New report points to major recession
A study of 34 years of the Australian property market has resulted in a 28 page report, Unlocking the Riches of Oz: A Case study of the Social and Economic Costs of Real Estate Bubbles (1972 to 2006).
Bryan Kavanagh, Director of the Land Values Research Group (LVRG) has identified that rises and falls in the economy follow those in the property market by 12-24 months (pg 14).
The revelation makes it possible to forecast economic booms and busts, and puts pressure on government and industry bodies to curb the excesses of the property market.
The LVRG has been the only Australian body to aggregate national real estate sales figures since 1972. Its analysis demonstrates the role of taxation in inflating unsustainable real estate bubbles.
Mr Kavanagh said the current taxation regime has acted to favour property speculation and the creation of real estate bubbles, which have a habit of bursting and creating recessions.
“The favourable tax treatment given to real estate investment is acting to inhibit business and real wealth creation,” he said.
The report suggests that the deadweight costs of high taxes and land prices have created a false wealth effect, whilst shaving $1 trillion off 2006 GDP.
“We should be examining the growing fund of publicly-generated land and natural resource rents to finance government as an alternative to current taxation.
“The LVRG’s Barometer of the Economy sharply identifies our economic problems and points the way to more affordable housing and sustainable economic growth,” said Mr Kavanagh.
Unlocking the Riches of Oz: A Case Study of the Social and Economic Costs of Real Estate Bubbles (1972 to 2006) is available for $10.00 (inc-GST and postage) from Prosper Australia, 27 Hardware Lane Melbourne.
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