Home prices to explode, ANZ Bank predicts

Thursday, 03 July 2008

With a growing population and simultaneous housing shortage, Australia’s house prices are set to go through the roof, according to ANZ’s economists. Yet given new apartment approvals fell 18.2%, those forced to stay in the rent trap are faced with a tighter and tighter squeeze.

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Average Jo - Price fix

| | 2008-07-16 10:50:17

Joe Bloggs Economics 101

| | 2008-08-03 00:50:17

Hi Average Jo, most Gov't policy makers agree that there is a problem but the issue is quite complex. The speculation you refer to is the result of a combination of policy settings and economic conditions that effectively transfer wealth from would-be new home buyers to existing property owners. This includes tax treatment of investment property (i.e. negative gearing), land release and housing regulation by States, stamp duty revenues, and skilled migration policy. Australia's booming economy and relaxed lending practices have also enabled many people to borrow a lot more in recent years. Make no mistake--the double-digit price growth we are seeing is the result of an acute housing shortage relative to demand, caused by this potent cocktail of policies and market conditions. Current estimates point to a deficiency of about 30,000 dwellings Australia-wide each year. The problem is not one of market failure, but one of unequal distribution of wealth. Thus, very few economists (Gov't and...

Home prices to explode, ANZ Bank predicts

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