Property locust swarm swept away by pure disinterest

It was an amazing spectacle yesterday as a property locust swarm descended on the nation’s media.

The day began with…ahem…”modelling” released by the Master Builders which argued that negative gearing reform will crash housing construction even though it will remain on new builds, which the Property Council head has already declared as a boom in the making. This was enough for the Property Council PM and Treasurer Frydendebt to buzz into the swarm at News:

Mr Morrison went hard on Labor’s policy following the release of the report.

“All those tradies out there, understand this – Labor’s policy to put up taxes on housing will cost jobs,” Mr Morrison told reporters on Wednesday.

“It will punish Australians. It will put our Triple A credit rating at risk – I know this for a fact as a former treasurer.”

Treasurer Josh Frydenberg said the research showed the “different market” that would come about if Labor’s changes were implemented.

“This modelling does show how punishing and destructive Labor’s changes to negative gearing will be,” Mr Frydenberg told Sky News.

Before we could swish this little flock of parasites away another swept in on the breeze, this time from the HIA which had more…ahem…”modelling” proving that falling house prices were making property more expensive:

On the one hand, the HIA claims that Labor’s CGT policy would result in “a worsening of the affordability challenge”. Then immediately afterwards they claim that “an increase in CGT would result in a $1bn reduction in revenue to state Governments” because prices would fall, thereby unambiguously improving housing affordability.

The swarm threatened to block out the Sun by mid-afternoon when the Property Investment Professionals of Australia (PIPA) and Property Investors Council of Australia (PICA) released their argument, based upon a “survey” of God only knows who:

…that claimed investors are not interested in investing in new properties and boosting supply, therefore are merely substituting homes for sale into homes for let. However, they then contradictorily claim that investors provide Australians with vital rental housing that would otherwise not be available and that Labor’s policy would cause investors to “retreat from the market at a time when more housing is needed the most”, despite explicitly admitting that investors aren’t actually interested in adding new supply.

The enormous flight of bugs was clearly co-ordinated in some measure though probably also opportunistic.

Yet the most remarkable thing about the buzzing covey was how quickly it passed. The flimsy insects were simply swept away, even on a slow news day, by sheer disinterest. Anything ScoMo touches now turns to crap. The avenue of media exploitation and manipulation by property interests is also utterly exhausted. Even Domainfax barely raised an eyebrow. There appears to be wide acceptance now that property prices are going fall, and need to, so we had just better get used it.

A few weeks ago it appeared that the rise of a Property Council PM might be the apotheosis of the property lobby and business in Australia. Instead, it is proving to be the last desperate convulsions of the dying swarm, droning its last on some random windowsill unseen and alone.

Houses and Holes
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  1. Fantastic to see reality gathering momentum after years of this ridiculous obsession with property. (All brought to you by friendly neighbourhood Ponzi-Bank). Are we finally going off the kool-aid?

  2. In line with the worldwide collapse in insect numbers. 🐞 🐜
    🤣🤣 it’s great to laugh in the morning though.

    • Yes

      It is a mistake to underestimate the power of a fear and loathing campaign centered around falling house prices in Australia.

      If the ALP want to make sure that the campaign loses traction they need to provide clearer support for new construction and the best way of doing that is keeping the CGT discount at 50% for new builds.

      People understand that new construction provides jobs.

      They can easily explain the policy change as necessary because there are still too few new houses in Sydney and Melbourne.

      They simply cannot afford the risk that people will think the NG policy will reduce new housing construction.

      And clearly there is that risk as the biggest driver of property investment was the capital gains discount in combination with NG.

      Reducing the discount from 50% to 25% for new builds, even though NG remains, will be considered a risk by many people.

      Why take the risk?

      Change the policy and shut down the scare campaign.

      • Well said.

        I will add that the lesson from history is that every time the bears were so wrong on house prices, they underestimated the power and resolve of the government (in varying guises, whether it is Treasury, Immigration, RBA, APRA, State, Federal, etc).

        It is truly bizarre to make the same mistake again and again.

      • Yes

        It is really weird.

        The enthusiasm for starting the Ewok dance BEFORE the Death Star blows is odd.

        Or Charlie Brown being fooled by Lucy yet again.

      • The difference this time is that they are trying to kick a can into a hurricane force headwind of rising global interest rates. We are down 10% from peak and there is no stimulus yet? WTF. The moment prices drop below settlement on apartments in Hellbourne and Shitney is the moment the burning ballon looses it fight with gravity.

      • Robert,

        When the AUD heads below 60 with some momentum we will be talking out of bullets.

        At the moment they are just allowing a few outlying hard to defend ‘exuberant’ settlements to fall.

        They will defend the people that matter.

  3. The Liberals have no chance from this point. People have simply stopped listening to whatever Scomo and Co. say.

  4. Of course affordability will worsen if prices fall you idiots, banks base their lending decisions on being able to confiscate your home and flog it off to recoup the amount owing on your mortgage. This is less likely to happen where prices are falling, meaning banks are less likely to lend, meaning people wont be able to afford cheaper and cheaper houses, meaning affordability has worsened.

    • That would be a superb outcome.

      Hopefully we are moving back to 20% deposit land. En route to 25-30%.

    • On one hand bank lends less and on another house price falls. House supply is already going to increase. So affordability will increase.

    • kiwikarynMEMBER

      No. The share market is kindly crashing as well, so you get two bites of the same cherry 🙂

  5. The swarm is moving again today on the right flank. The Oz’s broadacre provides a trifecta:

    1) Page 6 “Negative gearing change ‘would distort housing’”. (the sub-ed forgot the sarc tag). “Labor’s plan to direct the negative gearing tax break only to new housing has the potential to distort Australia’s $7 trillion housing sector and hurt the firs-home-buyers it is trying to help, according to the country’s biggest residential developer, Stockland. … if all those investors are focussing on new builds, there isn’t enough for them. We are worried about a crowding-out effect of first-home buyers and owner –occupiers over the long term.”

    And so incoherently on but for the saving grace from Saul Eslake who states “ one of the reasons Australian home ownership has been declining for the last 25 years – despite lower interst rates and programs to assist first-home owners – is they have been squeezed out by investors.”

    2) Op ed from Denita Wawn, CEO Masters Builders “ Labor’s plan will floor industry”
    First sentence is a cracker “Home ownership is a cornerstone of Australian life” and then goes on to defend NG.

    3) Letter to the editor ‘Post of the Day’! – “Property advice”
    “I write as a property lawyer for 30 years and had a lot of investor clients many with large investment portfolios. I can categorically assure readers that property investors do not buy new properties to put tenant in. They buy almost exclusively older properties, many of them ‘do-ups’, where they can add some value. They do not buy new houses that tenants can trach and that will particularly be the case in Victoria with its new tenancy laws. Watch the availability of rentals plummet and the whole property market collapse. Mary.”
    Thanks Mary, but ‘tis already happening.

  6. Will we ever see the ABC 7.30 Report story asking “How will we cope with 40% house price drops” along the lines of “How will we cope with a population of 40m”? that would be a delicious moment. Janna/Verrender, your country’s future generations need you!

  7. Well, let’s face it, the falls haven’t been in any way significant yet.

    When they are, and the populous at large starts screaming in pain, then the media will be onto it. Until then, it’s just the guys who can see future problems arising, and who don’t want them to come, screaming into the wind. Because, as far as most of the population is concerned at the moment, it is just a temporary downturn. Property doesn’t crash in Australia, so why worry?

    They still tell themselves stories about how the crash in America was because of non-recourse loans which we obviously don’t have here. Mention of property crashes in Europe as well is largely met by a shrug of the shoulders as if to say “what relevance does that have to us?”

    • The population doesn’t understand and doesn’t care to understand. They have been taught to believe in ever higher property prices. It is their religion. Whether it is people like ourselves who think high debt is dangerous, or “property locusts” who are warning that prices may fall, they won’t really listen. Aussies BELIEVE! They believe in ever increasing prices and no-one can really convince them otherwise.

  8. Don’t sell the skin before you have shot the… bull.
    For the younger generations sake I’d like to see a full and total crash but this can go any which way still.
    Now is the time to keep cool in both actions and commentary.