House prices

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Blowin started the topic in Friday, 9 Dec 2016 at 10:27am

House prices - going to go up , down or sideways ?

Opinions and anecdotal stories if you could.

Cheers

monkeyboy's picture
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monkeyboy Tuesday, 10 May 2022 at 8:11am
donweather wrote:

https://thefreethoughtproject.com/80-of-all-us-dollars-in-existence-have...

Crazy !!

Here is another blog worth subscribing too - this one is free, the author is Australian and works in the USA for Google. Even if you dont trade the markets or have an interest in them on a day to day basis his writings are very clear about whats going on and likely to occur.

https://tradethetape.com.au/

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velocityjohnno Tuesday, 10 May 2022 at 4:57pm
monkeyboy wrote:
velocityjohnno wrote:

Very interesting about the BTC margin call for that firm. In the bitcoin thread some time ago I asked an open question about loans taken in the legacy financial system to speculate on BTC, and wondered if it would be a mechanism whereby calls on those loans could transmit contagion from the crypto universe and make it a bomb in the legacy system, if the loans could not be repaid. We may get to witness such an event.

Absolutely. The total amount of leverage "out there" is supposed to be "known". Changes were made after the GFC to identify who held what and who had collateral with whom. But this has all gone to shit somehow - look at Archegos for example and this year we had the LME having to bail out its largest trader at the expense of other participants or the LME would have gone under. It's like warning signs.

https://mishtalk.com/economics/lme-violates-number-one-cardinal-rule-nev...

I've gone off track sorry.

That's OK it's all fascinating. A cursory look at the numbers on that BTC link showed a 2.2Bn loan?! What could possibly go wrong? I also note a headline today about a stablecoin 'breaking the buck' with a 25% fall (I know not a great deal in this sphere so perhaps there's a reason for it) - but back in 2008 when the money market funds broke the buck (went down to 0.996 or was it 0.96?) anyway that was a near death experience for the financial system and that's when sheet got real, huge action to shore that one up.

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velocityjohnno Tuesday, 10 May 2022 at 5:00pm

And also on that loan and speculation, who the hell tells everyone where their stop/margin call level is? I've noted a theme of people in high levels of tech being very, very trusting. It often doesn't end well - as evidence I present what happened when they gave Melbourne free bikes to use.

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velocityjohnno Tuesday, 10 May 2022 at 5:04pm
kaiser wrote:

So a quick search reveals the current crypto market cap is 1.53 trillion. And how many of us knew there’s more than 10,000 crypto currencies in the market?

Me! Even my bro created one, to use in his blockchain games. I've been told I'm gonna own real estate on a space station! Rent, please, pay up now :)

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velocityjohnno Tuesday, 10 May 2022 at 5:10pm

Consumer confidence gets a kick in the nuts

https://www.macrobusiness.com.au/2022/05/mortgage-holders-fearful-of-soa...

If it weren't for the 2020 fracas, it would be at decade lows.

(They use the term 'fearful'. Might be prudence. One strategy on Swellnet that never fails is, if you are arguing with someone, label them 'fearful', then abuse them for being 'fearful'. This can render the others' points invalid in an instant. Me? It is what it is, that's the mantra.)

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kaiser Tuesday, 10 May 2022 at 8:07pm
velocityjohnno wrote:
kaiser wrote:

So a quick search reveals the current crypto market cap is 1.53 trillion. And how many of us knew there’s more than 10,000 crypto currencies in the market?

Me! Even my bro created one, to use in his blockchain games. I've been told I'm gonna own real estate on a space station! Rent, please, pay up now :)

Will you accept quatloos, or does it have to be spondoolicks?

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flollo Tuesday, 10 May 2022 at 8:39pm

At the end of the day, most will have to follow FED. We all have to follow the USD, if it gets too strong compared to AUD we will be in all sorts of shit. Good for exports, people like that narrative but the fact is, all the consumer goods we use daily are coming through imports. And if AUD is low we will see even bigger inflation where it hurts the most. RBA will have no choice, they will need to keep following FED, even at the risk of recession. Will they strike some sort of balance? Not sure, it looks way too volatile right now.

monkeyboy's picture
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monkeyboy Wednesday, 11 May 2022 at 8:40am

Here's a prediction......

The US CPI print wont be "that bad" when it is reported tomorrow.
Rip your face off market rally, bond yields collapse the most in 3 years, interest rate expectations dive.

Everyone who wanted to sell sold. It's May.

Just a guess.

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flollo Wednesday, 11 May 2022 at 7:26pm

Growth stocks are getting seriously hammered this year. And this time around there is no daddy FED to help turn things around. Quite the contrary, FED is going for a massive sell off as well.

https://www.marketwatch.com/story/fed-lifts-interest-rates-by-1-2-point-...

Tough times ahead, I definitely wouldn’t be buying any houses right now. It is quite likely that RBA will have to choose between driving low unemployment and protecting the currency. Terrible place to be in, hopefully it doesn’t eventuate to a high degree.

Funnily enough, I can still see some crazy prices being paid for properties. Some have no idea what’s coming or they have so much money that they don’t care.

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bonza Wednesday, 11 May 2022 at 7:37pm

“Tough times ahead, I definitely wouldn’t be buying any houses right now“.

How many times have I heard that over the years.

flollo's picture
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flollo Wednesday, 11 May 2022 at 7:39pm

Haha, true. I think it all comes down to the asset. Some assets (or suburbs I guess) are bulletproof no matter what the economy is doing.

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monkeyboy Thursday, 12 May 2022 at 8:25am
velocityjohnno wrote:

And also on that loan and speculation, who the hell tells everyone where their stop/margin call level is? I've noted a theme of people in high levels of tech being very, very trusting. It often doesn't end well - as evidence I present what happened when they gave Melbourne free bikes to use.

Definitely some concerns "out there" about Crypto being the next Lehman moment. China did the right thing and banned crypto. What a mess.

https://mishtalk.com/economics/how-many-days-before-bitcoin-hits-margin-...

I hope no one has their money in Coindesk.

Here we are yet again.

donweather's picture
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donweather Thursday, 12 May 2022 at 1:15pm
monkeyboy wrote:

Here's a prediction......

The US CPI print wont be "that bad" when it is reported tomorrow.
Rip your face off market rally, bond yields collapse the most in 3 years, interest rate expectations dive.

Everyone who wanted to sell sold. It's May.

Just a guess.

https://www.ft.com/content/b91996b3-79b2-4f41-acc9-651a0952008f

monkeyboy's picture
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monkeyboy Thursday, 12 May 2022 at 2:12pm
donweather wrote:
monkeyboy wrote:

Here's a prediction......

The US CPI print wont be "that bad" when it is reported tomorrow.
Rip your face off market rally, bond yields collapse the most in 3 years, interest rate expectations dive.

Everyone who wanted to sell sold. It's May.

Just a guess.

https://www.ft.com/content/b91996b3-79b2-4f41-acc9-651a0952008f

Ah bummer, its behind a paywall.

But my "prediction" was wrong - the bear is in control !

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velocityjohnno Thursday, 12 May 2022 at 3:02pm

Largely agree with what is said above. If we have any technical analysts out there, go take a look at long term weekly charts on the major US indicies.

Will my spacestation dream survive the crypto pullback? I can sell you an NFT of it...

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velocityjohnno Thursday, 12 May 2022 at 3:13pm

"The normalized insanity from the past several years is just beginning to unwind."

That was a poignant quote from a tweet linked in Mish's article, above. One interesting thing about times of bubble/speculative froth, is that the most aberrant behaviour does seem to become normal; and it is only after the hosing off that the clear view appears that it was actually really weird behaviour. Ivar Kruger in 1929, Bernie Madoff in 2008, the London Whale in more recent years, etc etc

* A great, quick read - and also a chronicle of leveraged mass-folly - is JK Galbraith's "The Great Crash 1929"

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velocityjohnno Thursday, 12 May 2022 at 3:28pm

Here's another fantastic example, such a great story, of the late 1970's precious metals run (killed by Fed Chair Volker and 17% rates in the US I think). This story has the lot, cowboys riding shotgun in jet airliners, Saudi princes, inflation problems, Texas oil tycoons:

http://www.321gold.com/editorials/laborde/laborde012904.html

One of the best bits of prose on the net.

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monkeyboy Thursday, 12 May 2022 at 7:34pm
velocityjohnno wrote:

Here's another fantastic example, such a great story, of the late 1970's precious metals run (killed by Fed Chair Volker and 17% rates in the US I think). This story has the lot, cowboys riding shotgun in jet airliners, Saudi princes, inflation problems, Texas oil tycoons:

http://www.321gold.com/editorials/laborde/laborde012904.html

One of the best bits of prose on the net.

I remember reading about the Hunt brothers and their infamous cornering of the Silver market....classic stuff, nice link.

I like this quote: DO NOT BUY SILVER FUTURES CONTRACTS ON MARGIN

That applies to lots of speculative instruments crytpo and loss making tech in particular. Also to some House purchases most likely.

Don't look down....

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velocityjohnno Thursday, 12 May 2022 at 7:37pm

Yep I was watching live in 2011 when the metals exchange hiked margins on silver, and that massive rally to $50 or so died in an instant, amazing stuff.

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monkeyboy Thursday, 12 May 2022 at 8:02pm

Margin calls coming:

https://wolfstreet.com/2022/05/11/coinbase-shares-go-thunkadunk-88-from-...

Seemingly unrelated to Housing but it isnt because Housing has just become another inter-related financial play unfortunately. That should never have been allowed to happen...again.

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velocityjohnno Saturday, 14 May 2022 at 12:14pm

Interview with Jay Powell. Important because if he does as he says, the Fed is off on a crusade to do a Volker:

https://www.zerohedge.com/markets/powell-sees-more-pain-ahead-admits-sof...

I'm a fan of Paul Volker. Given we live in a world where central banks exist and have enormous influence, better for those in charge to do what's necessary to prevent the monetary system being destroyed by strong inflation/hyperinflation. Volker raised US rates enough in early 1980s (distinct from Australia's late 80's/early 90's 17% mortgage rates) to stop the inflation cycle of the 1970s (eg commodity/precious metals runs: which occurred after Nixon defaulted the US on the Bretton Woods gold standard). What resulted after Volker's action was a low inflation boom that lasted into 2000, and spawned many great inventions, such as the www. Then we got the Greenspan put, but that's another story.

Important to Australia, as if Powell goes after inflation, RBA will be caught between playing catch up with the Fed, and trying to massage our stupendous bubble down.

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velocityjohnno Saturday, 14 May 2022 at 12:22pm
bonza's picture
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bonza Saturday, 14 May 2022 at 7:51pm

“I’m actually a reiki practitioner, but…. I was in banking before.”

https://www.smh.com.au/property/news/reiki-practitioner-drops-2-54-milli...

Perfect.

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flollo Saturday, 14 May 2022 at 9:48pm
monkeyboy's picture
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monkeyboy Sunday, 15 May 2022 at 7:05am

No one in the Fed has any real world experience, all academia or Fed lifers. They dont risk anything, not even their jobs and they are lauded for "saving" us from events the Fed itself perpetuates. Try running a real business.

https://www.federalreservehistory.org/essays/great-inflation

Quote from the Fed's own History of the 70-80's inflationary era: "The origins of the Great Inflation were policies that allowed for an excessive growth in the supply of money—Federal Reserve policies."

A different perspective on today v the 70s - its a bit black hat but an ok read: https://www.oftwominds.com/blogapr22/not-1970s4-22.html

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geek Sunday, 15 May 2022 at 8:54am
flollo wrote:

Meanwhile, flood impacted in Lismore for $220k

https://www.domain.com.au/26-cromer-street-south-lismore-nsw-2480-201780...

Looking at previous sold data for that area it’s value has halved since the floods

AndyM's picture
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AndyM Sunday, 15 May 2022 at 8:56am

Maybe a touch more, but yeah, pretty much.
Let’s see how quickly memories fade.

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indo-dreaming Sunday, 15 May 2022 at 10:34am
geek wrote:
flollo wrote:

Meanwhile, flood impacted in Lismore for $220k

https://www.domain.com.au/26-cromer-street-south-lismore-nsw-2480-201780...

Looking at previous sold data for that area it’s value has halved since the floods

Could even drop further, it would be super high risk, too expensive to insure and could happen again at any time, imagine if you finished renovating and the same thiing happened again .

Just having a place flooded like that would cause all types of issues with moulds, create rot and even possibly cause structural issues.

If it happens a few times more in the next decade, areas of the town could affected could become pretty much worthless, you almost would need to build a house on huge high pillions that has the ability to rise with water levels.

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flollo Sunday, 15 May 2022 at 12:29pm

These houses will have to be priced as vacant blocks - estimated flood risk prices. Get rid of the house for $20-$30k (maybe different in that area) and start fresh. Whatever the design is I would always recommend drilling and concreting deep piers and making strip footings (as a minimum). That will ensure stability even if the top gets washed off. Then go up from there. And stay away from terrible materials like gyprock, that stuff drinks water like crazy.

But overall, crazy expensive insurance (if possible) and a guarantee of future flood events. Not for me.

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AndyM Sunday, 15 May 2022 at 1:03pm

Why would you bother?
If you haven’t got the money and are going to build something basic you’re stuffed.
And if you had the money to try something innovative surely you’d buy elsewhere anyway.
With something funky like a house that floated up on piles like a floating dock the question is how high do you go, not to mention how high can you afford to go.
Just can’t see it.
Will be interested to see if there have been any decisions made with regards to the future of Lismore more generally.

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flollo Sunday, 15 May 2022 at 1:16pm

Yeah, I personally wouldn’t bother. Too much headache and risk. It’s a big country, plenty of other quality locations.

But I must say that majority of population is not familiar with many towns around the country. I remember few conversations with colleagues at work about ‘what did you do for a weekend?’ I would say that I went to Boomerang or SW Rocks and they would have no idea where these places were. I guess people who surf know more than an average citizen. But everyone knows Byron so no surprise the place exploded (and towns around it) during covid. I’m sure many will be tempted to get into these ‘bargains’ and try to do something.

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bonza Sunday, 15 May 2022 at 1:56pm
indo-dreaming's picture
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indo-dreaming Sunday, 15 May 2022 at 2:06pm

Yeah i agree with most of those comments above, but it is still a very highly sought area to live.

You could do a house that has minimal interior living space with the majority of the house being covered and exposed deck area's, the climate suits that type of living and line all interior walls with mini orb.

You could do a cool house for a reasonable price if not too big, id personally like the challenge of having to overcome all those obstacles.

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freeride76 Sunday, 15 May 2022 at 2:42pm
flollo wrote:

Yeah, I personally wouldn’t bother. Too much headache and risk. It’s a big country, plenty of other quality locations.

But I must say that majority of population is not familiar with many towns around the country. I remember few conversations with colleagues at work about ‘what did you do for a weekend?’ I would say that I went to Boomerang or SW Rocks and they would have no idea where these places were. I guess people who surf know more than an average citizen. But everyone knows Byron so no surprise the place exploded (and towns around it) during covid. I’m sure many will be tempted to get into these ‘bargains’ and try to do something.

Probably, the demand for housing is very high and existing supply is prohibitively expensive for most people.

If it comes to the equation of being able to afford a roof over your head that floods or having no roof at all, or spending a majority of your pay-packet every week on housing it's not hard to see what will happen.

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flollo Sunday, 15 May 2022 at 2:44pm
bonza wrote:

https://www.smh.com.au/politics/federal/first-home-buyers-could-use-supe...

He’s an ideas man our Scomo.

Many have tried to push this one for years now. Just another workaround policy instead of doing what must be done - allocating a chunk of real estate market to first home owners directly. I already wrote about potential models extensively and there are good international frameworks that can be implemented.

Forget about throwing more cash onto the problem, that will just cause further inflation. Scrap all these schemes and develop directly for first home owners. I don’t know why are both Labor and LNP competing in the same thing - who will throw more money onto people?

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bonza Sunday, 15 May 2022 at 3:01pm

That’s socialist Marxist talk flollo

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flollo Sunday, 15 May 2022 at 3:39pm

Haha, a certain lobby and the associated propaganda would definitely call it like that. My response to them would be that we are already in Marxism if my proposal is Marxist. Between the state and feds there are 5-6, maybe more schemes to get people into home ownership or carry out renovations on your homes. Now they’re coming with more, shared equity scheme, use your super scheme, downsize your existing home and put $300k into super scheme…State involvement in this part of the economy is extraordinary as it is.

My proposal has nothing to do with Marxism. Goal is to protect private ownership and increase wealth for the individual citizens over long periods of time. Those calling it Marxist need to go back to the drawing board and read Communist Manifesto to understand what it truly means.

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bonza Sunday, 15 May 2022 at 4:02pm

More simply point such schemes pointed out ad infinitum are designed to keep prices rising not help first home buyers. The super thing is just another example how far they will go to protect the market while also hurting the very ones they claim to help. By destroying their retirement savings as well as increasing demand. Further cementing my belief there will be no Australian property crash anytime soon.

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blackers Sunday, 15 May 2022 at 5:32pm
bonza wrote:

More simply point such schemes pointed out ad infinitum are designed to keep prices rising not help first home buyers. The super thing is just another example how far they will go to protect the market while also hurting the very ones they claim to help. By destroying their retirement savings as well as increasing demand. Further cementing my belief there will be no Australian property crash anytime soon.

Sadly you may be right Bonza, still cooking at high heat here.

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mattlock Sunday, 15 May 2022 at 6:13pm

It's a sad state of affairs indeed Bonza.
Poor fella my country.

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mattlock Sunday, 15 May 2022 at 6:17pm

Real estate prices! are the driving force of inequality in Australia.
Poor fella my country.

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indo-dreaming Sunday, 15 May 2022 at 6:54pm
bonza wrote:

More simply point such schemes pointed out ad infinitum are designed to keep prices rising not help first home buyers. The super thing is just another example how far they will go to protect the market while also hurting the very ones they claim to help. By destroying their retirement savings as well as increasing demand. Further cementing my belief there will be no Australian property crash anytime soon.

Im honestly curious why you believe the government would want house prices to keep rising as they have???

Sure they want a healthy market they dont want the market to crash by any crazy amount because they don't want people to lose houses or end up paying a loan for $900K on a house only worth $600K

But do you honestly think they (being any government) want crazy high prices and unaffordable housing???

Wheres the benefit to them???

Housing issues cause all types of problems for them, they dont want people living on the street or in cars or have to increase support payment like rent assistance and housing issues can lead to other social economic issues even crime.

The problem is people expect solutions to the issue, so governments will do or try anything but most of these schemes if not all schemes only result in increased demand that further fuels house prices

BTW. Governments also want people to have a disposable income to buy goods and services to fuel the economy, they dint want people to struggle and spend all their money on loan repayments.

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flollo Sunday, 15 May 2022 at 7:31pm

@indo most obvious benefit is stamp duty. Although this is state level but think about it, stamp duty is payable every time the property changes hands. Higher the price higher the bill. Some houses flipped 3 times in the last 5 years. It’s crazy amount of revenue. Here’s an article from last year as an example where NSW collected $1b more revenue than they anticipated purely due to higher property prices.

https://amp.abc.net.au/article/100229554

I hate stamp duty. The worst type of taxation.

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indo-dreaming Sunday, 15 May 2022 at 7:43pm

I was going to mention that, but thought id leave it to you guys, but let's be real the benefits of that income would be outweighed by all the negatives elsewhere (mentioned above), not to mention it's actually becoming a political issue.

And like i said if people don't have a disposable income for goods and services the economy suffers.

Despite what people often believe the government actually wants people to be healthy, happy and productive, if they are they vote you back in as long as possible (like happened during the Howard years)

The other possible argument that is almost in the conspiracy theory realm is if you can keep people in debt for a longer period of their life, you can keep extending out the date that they get the pension.

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bonza Sunday, 15 May 2022 at 8:01pm

It’s self interest indo. Simples.
And I never said “as they have”.
Cameron Murray if you can be bothered:
https://fresheconomicthinking.substack.com/p/why-politicians-must-preten...

“ The solutions are not difficult. The politics is. Until we stop pretending, nothing will change.”

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blackers Sunday, 15 May 2022 at 8:02pm

While income from stamp duty etc will play a role, I think the main issue is that real estate is a widely held investment class and the people making the rules (Government and opposition) have plenty of skin in the game. Add to that some significant and very vocal lobby groups fighting any possibility of change. We saw at the last election how any mention of correcting some of the most egregious underlying factors (negative gearing anyone?) could and did get weaponized. No one wants to take the hit to the bottom line that will be required. Those with a foothold in the market will be able to pass something on or help out their kids, while those without are well f*ked.

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bonza Sunday, 15 May 2022 at 8:14pm

Yep the stamp duty argument is weak as piss in my uneducated view. Proponents favour a replacement for land tax from what I have read. But all that will do is create more churn. Great for property investors and real estate scum. Just another shit idea for those wanting to own their own home.

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flollo Sunday, 15 May 2022 at 8:40pm
bonza wrote:

It’s self interest indo. Simples.
And I never said “as they have”.
Cameron Murray if you can be bothered:
https://fresheconomicthinking.substack.com/p/why-politicians-must-preten...

“ The solutions are not difficult. The politics is. Until we stop pretending, nothing will change.”

This is a brilliant article. He wrote something similar for ABC about the Singapore model that I shared few pages back. I totally agree with what’s stated. I would also add something like:

20% annual land tax on the value of undeveloped land (assuming no development approvals have been applied for). There’s so much vacant land just sitting around in corporate hands, being speculated for maximal gains. They need to either develop or sell it to someone else more keen to do it.

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blackers Sunday, 15 May 2022 at 9:14pm

Yep, tax the f*kers to the hilt so there is no incentive.