Reminiscent of when former Treasurer Joe Hockey told first home buyers (FHBs) to “get a good job that pays good money”, Prime Minister Malcolm Turnbott has delivered this housing shit sandwich to Australia’s youth:
JOURNALIST:
Prime Minister, just on negative gearing and housing affordability. Do you have a message to young people who don’t have parents who can act as a guarantor on a mortgage, who can’t afford a deposit of say, $100,000, and probably face the prospect of renting for the rest of their lives? And only ever seeing housing going up and up in the capital cities? Do you have a recommendation for what those young people can do?
PRIME MINISTER:
Look, let me just say this to you. The Labor Party’s policy on negative gearing and capital gains tax are calculated to lower the value of Australians’ homes. They are proposing a massive shock to the market, pulling out 30 per cent of the buyers for established residential property. It is designed to lower the value of Australian homes. It would be a very significant negative shock to the market. And, you know, turning to…
JOURNALIST:
But, young people can’t afford homes?
PRIME MINISTER:
…Turning to capital gains tax, let’s just consider this, what is our central challenge? What is a central challenge to transition to a 21st-century economy? To assure young people the jobs of the future? To ensure that they will have jobs? How do we do that? We do that by promoting investment and innovation… Labour is proposing to increase capital gains tax by 50 per cent. So, what Labour are saying to investors is, if you invest in any project, any business, any asset, we will increase the tax on any gain you may realise by 50 per cent. They are setting out to reduce investment, to discourage investment… That is what we mean by growth, we mean by growth, growing our opportunities. And, a key part of that is investment. So, we are in favour of investment, we are encouraging investment, labor is increasing the tax on investment by 50 per cent and that can do only one thing, result in less investment, less growth, fewer jobs.
Turnbott clearly does not understand the difference between genuine investment in the real economy and tax-driven speculation into property.
He also clearly does not understand the difference between a speculative bubble, where an excessive share of buying is being conducted by property speculators:
And a housing market whereby homes are affordable to FHBs and essential workers, like nurses and teachers, who are also active participants.
Unfortunately, this is clearly not the case in Australia’s big cities, where the share of mortgages going to first home buyers (FHBs) is near record lows, crowded-out by said investors:
And the average loan size to FHBs across Australia has rocketed (obviously worse in the major capitals):
One can only wonder at what role his own multiple investment properties play when dancing this slap stick drivel.
