Australia Wasting Its Money & Future On Housing Market
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Australians spend most of their money and time buying and selling property to the tune of $400 billion every year. That is not making anything new or manufacturing useful things for the world. The Great Australian Dream is home ownership and that has become a very expensive obsession for most of us. What it does do is make our banks very rich and provides real estate agents and state governments with their fair share too. Australia wasting its money and future on housing market is a troubling indicator of where we are as a nation.
“Australians have $10.3 trillion of their wealth tied up in housing, more than three times the value of stocks on the ASX and even dwarfing the 43.5 trillion of superannuation savings.”
- (Michael Janda, ABC News, 16th Jan 2024)
No Ducking The Truth About Our Housing Market
I was watching some ducks pecking at the ground for food on my golf course the other day. In the past I had thought that we as humans had come a long way by comparison in evolutionary terms – no longer needing to constantly seek out food for survival. However, I realised that I was looking at things the wrong way for a fair comparison. Most of us work the greater part of our lives to afford to buy our own home. We are, in fact, still pecking at the ground in the bigger scheme of things for our very expensive shelter.
Australian Housing Market Investment A Ponzi Scheme
“Any investment that’s primarily reliant on capital gain rather than future income generation for its return shares at least one thing in common with a Ponzi scheme. Both rely on the next investors to pay out the profits of the earlier ones. In the case of real estate that means a new generation of buyers willing — and able — to stump up more cash to pay a higher price than the previous ones.”
Who would have thought that you would need a million dollars to buy an average house in somewhere like Sydney or Melbourne? The banks must love this setup they have cooked up over decades. Folks have to borrow enormous sums of money from them to purchase property and the central bank keeps whacking up the rate of interest they can charge on the loan. How does it get any better than this? Currently the banks make more on the loan than the home owner will on his or her investment in total.
Bank Con Job Grooming Australians
Actually, psychologically this scheme or scam or con job works brilliantly. Making things harder for the investor to enter the market primes them perfectly for the sting. If you keep spreading the word about how tough it is to achieve you foster greater motivation in the mark. People are busting a gut to get into this market to be fleeced by the banks. Property prices keep going up, as do interest rates, and consequentially the cuts taken by agents and state governments. The returns are lower but capital gains and negative gearing can keep investors in the game.
Australia Obsessed With Financialization Of Shelter
Meanwhile, the nation is going nowhere fast. Australia is not geared to encourage innovation in industry. No, we are firmly fixated on owning something that already exists – domestic shelter. Just like those ducks constantly pecking at the ground for grubs. The whole country is obsessed with home ownership – isn’t that a bit weird? It is like we never got beyond the basics of life. The banks rub their greedy hands together every day in anticipation of the next signee on that contract for an enormous home loan. Now, we have a situation where ordinary folk cannot afford to rent shelter because of a massively inflated housing market. The financialization of an essential component of living has made it too expensive for the working poor. Something isn’t right about this and speaks of poor leadership. John Howard messed with the capital gains tax back in the 1990’s and the massive increase in property prices stems from then. Howard was an ex-real estate agent. Australia wasting its money and future on housing market sets the nation up for a rude awakening when the minerals run out or are no longer wanted. We have no value added manufacturing industry. We have a financial sector focused on our domestic property market.
Robert Sudha Hamilton is the author of Money Matters: Navigating Credit, Debt, and Financial Freedom.
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