DeanoC,
Mate, you're not being slammed, so don't think about leaving this forum. You're making a thought-provoking case about house prices, and a bunch of us are questioning it because we don't want to take any argument as self-evident. It's making us all think. Good on you! You're welcome here, I say.
All right, about half the people on this forum ARE lunatics, and the other half are just property-mad, but you've got to enjoy it for what it is: A forum where everybody can speak about matter of public interest, and so everyone can rightfully be grilled about. The Greeks came up with the idea around two and half thousand years ago, and called it Democracy. It's one of the reasons people want to come and live in our wonderful country, and I'm sure you'd be in agreement about that.
So, at heart you're saying that we should look at the way increasing housing costs are diminishing our capacity to purchase other good and services, and that this can only damage our economic well-being long term, right?
There's a couple of assumptions in this question itself that need to make the light of day. . .
The first is that housing is not itself economically productive. But does money spent on building, buying and renting houses fall into a black hole? No. Just like money spent on other consumables, it re-circulates throughout the economy, engenendering spending in non-housing consumables. It's not a zero-sum game: It's a virtuous circle, because housing is ultimately just another comsumable, albeit one consumed less visibly than most others. It all comes back around. And, as prices go up, suppliers, builders and developers find better ways to bring costs down, competition ensues, equilibrium between supply and demand returns, and prices temporarily normalise at a new level and at a new housing density.
The second assumption is that expensive housing is un-Australian. Look back over your posts: You're mixing emotion with economic modelling, which I would argue is Steve Keene's basic mistake. I don't like expensive housing either, and it will have social implications for Australians, but are all of them bad? I would argue that Australians are a pretty realistic lot, and when housing costs go up they adapt flexibly (more like, say, Americans) than flammably (like, say, the French). {Sorry to any Francophiles out there!}
The third key assumption is that general economic productivity is static. How else could it be that housing costs go up but national income doesn't? But productivity advancements are non-linear: They're cumulative, just like compound interest (and capital gains). Unless the wage component of national income falls relative to the housing cost of national income, you don't have a problem. Of course, the distribution of wage income can change, but that's why as individuals we have to keep up with technology, re-train for our jobs, and review our education system's objectives with every generation. But I would argue Australia - while it has had it's income ups and downs relative to other countries thourghout its history - has always held its own and looks like doing so for many generations to come. And that's why we can afford growing house prices, because our ongoing productive growth is ultimately the cause of it!
You might not accept that your argument makes these assumptions, but I invite you to slam into them with all your might all the same!
Belbo
What will ?
