Will the Carbon Tax increase property prices

Dan_p

Dan_p

I might be way off target here but I would think the carbon tax will indirectly push up the price of housing in aus. I can see inflation across the board once the carbon tax comes in. The price of everything will go up so the construction of all houses will go up.

So this could lead to a mini boom by the lowering of value of the dollar.

What are your thoughts?
 
Construction costs have come down recently due to the low activity here in the Eastern States so that would offset any carbon tax increase to some extent. But I have no idea if it would increase prices - the GST seemed to do so but it was a more direct effect.
 
Without venturing into the right or wrong of the tax, there can be little doubt that it will be inflationary. The Govt acknowledges this by giving extra funding to social benefit recipients, they say about $10 a week extra costs on a very basic life style.

I think it will be quite inflationary as it works it way down the line. One big difference to the GST (as I understand it) will be that with GST each enterprise deducts credits and only pays GST on "their" part of the process.

With CO2 tax each enterprise will add their extra expenses and in turn the next enterprise will apply their extra costs plus the usual margin to the Total cost. So if a 50% markup is applied to higher cost price, this would magnify the eventual user price and be inflationary.

I expect like most huge changes in Govt policies it will have a number of nasty effects that no one saw coming. I would suggest that this will be another time to

"Beware the law of unintended consquences"
 
Dan and nan said:
I might be way off target here but I would think the carbon tax will indirectly push up the price of housing in aus. I can see inflation across the board once the carbon tax comes in. The price of everything will go up so the construction of all houses will go up.

So this could lead to a mini boom by the lowering of value of the dollar.

What are your thoughts?
Click to expand...

IMO, during the short wrong property prices will remain more less the same though rents would go up (gradually). In the long run and due to inflation and low stock volumes property prices would go up in nominal terms.
 
evan....really? really?

just let it go, FFS.

the tax is an inflationary measure designed to increase the cost of consumption of a product the govt does not want you to consume.

therefore, the tax will be inflationary.

the cost of new builds will go up. the cost of renovations wil go up.

this DOES NOT AUTOMATICALLY mean you can get more for your property, just because replacement value has risen.

i personally see margins being squeezed instead of prices going up.

what i do see, though, is LLs wanting more rent to offset the cost of construction and rents rising to suit.

costs = ^
rents = ^
sales = ?
 
Concrete and steel are carbon intensive so we can expect the price to go up a lot.

Aluminum is highly carbon intensive but also heavily carbon subsidised so I do not expect the price to move much.

Glass / tiles dunno carbon intensity.

Wood probably not much.

General labour costs can be expected to rise in line with the inflationary impact on the economy.

Bottom line if you are building office towers expect to get smashed. If you are building wooden framed homes maybe not so much although your slab and roof are going to cost more.
 
Araon, calm down! It was a joke.

Aaron Sice said:
evan....really? really?

just let it go, FFS.

the tax is an inflationary measure designed to increase the cost of consumption of a product the govt does not want you to consume.

therefore, the tax will be inflationary.

the cost of new builds will go up. the cost of renovations wil go up.

this DOES NOT AUTOMATICALLY mean you can get more for your property, just because replacement value has risen.

i personally see margins being squeezed instead of prices going up.

what i do see, though, is LLs wanting more rent to offset the cost of construction and rents rising to suit.

costs = ^
rents = ^
sales = ?
Click to expand...
 
Macca said:
With CO2 tax each enterprise will add their extra expenses and in turn the next enterprise will apply their extra costs plus the usual margin to the Total cost. So if a 50% markup is applied to higher cost price, this would magnify the eventual user price and be inflationary.

I expect like most huge changes in Govt policies it will have a number of nasty effects that no one saw coming. I would suggest that this will be another time to

"Beware the law of unintended consquences"
Click to expand...

This is incorrect. Only approximately 500 companies will be paying this tax. Mostly it is paid by electricity generators. So the cost of power will go up approximately 10%. There is no "additive" effects from one business to the next because the cost of power is only a big impact on a few industries, like aluminium, who also have specific compensation to ameliorate the impact due to their trade exposure.

BTW, I expect a small boost to house prices, particularly at the lower end. 90% of taxpayers will be paying less tax overall as a result of this. 1 million taxpayers will no longer have to file a tax return. There is no doubt that low income earners will end up significantly better off from this package. Going by history, this new found disposable income will end up getting spent on either entering the housing market or upgrading their house. So a mild boost to the bottom end of the market. It will particularly help first home buyers on low to middle incomes, who are at the bottom of the food chain of the housing market.

Rich people in McMansions guzzling power will be significantly worse off (just the way the Labor party like it...). Coupled with the other reasons for increasing power prices (playing catch up on transmission network investment) I can see some pain for housing with high running costs like this. Another reason to avoid this market.
 
evand said:
No, we are under a Labor govt.
Click to expand...

Not sure if they'll be afforded party status after the next election.

Though I do note the recent Queensland example shows a benelovent Coalition Government will still give them party entitlements even if they are legally they are no longer a party.
 
HiEquity said:
Rich people in McMansions guzzling power will be significantly worse off (just the way the Labor party like it...). Coupled with the other reasons for increasing power prices (playing catch up on transmission network investment) I can see some pain for housing with high running costs like this. Another reason to avoid this market.
Click to expand...

That's where Labor got it wrong though - thinking people who work hard and long and/or are double income, accept they're rich.

People 'aspiring' to be rich usually live in McMansions. They would see it as trying to built a better life for their families and are now being penalised.

It's these 'aspiring' ones that are often Labor or swinging voters.

McMansion suburbs have always been MORE vulnerable to rises in cost of living, interest rates, etc.

The difference this time is the blame is on Labor rather than the economy.
 
They still wouldnt vote less than the Liberal party on its own tho. Not even close.

Deltaberry said:
Not sure if they'll be afforded party status after the next election.

Though I do note the recent Queensland example shows a benelovent Coalition Government will still give them party entitlements even if they are legally they are no longer a party.
Click to expand...
 
Hi HiE

<<Rich people in McMansions guzzling power will be significantly worse off (just the way the Labor party like it...). Coupled with the other reasons for increasing power prices (playing catch up on transmission network investment) I can see some pain for housing with high running costs like this. Another reason to avoid this market.>>

To my way of thinking most of the people living in McMansions are usually average wage earners, both partners working, looking to have a nice house for them and their family to grow old in. If you take a drive in the new suburbs of Sydney you will see thousands of them.

Most of the people living there can't afford to buy any closer to town, those McMansions are Much cheaper per M2 of house than some small tenement in a closer suburb. If you want to have children then you need space for them to live in, hence the popularity of big space, small dollar Mcmansions. I agree they are costly to heat as the open plan makes them cheap to build but hard to warm up.

They definitely are not wealthy by any standard, the wealthy people pay a million plus for something closer to the city.
 
Macca said:
They definitely are not wealthy by any standard, the wealthy people pay a million plus for something closer to the city.
Click to expand...

or are getting right out of the city and doing their "thing".

Hmmmmm - spent today spraying weeds on our 10 acres ... off to see the builder on Wednesday to get that ball rolling ... pity hubby won't let me chainsaw by myself (wise man).
 
evand said:
Property prices increases due to the carbon tax will only rise for Liberal National voters. :rolleyes:
Click to expand...

Why do you have to drag the old politics debate in it. The thread is about what will happen under the carbon tax, not how superior my party is over yours.
 
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