Buyers Strike “Irresponsible”
“These opinions should be greeted with howls of derisive laughter,” Buyers Strike campaigner David Collyer said today. “A market is made up of many competing views. To give oxygen only to some is a recipe for disaster.”
“Hundreds of thousands of potential first home buyers have privately done their sums and find they don’t add up. Prosper is merely giving them a much-needed voice.
“Two secure jobs and a good deposit are no longer enough to buy a home. Buyers must make a life-long vow of poverty as well.
“It is irresponsible to expect such a sacrifice,” Collyer said.
“Do not underestimate their anger and frustration at being denied land ownership and its civic benefits.”
“These commentators are saying the only views entitled to attention are from the property spruikers – the professional industry mouthpieces. Their mantra is of land shortages due to government restrictions, spiralling demand, and that all property deserves a premium because Australians live on the coast.
“They glide over the fact FHBs are priced out of the market by a national hysteria to invest in property. Without FHBs, second home buyers cannot trade up. The whole juggernaut grids to a halt.
Meanwhile, of the 1.75 million Australian taxpayers with rental income, 1.3 million only have a single rental property. The vast majority are both middle-income earners and are negatively geared. They are diverting all rents and part of their personal income to meet costs and interest payments. These assets are illiquid, highly geared and undiversified. Their investment strategy only works when prices rise faster than the interest cost. See here.
“Negatively geared taxpayers guarantee price falls will be extreme when they occur: all will want to bail out at the same time. Further, banks will require equity injections or will forcibly sell up heavily mortgaged properties that go underwater, that are valued at less than the loans they support.
“The message in our Buyers Strike is clear and simple. If FHBs refuse to buy at current outrageous prices, the market will correct.
Collyer reiterated that Prosper is not calling the bursting of the Great Australian Land Bubble, merely pointing out that it is ‘imminent’. ENDS