From Alan Kohler today:
Actually it seems pretty simple: most people want to live in houses, not apartments, and they want to live near the city because they don’t want to, or can’t, commute a long distance, and they don’t want to live cheek by jowl with neighbours, separated only by thin walls.
The roads and public transport are too slow for a decent life beyond work and, with interest rates at around 4 per cent for a housing loan, they are bidding against each other and forcing up the prices of detached houses close to the city.
They are, in effect, putting a value on their time — the hours it would take to commute to and from the far outer suburbs.
Separately they have been investing in new apartments to get tax deductions, but eager developers have now driven down rental yields and values through oversupply. Not enough people want to live in them.
And now the economy is vulnerable to a housing crash because of non-settlement of apartments, and developer default risk.
On the other hand, non-settlement and receivers’ fire sales should mean prices will fall and the affordability problem will be solved to some extent.
Maybe Philip Lowe is right, that it’s a complex picture after all: we want prices to fall, but we’re scared to death of it happening.
Come on, Alan, this is twaddle. Your son is crying out for help:
Give it to him. You can campaign for affordability by supporting a wind back of the many market distortions support hosuing:
- reduced immigration;
- reduced housing speculation tax incentives;
- reduced big bank public supports;
- increased foreign buyer policing;
- increased supply side measures;
- increased macroprudential tightening.
Stop pretending to care, Alan. Do something.
