Subtle old Gotti

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I think I need to apologise to Robert Gottliebsen. I think I misinterpreted his words last November when he said

It might not be intentional, but in Australia banks have developed a unique system to keep dwelling prices high. They are liberal in granting housing loans, so there is a strong consumer demand for houses. But they are really tough in their funding of developers so that they restrict the supply of dwellings.

Maybe I was angry at the time or just didn’t understand his message. However today using very similar words he repeated himself.

In Australia one of the reasons house prices have held is that the avalanche of bank deposits have encouraged banks to maintain or increase their financing of houses. This is probably the biggest single force determining house price values. At the same time they have constrained developers by limiting finance. It’s a classic squeeze play – cutting the supply and boosting the demand.

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Now I know Gotti is a very smart man, so making these sort of statements about banks at a time when there is a political campaign by a younger cohort against inequitable behaviour in the housing market seems very counterproductive. So I really can’t believe that was Gotti’s intention.

After a bit of thought I think I have worked it out. I don’t think Gotti is in support of the banks at all. I think this is a shout out in support of the younger generation to the ACCC to investigate banking practices.

Subtle old Gotti.

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