Economists respond to minister insisting house prices shouldn't fall
Economists respond to minister insisting house prices shouldn't fall
Last month, Housing Minister Clare O'Neil told triple j that the government wasn't trying to bring down house prices. The interview found a new life online this week, so we asked the experts what they think.
Well, unfortunately they're right. House prices, thanks to consecutive governments have been allowed to become a central pillar of our economy. If we allow that enormous private debt bruden to become unstable, by a drastic cut to house prices say, then we'll start resembling the third rate economy Keating warned about pretty bloody quickly.
I still don't agree that its only a supply issue, the demand levers are stacked to ratchet prices one way that is a key contributor to the soaring prices. We ignore the demand side, we ignore half the problems in the housing system.
On the supply side, if they're really interested in fixing supply the government are gona have to look at a more directive approach to the market. Maybe Chalmers should lend O'Neil his copy of Mission Economy by Mariana Mazzacato.
One of the big reasons this is a global issue is because it's partly driven by wealth inequality. As long as there are enough people with enough money (or borrowing capacity) to keep prices high, it won't change. This is one of the demand side factors that goes largely undiscussed in the mainstream media. We need serious tax reform, and that's not going to happen anytime soon.
We are completely unable to have a mature discussion about the concept of property rights too (look at how quickly the squat protest in Brunswick today, staged by PurplePingers, was shut down). 3 potential homes in Brunswick that have been vacant for 15 years. I'm paying 670 bucks a week to live in a tiny place in Brunswick that would have cost nothing to rent in my parents time. House is valued at over a million dollars despite the stumps being fucked, brick work falling apart. It will be knocked down because the value is in the land.
The owner of the property takes nearly half the money I earn as an engineer, while doing nothing but granting access to a scarce resource. I spent my time making things that have value and people use. Where's the fairness in that?
People shouldn't have to worry so much about finding somewhere to live. It's supposed to be a simple foundation on which you can build a life, a community, a career, a family. We are going to end up killing any drive for innovation because the rewards are diminishing and being stolen by people who lucked out by being born in better situations.
Couldn't have said it better myself.
We are going to end up killing any drive for innovation because the rewards are diminishing and being stolen by people who lucked out by being born in better situations.
This is going to become an increasingly correct sentiment. And as you say, at its core, the issue is how we're dividing land ownership rights.
The great thing about Australia, is everyone knows no-one has an inalienable right to any piece of land. Whehther its been demonstrated by eminent domain from the government, the knowledge that it all rests in this amorphous thing called 'the crown', or, happily, the very active and oft discussed indigenous land rights.
I say 'happily' because in this case the often strained discussions and legal cases around an Aboriginal Nation asserting a claim serves the whole community to remind us that there is always other stakeholders in the land we might have passing control over, whereas eminent domain isn't used widely, or as often, so people tend to forget about it.
Wages will never rise faster than house prices. I also wish the media would stop consulting economists on everything. They can say whatever fluff they want and they're never held accountable for being wrong. Anyone currently in a position of power in this country intends to keep everything the way it is.
They're just worried they'll lose next year because of their 2019 election loss, which was largely seen as a rebuke on negative gearing reform proposals.
Make no mistake, this minister is trying to keep their older voters, who have sizable housing investments.
Anyone who thinks rising house prices (in real terms) is actually good for society is brain-dead.