The ABC’s Four Corners has aired an excellent story tonight showing how tax distortions such as negative gearing has created one of the world’s largest housing bubbles:
Watch the 45 minute segment here.
Comments are closed.
The ABC’s Four Corners has aired an excellent story tonight showing how tax distortions such as negative gearing has created one of the world’s largest housing bubbles:
Watch the 45 minute segment here.
Comments are closed.
Copyright 2006 - 2022
“i’m not good with maths”, but happily signs up to over a million dollars in debt. Classic.
I think the simplified graphics showing the debt to income ratios along with red filter overlaid is the type of thing needed to try and get through to the masses.
I only wished they’d touched more on the massive misallocation of capital and the wider ramifications to the economy as a result. But overall an excellent story.
We need this bubble to burst, its time the baby boomers and wanna be investors cop this burst where it hurts. Greed does not always pay off….. plus im not good with maths, sign me up for a small loan of 1 million dollars…. what a moron.
Well, people still seem to think that the government can control this market.
NO WAY!
At these levels, it doesn’t matter what they do, there will be hell to pay.
So many problems in that clip:
From politicians who don’t know what a ponzi really is (where new investors money is paid to exiting members)
To idiots borrowing numbers they can never, ever, ever hope to pay back.
To a home owner complaining that the tradies don’t care (no mate, it’s the developer that don’t care, the tradies often don’t get paid, or paid very poorly)
I could go on.
I still don’t understand why no-one shows a graph of house prices overlaid on income (at current rates) over 50 years, it’s clearly evident this is unsustainable. The reason it’s been able to go on for 15 years is the ever expanding debt load, but debt can not expanded indefinitely.
Japan found this out
USA found this out
UK found this out
Ireland found this out
Iceland found this out
Greece found this out
Italy found this out
Spain found this out
France found this out
Do I need to go on?????
The clip totally skipped over Rudd/Gillard/Swans crazy FHOB during the gfc, that spawned god knows how many billions of $$$$ of RMBS through the multiplying effect
If you must buy in the short term, you must accept the fact that you’ll burn 30% of your purchase price, if not more. For many people, that will be > 5 or 10 years worth of saving. Is it really worth owning a house that bad? Of course not.
Oh, and I’ve said for years, when this bust is all done and dusted, guys like me will be buying adjoining properties, only to smash them down and build a nice residence.
What goes around, comes around.
The timing of this program is of course to embarrass the government/PM prior to the budget and election.(Another budget cut for the ABC? ) What they did not mention is that a 4% downward swing in property values would take down the banks via their liar loans. In fact the Negative Gearing controversy will solve itself when the market crashes. The real problems are the property spruikers and the finance industry who continue to spew out the “Australia is different as we have a property shortage” myth. The bloodbath that will follow will destroy the investors and recent homebuyers for generations to come and create an enormous underclass totally dependant on social welfare. A clear case of Caveat Emptor lost on the sheeple.
Nathan
The “I’m not good with Maths” was a classic. It should replace ‘Advance Australia Fare’ in our National Anthem.
Pretty well sums up Australia’s approach to debt.
Incredible that NOT one second of the program was devoted to the REAL cause of this (and every other bubble in every other part of the world) – ultra-low interest rates and ridiculous monetary expansion by central banks
That is the true cause, things like negative gearing and cheating on loan applications might exacerbate it around the edges but the true cause is stupid monetary interventions (ZIRP, QE 1, 2, 3 and 4, Negative interest rates,….etc)
All these latest expenditures make us realise who our leaders really are (seen and unseen). It is we who are paying for the killing of innocents because of our compliance. Just the price of these subs and planes, for our military, could otherwise provide homes for half a million families in Sydney (in regional OZ maybe 2 million families. But out superiors don’t want that. The paradox of debt slavery and constant wars……Also a CCP invasion is just fine ?
So why are we paying interest on debt, money created from nothing?
That is called tribute.
Matty, why do you need a graph of house prices laid over income? Thats exactly what the house price to wages index is. Famously championed on sites like Demographia. With an index of 12 in Sydney, that is all you need to know – its unsustainable. house prices always return to an index of 3:1 because that is what people can comfortably sustain.
Stupid people are sustaining these 8:1 and 12:1 ratios with huge debt loads, but at great personal cost, which is now being brought to bear as lending criteria tightens.
It started last year, and now 4 Corners sinks another nail into the property bubble balloon of confidence. Now that negative articles like this are starting to be common, its only a matter of time before investor confidence collapses.
You can factor in as many variables as you like but it is INVESTOR CONFIDENCE that will topple this Ponzi scheme – that will be the tipping point when they all create a mad rush to offload their IPs.
A good doco, but absolutely NO mention of the thousands of foreign (yes mainly Chinese) buyers snapping up established homes (not just off the plan apartments) all over Sydney and Melbourne in particular. This is having a detrimental effect on residents being able to purchase and pushing prices sky high as many have bottomless pockets.
They also hide money there, not seeming to care if homes are left vacant for long periods of time. Absolutely unethical given the amount of homeless on the streets. No party seems to want to touch this – and neither does the ABC!
If overseas investors keep on buying in cash, things can only get worse for locals. That is what both parties are backing. It’s not locals pushing prices up it’s overseas buyers. It is not hard to see this.
But we do have a shortage of housing. A shortage of housing for foreigners to snap up and sit vacant as a pointless unproductive storage of wealth.
“A staggering 94% of total Chinese investment in real estate flowed into NSW last year.” Robert Shakespeare.
The documentary didn’t cover everything relating to the housing bubble inflated in Australia – it isn’t possible in 45 minutes, but it sure rings true. Eventually this bubble will burst- only thing is trying to pin point what will cause it- a bubble can remain for as long as it isnt disturbed. But while my mates are happy to take out 850k interest only loans because ” you cant lose on sydney houses” and ” it cost me only $200 to service after rent” one can only watch in dismay!
It was the espresso coffee that turned my upper and lower tract.
Just being funny, but invest in tea pots. I can see a lot of black tea and plain sliced bread for breakfast comin’.