Why Australian Housing Price keep increasing?

时间:2015-06-18 00:00:00   |    多多领域美容院

Why Australian Housing Price keep increasing?

2015-06-18 GLENLIN地产 GLENLIN地产

Unfortunately, there are many more Aussies out there who quietly blame overseas investors for the high real estate prices in our major cities.


People need to stop blaming foreigners for high property prices. It’s a massive distraction from what’s really going on.

Here are just three of the factors that are having the most impact.


The supply problem

First, there’s the land supply issue. Sure, people can build apartment towers and subdivide land in some cases. But if there’s no more land being released to build on, supply will be restricted. Even though many people prefer to buy in the metro area, releasing land at the edge of a city can help reduce the pressure on prices in the centre.


State governments are responsible for releasing land supply. But they have one big reason not to. See, when property prices are high, they get more stamp duty. Stamp duty is a major source of revenue for state governments.


For example, look at NSW. Their state budget forecasts say they’ll get $6.1 billion in stamp duty by the end of the year. The table below is from a federal study of national fiscal trends. It shows just how much stamp duty adds to their budget, compared to other revenue items.


That means more money in their coffers, without them having to actually do anything. Like, you know, build the infrastructure that communities need. Why would they give that up?


They might say that it’s because they want to make sure the new communities have the right infrastructure and services. But they could have funded and built all that before houses were built — partly by using the stamp duty and land taxes they get from the developers.


And many local councils apply infrastructure charges to development applications, anyway.


Low interest rates and investor lending standards

Official cash rates are at historic lows. This means that banks’ interest rates on mortgages are also very low.


When rates are low, more people can afford to borrow to buy properties. And those that could already afford it, can afford to borrow more.


More competition for limited housing stock means higher market prices.


When borrowing is especially cheap, and price growth is very strong, some people invest in property based on the assumption that they’ll be able to sell it for a profit later.


The RBA described it as ‘speculative demand’. In their Financial Stability Review this March, the RBA said:


The composition of new mortgage finance remains skewed to investors …‘Ongoing strong speculative demand would tend to amplify the run-up in housing prices and increase the risk that prices in at least some regions might fall significantly later on. In the first instance, the consequences of such a downturn in prices are more likely to be macroeconomic in nature because the effects on household wealth and spending would be spread more broadly than just on the recent property purchasers. However, the further housing prices fall in that scenario, the greater the chance that lenders would incur losses on their housing loans.the recent decline in mortgage interest rates can be expected to boost demand for housing further


In this environment of low interest rates and strong demand, it is important that lending standards do not decline, and the measures announced by the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission in December are designed with that intent.’


The APRA measures they’re referring to are ‘guidelines’ (threats) by APRA to major lenders including banks. APRA wants them to reduce investor lending growth to under 10%. Banks have already done all kinds of things to try and meet this target. Some have changed the amount that investors have to have as a deposit. Others have got rid of their interest rate discounts for investors.


Like the RBA said, we can’t tell yet whether APRA’s measures are going to make a difference to house prices. They might not do much. After all, the measures aren’t designed to get rid of all investor lending. Just the lending that’s especially risky, and puts our financial system in trouble. So wealthy individuals, creditworthy people who have plenty of cash for a deposit, will still be able to get investor mortgages.

Negative gearing

Negative gearing allows people to hold property as a rental, when they couldn’t otherwise afford to. Basically, the taxpayer foots the bill for people buying and operating rental properties that make a loss. Lots of investors buy property at high prices even though rents are low, because they know they can rely on negative gearing.


Many commentators blame high house prices on negative gearing. Saul Eslake, chief economist at Bank of America Merrill Lynch, has said that there is ‘a very compelling case for the government to consider ending negative gearing for new investors.’


John Daley is a prominent research economist. He’s also the CEO of the Grattan Institute, an independent think tank. In March he published an article that said:


Negative gearing is an untouchable of Australian tax policy. It survives because of persistent myths that it improves housing availability and reduces rents. It survives because 1.2 million taxpayers – mostly voters – use it to minimise their tax.

But negative gearing is expensive, inefficient, inequitable, and it reduces home ownership. For governments under severe budgetary pressure it should be near the top of the reform list.’


But there’s another reason that no government is likely to get rid of negative gearing. And it’s not because it wouldn’t save them billions of dollars in tax breaks. It’s because, according to the parliamentary register of members’ interests, about a third of them own at least one investment property, and at least one mortgage or investment loan.


The register doesn’t say whether they’re specifically negatively geared. But unless parliamentarians’ properties are in some mystical separate market to the rest of Australia, it’s unlikely their rents outstrip their mortgage payments.


These three factors make housing market to keep hot. It is objective economic laws and preferential policies. Therefore there is no need for investors to hesitate and be afraid of bubble boom.


Please hold your finger on the fingerprint to subscribe us.