“First-timers pile in as house prices start to rise.
Record numbers of first-home buyers are entering the property market, encouraged by ultra-low
interest rates and unprecedented federal government incentive schemes that include a grant of
$25,000 and another where only a 5% deposit is needed to qualify for a mortgage”.
“Brisbane property prices forecast to rise by almost 10%.
Confidence in Brisbane's property market appears to be returning with a new forecast predicting
solid price growth in 2021”.
“ANZ scraps its ‘too pessimistic’ house price call.
ANZ has scrapped its forecast for a pandemic-linked 10% drop in house prices and says a jump in
sentiment based on stimulus measures and record-low interest rates will curb the decline, and
could even result in “modest” price growth this year.
It expects strong growth next year – housing prices in Perth are likely to jump 12%, Brisbane
9.5% and Hobart 9.4%.
Sydney prices are expected to rise 8.8% – close to the national average – but Melbourne
prices will lag, with only 7.8% growth”.
Argh!
As you can tell from recent “top stories”, rising house prices are often seen as a good
thing in Australia and are usually heavily publicised.
From the Government’s standpoint, they see this as a “success”.
They see rapidly rising house prices — rises much much greater than the cost of living
— as some kind of validation of their polices, even though high house prices don’t actually
help most of us.
If you’re a property investor, sure, you love when house prices go up.
When a good portion of your money is invested in real estate, the last thing you want is
for property prices to go down.
Who gives a damn about ordinary Australians who are priced out of the market?
Both federal and state governments, of course, don’t want prices to slip.
They can generate more fees and taxes from higher property prices, allowing more money
to flow through to government coffers.
This is clearly evident in this graph.
If property prices were to go down, benefiting people like me, governments would have to
find another way to maintain their tax base.
So of course, Scotty and Joshy boy, or whoever else is in power at the time, will do their
darnedest to make Australian housing the most unaffordable housing in the world.
Of course, the big banks don’t won’t property prices to go down either.
Their entire business model relies on people getting into massive debt.
With up to 60% of their total loans allocated to Australian mortgages, the major banks are
of the opinion — The more debt, the better!
High house prices equates to more debt and therefore, more banking profits.
Unfortunately, the big banks have a very unhealthy exposure to the domestic real estate market.
As Ian Verrender once wrote for ABC news, “When the value of your major asset is going
backwards, you're less inclined to spend and less likely to be given credit.
That, in turn, weakens the domestic economy which eventually leads to higher unemployment,
mortgage defaults and, potentially, a banking crisis”.
Something that the banks obviously don’t want.
So whenever you hear a politician say that they’re all for affordable housing, don’t
believe a word of it.
They’re not in the business of trying to make property affordable.
They want prices to forever go upwards.
As Mr Verrender pointed out, there are only two ways for property prices to go down, “Either
property prices need to collapse, which would only occur as part of an apocalyptic economic
event, or wages need to take off which no major party is likely to endorse.
Everything else is just window dressing.”
So apart from the banks, government, and investors, pretty much everybody else wants house prices
to fall or they're indifferent.
People who are lucky enough to own their own house outright, don’t really benefit from
increasing house prices.
If they chose to sell, sure they might get a whole lot more money than they originally
paid, but all other houses are now just as expensive as well, so they’re no better
off.
People looking to buy their first home like myself, can’t unless we get into debt.
Rising house prices clearly do not help us.
Actually, we want the opposite.
We want house prices to fall, but clearly that’s only going to happen through blind
chance.
The banks are against us.
The government is against us.
Investors are against us.
There’s probably very little you and me can do to bring on a housing crash.
A pandemic couldn’t do it.
What hope do we have?
It’s funny, only a few short months ago, people were predicting a major crash.
“Home prices ease in July but there are warnings of bigger falls ahead”, “RBA
predicts a potential 40% drop in house prices”.
Look, I suppose it could still happen.
I mean, anything could happen.
I don’t think anybody can be 100% certain what will happen.
Obviously the government will favour optimism over pessimism.
Even if the housing market was about to crash, you can’t expect them to say as such.
They don’t want people to panic.
Anyway, I think the news headlines tell it all.
Or at least, tells us what the current narrative is.
Never fear!
House prices will continue to rise!
Get into debt while interest rates are low!
That’s what they want.
You and me to get into massive debt, because apparently, that will benefit the economy.
Thanks for watching.