Why are we still moving towards it?!

Well, of course:

No ceiling to housing prices in sight yet

HOUSE prices in Melbourne and Sydney are tipped to rise in coming months, defying concerns that rising interest rates will dampen the heated sector.

“Concerns”? Dampening the sector is a large part of the point of the decision – but of course, that’s not what’s going to happen. The Reserve Bank has precisely one method of reining in inflation, and it simply isn’t working, no matter how many times they push the interest rate button. It’s still too tempting for investors to outbid first home buyers, and easy enough to pass on the increased mortgage payments through increased rents. The only people who can’t do that, in fact, are the young people presently being priced out of ever owning their own home…

The problem is one only the government can seriously tackle. Give incentives to investors to build, and disincentives to investors to take houses away from home buyers. Rather than the reverse, as at present.

Not that either major party will, of course – they’re terrified of the political ramifications of first homes becoming more affordable, because that means their going down in price. As in, voters with these homes apparently losing money. There are too many young families who’ve just scraped to get onto the first rung of the ladder: they’ve gambled on prices going up, and they’ll be damned if they’ll let anyone take that away from them. Those left behind? Too bad.

That’s why the government’s happy to pretend it’s all up to the Reserve Bank, and it’s nothing to do with them. Even though the Reserve Bank only has one button it can push, and it isn’t working…

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5 responses to “Why are we still moving towards it?!

  1. …a newspaper talking up house prices, this is unexpected

    the reserve bank isnt blame free. they kept interest rates too low for too long

    also the banks are lending to every man and his dog… household debt is growing exponentially

    aussies are hocked to the eyeballs. yet amazingly they borrow against fictitious equity…to buy cars and other junk

    dreamy-eyed thralls, what government wants to pull the pin and wake them up?

  2. usesomesanity

    The reserve bank should really hike rates by 1% they have done five 0.25% rises in the last 7 mths. They should have done a full percent 6 mths ago, to have more impact.

  3. usesomesanity

    Home owners living in their own home should be charged an interest rate at 5% lower that investors trying to make a killing in passive assets.

  4. Wisdom Like Silence

    Yes! That’s Brilliant! I’m not sarcasming! Make it impossible for those bottom feeder investors to make money off of their assets unless they have paid off the whole house. Negative gearing should be shot behind a shed and different interest rates for people who want to buy their very own home and people who think that houses are market stalls down mindil beach.

  5. usesomesanity

    “Home owners living in their own home should be charged an interest rate at 5% lower that investors trying to make a killing in passive assets.”

    “Yes! That’s Brilliant!”

    Of course it’s brilliant. I came up with it.

    Banks also should be only able to lend to people with a 20% deposit in liquid cash.

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