Why the Home Buyer’s Strike is of Value

Chris Vedelago wrote a critique of our recent activities:

The campaign will ultimately prove self-defeating because it’s more about venting helpless rage and the delights of schadenfreude than putting out real solutions to the nation’s housing affordability crisis.

I have friends who have been forced to move 3 times in the last year, threatening to take a machete to the agents office if it happens again. Each time the owner has been selling their property, bailing out of the market to a greater fool lured into buying at some of the world’s most expensive prices.

Unless someone is willing to speak up for these people (and be listened to), words can become dangerous actions. A public venting of frustration and the feeling that someone is representing their second class rights helps to alleviate just some of this.

None of the political parties are providing such leadership.

Governments at all levels are implicit in the demands that young people buy into the market just as it is crashing, forcing them to subscribe to a lifetime paying 50% plus of their income on somewhere to live. In many cases, couples are being forced by high land prices to both work full-time.

According to SQM Research’s latest e-news, there were 68% more properties on the market in April (y.o.y). Don’t Buy Now!

We would be happy to debate anyone on the notion that we haven’t promoted ‘real solutions’ to the nation’s housing affordability issues. Please read our lobbying letter to MP’s. Listed there are 5 rock solid policy responses to the speculative spigot that our tax system unleashes. Visitors to our website can always look at our Policy Position documents, including Dr Terry Dwyer’s in depth application to the Henry Tax Review.

Many of these solutions were mentioned at the Pop the Housing Bubble Party.

Vedelago writes:

It’s also the nourishment of choice when you’re celebrating what you hope to be the collapse of one of the most important asset classes in the country, the place where some 70 per cent of the population have parked their money.

For decades we have been critical of the over-emphasis of real estate as a speculative playground. We urgently need to restore housing’s primary role as a human right to put a roof over our head. The REIV’s Robert Larocca states: (1.13 min mark)

If it (the Buyer’s Strike) were to be even moderately successful, the people who get hurt are the thousands of people selling their homes. Why do they have to pay the price for our community’s inability to meet our housing needs?

How has society got to a point where it is of a higher moral grounding to defend the right of the have’s over the have not’s? Pain might be caused by a housing crash but we would be much happier if that pain was harder and faster rather than the long correction the US has endured of 5 years. The US is only half way back to long term average housing prices.

Fairfax again:

A property bubble doesn’t collapse like the controlled demolition of a building. There’s always plenty of collateral damage, so to speak, which makes you wonder how these people think that housing will come so easily within reach when the economy is consequently in the toilet.

Chris is right here. The pain will be immense. But some sort of rude shock is needed to awaken the sleeping masses. They are being played as pawns and need a wake up call. Such a crash will force politicians to remove the unfair advantages the have’s are lavished with via the tax system.

To deny a correction back to long term prices is to stifle the productive economy with high rents for one or two more election cycles.

Many people are aware of these dangers as the comments section in this Age article displays. ‘Dave’ sums it up:

The main thing Chris doesn’t understand is where the so called “wealth” of rising house prices comes from. The increase in the price of property is mostly due to rising land value and the people on the receiving end have in most cases added ABSOLUTELY NO VALUE. It is a transfer of wealth and it is young first home buyers who pay for it. So to me its completely inconsistent to say that wishing for a house price collapse is cruel and unwarranted but on the other hand celebrating their rise is ok. Unless somebody is adding value it is a zero sum game and squaring up the ledger a little will be healthy. I agree wholeheartedly with Kira – the sooner this pops the better – we can stop robbing each other and get back to working for a living.

Dave – May 11, 2011, 11:00PM

A recent Guardian article Tax property, not people, for a fairer society reinforced this:

As the economist Martin Weale has argued, the accumulation of property wealth is in effect an act of theft perpetrated on the younger generation who must pay the exorbitant prices demanded by baby boomers or rent.

Using real estate as a profiteering vehicle only enables a ‘services’ sector (AKA banking sector) more money with which to leverage through other speculative vehicles such as the derivatives market and our casino currency.

The commercial and industrial sectors would have a greater capacity to pay higher wages when rents are pushed down by keeping a permanent lid on land bubbles. Productive capitalists would have a greater chance to compete with mining wages if a Land Value Tax was implemented, the MRRT was set at 40%, negative gearing removed and the FHOG banished at all government levels.

Adam Campbell on our Facebook page comments:

With regular publicity like this the buyers strike has already had a win, maybe not so much as in an actual strike numbers but the level of awareness around prices and the FACT that they don’t always go up is invaluable. Even if it saves one person any amount of money from 30 yrs of bank slavery then the job is done.