tag:blogger.com,1999:blog-6955370338439917430.post5677425488780105235..comments2023-10-20T07:31:25.948-07:00Comments on Not Fooled By Property Spruikers Hype: IMF says our Housing Costs Are Out Of WackNot The Greater Foolhttp://www.blogger.com/profile/07017076350566919683noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-6955370338439917430.post-21871469342386139102014-06-19T22:28:17.448-07:002014-06-19T22:28:17.448-07:00I think it's pretty clear to all with sense th...I think it's pretty clear to all with sense that house prices are grossly overvalued. I was particularly disappointed/disgusted with McGowan during the State election when he tried to capitalise on the issue, but his only contribution was to ease some restrictions on builders labourers. It ignores the whole issue of Government meddling in land releases, specifically the disgraceful record of his own political mentor, Geoff Gallop (and Gallop's puppet meister McGinty) in creating this mess here in WA.<br /><br />The truth be told, no government will do much to remedy the situation now it has gotten out of hand. It was even too late by the time Carpenter became Premier. If they release sufficient amounts of land on the periphery of Perth to cause a reduction in prices, it could well cause a true real estate crash. No government will dare do this, at least not now. Firstly, it would destroy their standing with existing home owners, who will suddenly feel poorer (and certainly all those who bought since 2005 will be staring at negative equity). But secondly, most MPs own investment properties, and hence have a vested interest in high and rising property prices. That just makes things so much worse, as they will not try for a "soft landing" but try to put off any price correction until panic really starts. <br /><br />Gorgon has already reached it's peak employment, and numbers will decline from now. Wheatstone is likewise close to it's peak. With other mining/resource developments either on hold, or stalling, the employment "bonanza" which is supposed to attract all these immigrants to the West to keep prices up has been fading for the last 12 months. Not only are there fewer jobs, but the rates and salaries are lower, and the contract periods are shorter. I work with a number of Americans, and they all tell me they used to hear the old mantra "house prices never, ever fall" repeated ad nausium until they crashed! Only Travs seems to think that Australian's have a special right to be exempt from this. <br /><br />The main issue the IMF has only touched on is the way that a housing boom destroys a productive economy. Japan is the most obvious example. We keep being told about the "Dutch disease" in that our resources boom was going to destroy manufacturing and the rest of the economy. However the housing boom has been more destructive. Why the dangers of run away house prices forcing up costs, forcing down living standards (most house owners are owner/occupiers rather than investors), and distorting investment have not been investigated before is beyond me. But it is clearly a much bigger deal in Australia than the 7% of the economy represented by Mining (OK it's bigger than that in WA).Anonymousnoreply@blogger.com