Earlier this year, Prime Minister Tony Abbott revealed his true colours in calling for ever-rising house prices:
“As someone who, along with the bank, owns a house in Sydney I do hope our housing prices are increasing”…
“Millions of Australians have mortgages and the last thing they want to see is the decline in the value of their most important asset.
“(Mr Shorten) is someone who wants to be the prime minister of Australia and he wants your house to be worth less.
“Do not trust this man with your house price, do not trust this man with your superannuation, do not trust this man with your future and do not trust this man with the government of Australia because what he wants is your house to be worth less.”
Along with these comments, Abbott promised no changes to negative gearing or capital gains tax concessions, and no changes to superannuation concessions, in a full bore bid for the grey vote.
It is interesting to note that across the pond, New Zealand’s Prime Minister, John Key, has made equally dubious comments, seemingly cheering on rising house prices and the associated Chinese investment. From Interest.co.nz;
“Aucklanders are getting wealthier,” Key said, referring to front page newspaper articles in Auckland about house prices.
“I don’t want to be unkind to news outlets that run these stories, but the truth is, people are interested. They either own a home, want to buy a home, or have sold a home. It generates interest in their magazines and their newspapers,” Key said.
“The point is there is over 500,000 Aucklanders that own a home. They are significantly wealthier. I go around the rest of the country and people say to me ‘Can we have a few of those Chinese buyers in Wellington and other parts of New Zealand because actually we want our house prices to go up’,” he said…
“Let’s just take the counter-factual for a moment. Would you want your house price going down?,” Key said.
“And what most Aucklanders say to me is ‘I’d rather my house price went up, but I’d rather it went up a little more slowly than this'”…
The comments are the strongest from Key suggesting the Government is comfortable with rising Auckland prices and with the current levels of Auckland house prices…
Members of the Government have privately said that rising Auckland house prices are good in a political sense for the Government, given home owners who are voters feel richer and happier when they rise. Key’s comments are the closest he has made that support those views in public.
Thankfully, the opposition housing spokesman, Labour’s Phil Twyford, slammed Prime Minister Key’s comments, claiming that he is selling younger generations out whilst promoting unproductive investment:
“John Key claims Aucklanders want the value of their homes to keep rising. But for most, that paper wealth won’t be realised unless they sell up and move cities,” Twyford said.
“Even people who own their own houses are concerned their kids and their grandchildren will never be able to own a home in Auckland,” he said.
“The Prime Minister speaks on behalf of those who own property. But the majority of Aucklanders rent. He has a duty to also represent the generation of young New Zealanders who are locked out of the Kiwi dream of homeownership,” he said.
“The housing crisis is a disaster for the country; it’s driving up inequality and sucking vast amounts of investment into unproductive real estate speculation. No one wants to see Auckland house prices go bust. But the biggest risk to the Auckland property market is National’s hands off approach to the housing crisis which has allowed a bubble to develop in our biggest city.”
“John Key is happy to talk down concerns about the Auckland housing crisis because with the collapse of dairy prices and the Canterbury rebuild coming to an end, the bubble is all that’s left”…
“It’s a pretty cynical political calculation that there are enough home owners who stand to gain from Auckland’s housing crisis and skyrocketing house prices that he’s willing to throw under the bus the half of people in Auckland who are renters and a generation of young New Zealanders who are locked out of the housing market,” he said…
“There is a realisation this is bad for our families, bad for our kids, bad for our communities and bad for New Zealand. The Auckland housing economy that John Key is comfortable about is bad for the whole economy. We’re ploughing billions of dollars of capital into unproductive speculation in real estate and watching a generation of young New Zealanders being condemned to being renters and tenants in their own land in the Prime Minister’s words”…
“That’s the sort of Ponzi logic of this housing economy that John Key is comfortable with, and that’s why you can’t blame people under this Government’s housing policy for thinking that the only way to get rich in New Zealand is by speculating in residential property.”
Brilliant. I couldn’t have summed up the situation in New Zealand (and Australia) better. And the fact that it has come from a politician is even more remarkable.
The sad truth is that both Australia’s and New Zealand’s authorities are no longer managing economies, but rather property bubbles.
One can only wonder how both nations would now look if the many billions of dollars of excess capital that has been poured into established housing had instead been funneled into businesses and infrastructure. Instead, both countries have been been left with hollowed-out industries, non-mining/agricultural companies that are struggling to compete, and an infrastructure deficit that will likely never be closed, made worse by rampant population growth (immigration).
Youngsters in both nations now face the choice of a life time of renting or debt servitude as they pay-off some of the world’s biggest mortgages, together with an ever-rising tax burden as they fund their asset rich boomer parents, along with a zombie economy.
That’s some future that is being bestowing on our ANZAC youth.
