A housing affordability crisis in Australia fueled by increasing involvement of investors? A growing crisis in which only the very rich of future generations are going to be able to buy their own home? Iin which investors own the properties, and families are stuck renting for the rest of their lives? To this wonderful scenario the Commonwealth Bank says YES PLEASE and WHAT CAN WE DO TO MAKE IT WORSE:
The simmering debate about whether Australia has a housing bubble erupted again this week over a Commonwealth Bank presentation that seeks to assure global investors Australian real estate is a safe bet.
Senior Commonwealth Bank executives have travelled the world in the past couple of weeks with a presentation showing how Australian house prices, and the key price to income ratios, compare favourably with similar countries.
Isn’t that nice – the CBA wants to encourage more overseas investors to pour their money into the already inflated market. That’ll make its vast stake in existing property more secure, and increase the amount it can profit from ever-increasing home loans – who cares if the upshot is that an increasing proportion of the Australian population is being permanently locked out of buying their own home?
Craig James is already on the property ladder, and plans to use the inflated equity in his existing portfolio to force more young families to rent from him instead. Then he will live in a giant fortress with other wealthy Australians where the poor people can’t get at them.
When will governments wake up and see that the invasion of the market by investors is the real problem, and that it’s government tax policies – Howard’s cut to CGT in particular – that have made it so? How bad does the problem have to get before they take it seriously?
UPDATE: An international credit rating agency proposes to seriously analyse the extent of Australia’s problem, and bank stocks fall. (Via Jordan in the comments.)