Thursday, 13 April 2017
Taking the Pressure off the Australian Housing Market - an 'Easy' Solution: A Letter to Senator Nick Xenophon
It does not take too much added input into a tightly held market to drive prices higher. To take pressure off the housing market, where prices are massively inflated, I recommend severely restricting foreign ownership. Our laws in this regard are not being enforced. Our domestic market is being manipulated (unconsciously) by the influx of overseas (investment) buyers. This is not fair for those that live here.
If you don't live here, you should not be able to buy property.
Also, pressure on available housing is increased by immigration. The increasing populations of our major cities are not being driven by a baby boom but by new arrivals into the country. The problem here is that it's putting a lot of pressure on the existing infrastructure and lowering the standard of living across the board. Too many people packed in like sardines is not a good thing, for any country.
I remember being in Hong Kong a number of years ago and talked to a lot of taxi drivers (the ones that spoke English!) They told me that HK was overpopulated with a huge influx of people from the mainland. They didn't like it.
Nick, it doesn't matter where people are coming from, their money and numbers are putting pressure on our existing systems. We have the authority to control what happens here. The issue is one of fairness for the existing citizens of the country.
Other actions to take on this issue are naturally changes to negative gearing laws, capital gains tax laws, and perhaps a new law to restrict investment property acquisition (putting a cap on the number of private properties owned by individuals or private corporations).
One other thing. There may be no way to stop a house price correction. If our economy falters at any stage it's likely that the bubble will collapse such as happened in the US, although not to the same extent. With the hollowing out of our economy (industrial) it's likely that the only thing that will stop this correction would be a massive influx of foreign capital, which would keep prices high, but still retain the same problem of unaffordable house prices for the residents of the country. The long term solution to that problem, of out-of-work or lowly paid citizens, is to have an economic policy centred on internal production (not simply 'productivity'), which means a level of protectionism. Restrictions of foreign purchases of domestic assets would stop closures or profit siphoning in a global market place. (How foolish 'we' were to allow the closure of the auto industry!) Our country should have systems that encourage Australian based ownership and investment in industry, which involve Government, investment banks, and perhaps a public bank (like the Bank of North Dakota).
With increased internal production comes more revenue for the Government.
Anyway, I have digressed. The easy solution to alleviate some house price pressure is to restrict foreign interference in our domestic economy.
Thanks for your attention,
ps. Please feel free to share the content of this message. I actually insist that you do. The fundamental issues at hand seem very simple ones. We need people to have their minds changed in order to address an underlying problem and recognise potential solutions.
[Posted at the SpookyWeather blog, April 13th, 2017.]