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Aussies and NZers: Four seasons in one protest


karaddin
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18 hours ago, karaddin said:

The problem is that the entire economy is held hostage due to entanglement with property prices, so even if housing price crashes the ones that will get hurt the most are the ones already hurting. 

Would you be able to explain how that works at all? I'd expect greatly reduced housing costs to be directly extremely beneficial to the people currently worst off, and indirectly good for the economy as a whole because all those people will be spending more on other things. And it's good for anyone who already owns a home but would like to upgrade to something more expensive, because the difference in price between their current and new homes would be smaller.

18 hours ago, karaddin said:

they have done what they were told to the point of buying investment properties before their own home. They are a very large voting block and it's their number 1 issue. They'll also be the other group that's fucked if housing prices crash, but all that properties will mostly be bought up by larger investors and we'll wind up with it concentrated in even fewer hands.

What's the motivation for investors, if prices are expected to stay low? Why wouldn't the properties be bought by owner-occupiers, when so many more people would now be able to afford that?

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2 hours ago, felice said:

Would you be able to explain how that works at all? I'd expect greatly reduced housing costs to be directly extremely beneficial to the people currently worst off, and indirectly good for the economy as a whole because all those people will be spending more on other things. And it's good for anyone who already owns a home but would like to upgrade to something more expensive, because the difference in price between their current and new homes would be smaller.

In the long run yes, lower house prices will be beneficial. As it is though, most Australians wind up having the majority of their wealth tied up in housing, so dropping prices means dropping wealth for the country overall which means bad news for the economy as a whole. Not to mention, Australians carry something like the second highest debt-per-capita in the world with the vast majority of that debt being mortgages so a crash in prices will mean lots of people going into negative equity which again, will trash the overall economy.

We've turned the basic necessity of housing into a massive wealth instrument unfortunately and it's left us in the predicament we are in now where it's become prohibitively unaffordable, but too costly to make affordable.

As Jeor said, the best we could probably do to achieve more affordable housing without wrecking our wealth would be a long-term stagnation where prices barely move and general inflation catches up. Yes it will take awhile and it sucks for the FHBs who have bought recently or need to buy something soon, but this problem has been steadily building over the past couple decades or so, so correcting it will be a long grind.

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1 hour ago, Skyrazer said:

In the long run yes, lower house prices will be beneficial.

Also in the immediate term with reduced rents and people able to buy homes for the first time.

1 hour ago, Skyrazer said:

As it is though, most Australians wind up having the majority of their wealth tied up in housing, so dropping prices means dropping wealth for the country overall which means bad news for the economy as a whole.

Most of that wealth is imaginary, though. They haven't earned it, it's just numbers going up on a screen. Any measure of national wealth that counts the construction of additional physical houses as a decline is fundamentally bullshit. In real terms, total wealth has gone up, it's just being distributed differently.

1 hour ago, Skyrazer said:

Not to mention, Australians carry something like the second highest debt-per-capita in the world with the vast majority of that debt being mortgages so a crash in prices will mean lots of people going into negative equity which again, will trash the overall economy.

In the long term it will reduce debt-per-capita as old loans are paid off and new loans are smaller. What's the mechanism by which negative equity trashes the economy in the short term? If people keep making their mortgage payments just as they're doing now, they'll eventually reach positive equity again, and 100% equity when the mortgage is paid off.

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There's probably a surprising amount of the economy that is dependant on people's property values going up  so that they can increase their mortgage to pay for other things. It is certainly something I did 3 times over about 16 years of owning my last house. Mostly in order to pay for improvements or R&M on the house, but also sneakily to pay off credit card debt and partly finance overseas school trips for my sons.

Negative property value growth would kill that aspect of economic activity, even stagnation over a long period would kill it. Though perhaps a culture change to stop people putting expenses not directly related to the house on the mortgage would be a good thing.

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@felicethe idea behind it hurting the most vulnerable was it causing an entire crash of the economy with large scale job losses. Maybe I'm being overly pessimistic, I don't oppose any of these measures to try and improve things and found myself playing devils advocate when the devil doesn't actually need my services. My main belief is that Australia is convinced the above will happen and thus government will do everything it can to keep the bubble inflating while pretending it wants to help.

 

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Posted (edited)
48 minutes ago, felice said:

In the long term it will reduce debt-per-capita as old loans are paid off and new loans are smaller. What's the mechanism by which negative equity trashes the economy in the short term? If people keep making their mortgage payments just as they're doing now, they'll eventually reach positive equity again, and 100% equity when the mortgage is paid off.

As Anti-Targ said, lots of people pull loans against their houses, and not just for discretionary stuff like cars and holidays but for things like opening/expanding businesses and such. If people start falling into negative equity en-masse, it'll gut much of the economy as they won't be able to pull loans against their properties anymore. Confidence and sentiment is also a big driver of the economy and nothing will kill confidence and sentiment than being in negative equity.

Look, I agree with much of what you're saying. Prices coming down to more affordable levels will overall be ideal and something we should definitely be aiming for. We've just gotten to a stage where it's nearly impossible to do without any short-term pain and if you're a politician trying to get elected and stay elected, it's just not very politically palatable to induce the old "recession we had to have" with the electorate. Hence why we continue to get policies implemented that perpetually kick the can down the road instead of actually trying to solve underlying issues.

Edited by Skyrazer
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I quite enjoyed this video, because it looks at the heart of the problem. Everyone wants to be able to afford a house, but no one wants their house value to stagnate or go down once they own one, and the economy as a whole is dependant on house values continuing to rise as a decent rate.

It's like the One Ring and we're all Gollum. We both hate and love property inflation, and no matter what we can't let it go willingly.

I don't always agree with his videos, but I do enjoy watching them.

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2 hours ago, The Anti-Targ said:

Everyone wants to be able to afford a house, but no one wants their house value to stagnate or go down once they own one

I do! Well, obviously I'd prefer if my personal house uniquely skyrocketed in value so I could sell it and retire in luxury, but I'd much rather see all houses including my own go down in price than the situation we have currently.

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Here's something I learned today from our geonet app, which is an app that monitors earthquake and volcanic activity in the country, two things that our Aussie neighbours probably never really hear about, except when a big one erupts somewhere else in the world.

There has been an earthquake storm today under lake Taupo, our local supervolcano in case anyone just thought lake Taupo was a nice placid lake. Apparently eathquake storms are quite common under lake Taupo. So no worries, there have been 4,200 earthquakes under lake Taupo in the last 10 years. So no worries.

A little more concerning is that we have something called an ECLISPE programme, which stands for Eruption or Catastrophe: Learning to Implement Preparedness for future Supervolcano Eruptions. Cool. Even more cool, Taupo has erupted 29 times in the last 30,000 years, so just over 1,000 years between eruptions. The last eruption was 1,800 years ago. We know Taupo is still active because it shows signs of what volcanologists call volcanic unrest.

Awesome.

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Well, soon it will be time to vote. This has to be the most policy-light election campaign I've seen. I don't even really know what each party is proposing to do apart from casting the other one as something bad. 

By nature I'm a Liberal voter (and I live in one of the safest blue seats in the country) and I can't help but think that Albanese is a bit underdone to play the role of PM. At the same time, I'm very disappointed that the Coalition doesn't seem to have put in any effort into reforms and have no structural ideas for the economy. Maybe we need a hung parliament where some independents who actually have (good) ideas will be able to force the governing party to adopt something. How depressing!

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8 hours ago, Jeor said:

Well, soon it will be time to vote. This has to be the most policy-light election campaign I've seen. I don't even really know what each party is proposing to do apart from casting the other one as something bad. 

 

Labor had taken the (probably correct) lesson from the last time that taking solid, ambitious policies to an election will just lose it for you.

I'm no fan of Albanese, but this current government seems to be full of unapologetic borderline corrupt assholes. Really hoping they lose today. Wouldn't be disappointed with a hung parliament, with a few independents to keep the bastards honest.

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1 hour ago, Impmk2 said:

Labor had taken the (probably correct) lesson from the last time that taking solid, ambitious policies to an election will just lose it for you.

I'm no fan of Albanese, but this current government seems to be full of unapologetic borderline corrupt assholes. Really hoping they lose today. Wouldn't be disappointed with a hung parliament, with a few independents to keep the bastards honest.

I think a few of the current gov't have crossed that borderline and are downright corrupt. I'm a Labor voter but it goes beyond that for me with this election, maybe because I'm also a former long-term public servant. Morrison has been running more of a protection racket and mates' club than a functioning government. Accountability, transparency and the politicisation of public institutions are the worst I've seen it. I get that those kind of issues aren't top of people's thoughts when voting but they absolutely affect the quality of government that all of us have to live with.

 

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Posted (edited)

A question about Labour. Is it also captive of the neo-liberal economic thinking of the past 40 years or does it have a completely different economic philosophy? If they use basically the same operating system for economic policy there's bugger all real difference between Lib/Nat and Labour. So really the difference comes on liberal vs conservative approaches to social issues rather than left/right on economic policy.

Edited by The Anti-Targ
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Going to do all my chores and then vote later in the afternoon. Morning is usually when it's busiest, so should hopefully be minimal wait if I go in the afternoon. Last election I went in the morning and had to line up for ages.

My area though just recently got redistributed from seat of Melbourne (Bandt) to Maribyrnong (Shorten). It's super safe Labor, but I wonder if the redistribution will bump up the Green vote somewhat in the electorate since inner-Melbourne is full of Greenies.

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2 hours ago, The Anti-Targ said:

A question about Labour. Is it also captive of the neo-liberal economic thinking of the past 40 years or does it have a completely different economic philosophy? If they use basically the same operating system for economic policy there's bugger all real difference between Lib/Nat and Labour. So really the difference comes on liberal vs conservative approaches to social issues rather than left/right on economic policy.

Labor politicians and backing are largely from trade unions, so theres protectionist leanings there. But much of their voter block are now university educated, middle class metropolitan / inner city voters. They tried taking a pretty ambitious economic reform agenda to the last election and lost. So they won't rock the boat much on economic issues.

Really the differences are on the extent of government spending, social issues, and environment.

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Yeah I'm not a fan of Albanese but Morrison is a lot worse than simply a bit disappointing, he's actively run away from every single crisis that's called for leadership and gets pissy at the suggestion that the leader of the country should have any responsibility at all. If the country sends the message that this is ok, it will only get worse.

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Counting is very early, but anyone brave enough to make any predictions?

From what I can discern, there's a big swing against the LNP, minor swing against ALP and a big swing towards independents. Could be looking at a minority govt which I believe is going to become a common feature of our parliament going forward.

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