Generations Ask Y is Housing a Speculator’s Paradise?
By Karl Fitzgerald
If we are all borne onto this planet as equals, why are some subsidised to own the planet at the expense of others? Don’t we all deserve a roof over our heads? The right to participate in the Great Australian Dream? This is what Gen X, Y (& soon Z) are asking.
Why does Howard ignore these founding principles, preferring speculators profits over basic human rights?
Negative gearing gives over $2billion p.a to those already wealthy enough to own a piece of the planet.
Research by The Australian (26/02/07 – now only listed on Real Estate.com.au) found an existing 10 year supply of land in Sydney, Brisbane & Melbourne. Zoning approval for development on 155,000 lots is presently available. Why is nothing happening?In the 70’s land accounted for just 30% and housing 70% of a typical mortgage. Since then the trend has reversed with land accounting for 70% of a mortgage. This high cost of land is the real pressure on housing affordability.
However, the minions working for property lobby every state, every country, telling us that urban sprawl must continue, that government controlled land supply is the cause of land price escalation. With 10 years and 155,000 blocks of land waiting, we know that the real catalyst is the private supply of land locked up by speculators.
Jane Nethercote (Crikey 16/03) asks how can we unlock this land?
Market forces can be used via a land based holding charge, in the form of a Site Rental (rather than the bastardised Land Tax). This encourages all land to be used efficiently. No longer can speculators sit on vacant blocks, withholding land until their ‘blackmail price’ is met. The added supply pushes down the cost of the land component, leading us back to a fair go for all generations.
Howard has cheek to say that the economy is performing well when property in Melbourne grows 10.24% p.a over 15 years for a total of 154%. With wages barely growing 3% p.a, how are future generations ever to catch up?
Why would you bother being in small business when you can speculate in land, hire a tax dodging lawyer and do all your business from a beach in Vanuatu with a Pina Colada in one hand and trusty Blackberry in the other?
Recent affordability remedies include Equity Finance Mortgages, where a bank contributes 20% of the mortgage costs in return for 40% of the capital gains/ losses. Like the First Home Owners Grants, any time the market receives an increase in purchasing power, the end result is reflected in higher land prices and profits for speculators.
Just when one wonders if we can be pushed further, news comes through that Managed Funds are moving into the property market. This reflects another world-wide taxation trend where property trusts now receive top tax writeoffs to invest in an asset class that delivers very little risk for astronomical returns. The clever PR juggernaut (AFR 08/03/07)) couches the announcement with a $500m affordable housing package to complement a $10billion leap into an already burgeoning market. Is the ripple of 2,000 homes at $250K going to make any significant impact?
A Site Rental system ensures all land is put to best use. In the end market forces will price land only at what can be productively earnt off it. With the speculative urge downplayed, a land of opportunity is again possible.
Just check the upcoming BRW’s top 200 to see how many gain from the profits of the earth. Howard has given these friends in high places such handouts as their lobby money is always handy for the next scaremongering election campaign.
Karl Fitzgerald, Prosper Australia