Finally a politician speaks the truth:
Liberal MP John Alexander, who is chairing a parliamentary inquiry into home ownership, warned senior Coalition colleagues that the property market resembles a Ponzi scheme…
“Ponzi is a word I mentioned when I spoke to the Treasurer because a situation has emerged that we have never had before in this country, which is that interest rates are lower than rental returns,” he said…
Mr Alexander is among the politicians who have been most vocal about housing affordability and the risks of a bubble.
“The question for responsible policymakers is whether there are enough vulnerable people that when interest rates do go up there is a major impact on the whole of the market,” he said.
“If rates do go up, the investor with multiple properties will find it as difficult as the newcomer with limited income to fund their losses. The home owner-occupier highly geared who has to pay their interest with after tax-dollars is even more disadvantaged.”
Prime Minister Malcolm Turnbull has also implicitly acknowledged the ponzi by warning that removing negative gearing will “smash the residential housing market”. This suggests that Turnbull believes that the only thing holding-up housing values is the heavy flow of investors using negative gearing to avoid paying tax, which is akin to admitting that Australian housing is a tax-driven ponzi scheme.
