from a similar business up the road. Just go ask most retailers what they think of ebay and Amazon.

In numerous documentaries/discussions (often with millionaires/billionaires mentioning this)....they say:
"The pitchforks are coming."

Not my words....this is from economists and (extremely) wealthy business people.

Really? I don't wanna derail the thread but accepting that the world has finite resources, & that throughout human history this reality has always led to competition, struggle, & conquerors/the conquered is like one of the foundational principles for a lot of right wing thought.

 

[Rear Admiral]

What made his magic pudding work was a global war. Hopefully it won't take that this time but sadly I'm thinking history will repeat.

I also think this is where we're heading.

But what I often do is look at this sorta thing here....at the bottom of all the "quoted" comments.

 

[Power Raid]

I also think this is where we're heading.

But what I often do is look at this sorta thing here....at the bottom of all the "quoted" comments.

hiking? and country side?

 

[Power Raid]

I also think this is where we're heading.

But what I often do is look at this sorta thing here....at the bottom of all the "quoted" comments.

goodnight and good chatting!

 

[Crankyhawk]

Gruen transfer pitch yesterday was designing ad for one house per person/family. Worth a watch