Buyers Strike finds heavyweight backing

The first home Buyers Strike announced by tax reform group Prosper Australia last week is being supported by debt-skeptic Steve Keen.

“This is an excellent idea which I endorse,” Keen said on his website (1) yesterday. “It would be a foolish personal decision to take out the size of loan now required to enter the market.”

Keen is Associate Professor of Economics and Finance at University of Western Sydney.  His solid work and stern warnings on the unsustainable level of consumer debt are very highly regarded overseas and by academic economists.

Keen identifies as post-Keynesian, critical of both modern neoclassical economics and Marxian economics. He has repeatedly spoken out about the dangerous instability of the Australian housing market, describing it as a ‘Ponzi Scheme’, as defined by Hyman Minsky.

“Though the banks have the most responsibility for driving up house prices by letting their LVRs rise from the responsible 70 per cent levels of the 1960s-1970s to the utterly irresponsible 97 per cent levels of today, the house price bubble has also been inflated by the so-called “First Home Owners Grant” scheme. This scheme, which I prefer to call the First Home Vendors Grant, has been used as a cheap macroeconomic boost by the government on five occasions now –1983, 1989, 2000, 2001 and 2008 – and each time all it has done is push up house prices,” Keen said.

“There are good odds that house prices will start to fall this year – with macroeconomic impacts flowing from that – and there may well be lobbying to bring back the FHVB for a sixth time. This campaign might well make that an impossibility, which would be a very good thing,” Keen said.

Prosper Buyers Strike campaigner David Collyer welcomed Prof. Keen’s support of the Buyers Strike.  Keen adds his voice to hundreds registering their dismay on the GetUp campaign ideas page (2), where the Buyers Strike has risen from one hundredth to sixth in the rankings in a mere ten days.

“Young adults face a genuine dilemma. If they buy a home at current prices, they commit to an entire lifetime of heavy debt repayments.  Standing aside to save for a higher deposit is sensible and logical.  Meanwhile they are denied the citizenship benefits of home ownership,” Collyer said. “Do not underestimate the anger and frustration of an entire generation of Australians.”

Collyer reiterated that Prosper does not announce the bursting of The Great Australian Land Bubble, but does regard it as ‘imminent’. ENDS

 

(1)http://www.debtdeflation.com/blogs/2011/03/25/getup-campaign-suggestion-first-home-property-buyers-strike/

(2) http://suggest.getup.org.au/forums/60819-campaign-ideas/suggestions/1595687-first-home-buyers-property-buyers-strike?page=1&ref=title

 

5 Comments

  1. mike30-03-2011

    Hi guys,

    Wow. I have never heard of such a delusional, hare-brained idea as this one. First, this strike will have zero impact on house prices. The only people signing this petition are the morons, lefties and useless academics who will never have the money to purchase a home regardless.

    Second, to refer to the housing market as a ‘ponzi scheme’ is entirely outrageous and a complete misuse of the term.

    Third… support from Steve Keen? Wow, big win you got there. You might remember that Steve Keen was the idiot who a couple of years ago made a bet against a Macquarie Bank analyst that house prices were overvalued and that they would fall by more than 40%. Needless to say he lost the bet and ended up having to walk 200km wearing a shirt that said “I was hopelessly wrong on house prices! Ask me how.” Have a read for yourself: http://www.news.com.au/business/economist-steve-keen-loses-housing-bet-against-rory-robertson/story-e6frfmbi-1225793985120.

    If you would like a more accurate and realistic opinion of Australia’s housing situation, have a read over some of Rory Robertson’s work (the Macquarie analyst in the bet): http://www.businessspectator.com.au/bs.nsf/Article/Steve-Keen-house-prices-bubble-debt-march-pd20100420-4P4MD?OpenDocument&src=blb.

    Perhaps it is best if you took you advice from someone who is continuously right as opposed to some academic who is continuously wrong?

    Cheers, and good luck to you =)

  2. thetrureal30-03-2011

    People are sheep; the sheep will walk bare foot on broken glass through fire to buy a house they can’t afford and be locked in a mortgage for life!

  3. Sarma Krastavac30-03-2011

    The ‘BUYERS STRIKE’ sounds like a great plan, bit would’nt it open up an opportunity while most buyers are on strike for you to swoop in and buy cheap….Taking advantage….

  4. constantly watching30-03-2011

    Good luck to all the strikers! By the time you end your strike no more cheap houses for you to buy and you will miss it again.

    On a separate note, when house prices fall by 30%-40% economy will slows, consequently job losses, would you be able to buy a house, however cheap it might be, if you lose your job? Be extremely careful about what you wish.

    On Dr Keen, had he kept his property until end of 2010 he’d have gained at least 16% in price.

  5. craig30-03-2011

    A property strike eh? nice work no ones buying property at the moment anyway dicks. You might as well say you have already won, even though it’s the way the market is heading. Pat yourselves on the back for something you haven’t done. I see your trying to make it so new home owners property isn’t worth shit and they lose the lot. again well done. Why not try and do something real like a fuel strike something that would actually make an impact on everyone, not just a few selfish selves. When the real estate market picks up why not do your next nostradamus buy telling people to buy quick before prices rise..

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