Australian house prices causing "social harm" - economist

No surprises for guessing that the Abbott gov's assistant treasurer to SSJoe is denying that there's a housing bubble in Sydney. Don't worry that the only thing people are using their home equity to borrow money for is to invest in more property. SSJoe himself is a property investor so he's certainly not going to talk down property, any more than gormless Abbott. So whatever the gov says is typically just more spin and lies. Like I said, no surprises there.

Also, as anyone who's in the private rental market in Sydney or trying to buy a dwelling, there's no surprise with the news that leading economist Saul Eslake with the Bank of America Merrill Lynch people disagrees with the PM, SSJoe, and SSJoe's trusty offsider. In fact he goes so far as to say not only are inflated prices a scary bogyman for the economy, but that they're causing social harm amongst the Australian communities.

"I would say they are causing social harm because they are widening the gap between those who have houses and those who don't, and freezing younger generations out of home ownership," he told Fairfax Media. more

No shit Sherlock. You have to be a leading economist to come up that that most basic logic?

It's simple arithmetic. The more money people have to pay for housing then the less money is going into the economy. People can't buy stuff, the economy slows. It's not rocket science. And eventually there must surely come a point where people simply say they're not going to pay such an exorbitant price for a house. If enough people say that then boom turns to bust. Tulips anyone?

The later part of the 20th century saw its share of odd financial bubbles. There was the real-estate bubble, the stock market bubbles, and the dot com bubble, just to name a few. In each instance of price inflation people paid exorbitant amounts for things that shouldn't have been worth anything like the going price. And each time people stood around afterwards and said “What were we thinking?”

One has to believe that the same thought occurred to the Dutch in the 17th century when they settled down after their bout with tulipomania, wherein the humble tulip bulb began to sell for prices to make New York Realtors blanch. more

BTW, in possibly an indication of how ridiculous this is all getting, we got another letter from Housing last week about the complaint I put in to them. It must have kept going after the state election. I was also rung a few days before that for an interview about our current situation. 

Actually the lady was really good on the phone and well understood what I was saying. Pretty much there was nothing Housing could do without the politicians changing the policies of the dept of housing. 

Specifically the policy that says when people live in a dept of housing property then the affordable rent is considered to be no more than 30% of their income. Yet if people are living in the private market trying to get onto the priority dept of housing list, then the dept of housing has a magic formula to declare that paying more than 50% of your income in rent is "affordable". 

As was noted in the Housing letter sent to us last week. As David has gone onto the Carers Payment and all then the $360wk deemed as "affordable" rent was increased to $415wk. Well over 50% of our income. Yep, the Dept of Housing NSW says that us both on a pension can afford that. 

This is housing insanity.