FHOG Sucker Punches Gen X/Y

Karl FitzgeraldArticles, Commentary, Hot Issues5 Comments

Be There Or Be Triangle-Square-Circle
Creative Commons License photo credit: bjornmeansbear

With climate change forging into our conscience day by day, how are Gen X,Y & Z to feel when they realise they have been ripped off like no other generation before? The increase in the First Home Owners Grant saw nearly 13,000 youngsters manipulated into buying at the top end of the property cycle in January alone.

Tell your friends – whatever you do, DON’T BUY NOW! This is an 18 year property cycle and will pop soon.

The financial illiteracy of the general populace is further enhancing the wealth gap. Will economic know-how be seen as crucial once the dust settles on the ugly months we have coming our way? The wisened property speculators have left the market spectacularly, cashing out just as their advisers directed. What a pity youngsters have Paris Hilton to advise them….

The lobbying forces for an extension of the FHOG are in full effect (it is due to expire June 30). It is widely understood amongst policy wonks that this is being used as a pump priming stimulus package to buffer the construction industry, rather than to provide affordable housing.

However, the reality of day to day life sees many youngsters miss the nuances in the debate. Mainstream media does little to bring balance to this looming tragedy. With the property lobby the major benefactors to political companies/ parties, it seems likely that the dominance of lobbyocracy will again prevail in this world of poll driven, spineless politicians. Ruddy pawns.

And to think that Brumby-otis has hit again with Minister Madden ripping planning controls for major developments from the closest thing we have to grass roots politics – local councils. This will see large tracts of public land sold to VicUrban or major political donors who have played the game of land hoarding until their planning desires are finally approved.

The casualisation of the younger workforce exposes a massive risk. Banks are like sitting ducks for our sub-prime like FHOG recipients. Will they get bailed out when the effects of the job layoffs start to cascade into foreclosures? Michael West reports:

Outside the first-home buyers, interest rate cuts have done little to spur growth. Since August, the number of loans to existing owner-occupiers has risen only 1.2 per cent, compared with the 65.4 per cent surge in first-home buyer loans.

Colebatch goes on to say:

In a dramatic reversal of the trend towards increasing ownership of homes by negatively geared investors, the financial crisis has seen first-home buyers lift their share of lending from 17 per cent to 29 per cent in just six months.

At the same time, the share of lending for home purchase going to investors has shrunk from 40 per cent to 30 per cent, as the banks become more wary of lending, and investors more wary of borrowing.

The Bureau of Statistics reports that lending to would-be housing investors so far this year is down roughly a third from a year earlier, plunging from $12 billion to about $8 billion.

The net result is that while lending to first-home buyers has risen 84 per cent since the Government lifted the first home buyers grant, the total amount lent for housing has risen far more modestly, by 11 per cent.

Warn your friends – don’t buy now! Wait a year. You’ve heard that before we know but this is an 18 year cycle, a generational cycle that goes back 400 years. Read Boom Bust 2010 or listen to a recent interview with the author Fred Harrison. Time for some laughing yoga to get through this…..

5 Comments on “FHOG Sucker Punches Gen X/Y”

  1. Spot on…

    Now is not the time to buy its the time to sell.

    Wages drive sustainable house prices not speculation with easy credit.

    We participated in the “easy credit binge” just like the US and UK, here comes the correction.

    Its a MYTH that house prices only ever just go up.

    The only shortage in Australias housing sector over the next few years will be a shortage of buyers.

  2. I agree but we need to go further. Easy credit is aided and abetted by easy tax. The loophole left over for speculators to scoop up economic rent generated by the general public will drive house prices onto the next bubble, even if credit is tightened. We need to fund the abolition of payroll, stamp duty, GST and at least halve income taxes by flattening and increasing Land Taxes.

    Due to the nature of land values capturing any new benefits to society (a cool cafe or the ‘singu-talitarian’ dream – of robots to work for us), all reforms are discounted by the potential that is locked up in higher rents. Its time for pissing in the wind policies to end.

  3. Viva le crash! Bring on the 30% correction and I’ll laugh at the greedy specufestors selling for losses!

  4. The twice mortgaged Baby Boomers property speculators and investors and Landlords who receive middle class welfare are thinking they will enrich themselves and boost market holdings on Fresh government infulstructure spending by Rudd on future generations taxes of low income working poor as a infulstructure stimulus package for amenities that increase their market holdings, while claiming depreciation and negative gearing on property?
 Sounds Fair?


    All this to keep the bubble going while they parasite off future generations who may still be renting and paying high lower end taxes, and as renegade economists points out Boomer (Investors and speculators have innovated and produced nothing for the real economy,Banks are not meant to be dynamic or exciting, but stable and boring, or they fall over. Boomers made a boon over last 20 years out of housing inflation, but the bubble had to burst. they also privatising everything to make a short term profit GDP by outsourcing in manufacturing (bonds) latest casualty, which means job security is worst its been in fifty years, not good if you dont have stable income for paying a new home loan, and the fin sector has secret contempt for real economy of products and services viewing them as the stupid people, greater fools. But the Fin, Insurance and real estate sector has been sucking the life out of the beast, the golden calf, the real economy which is fast disappearing as jobs fly offshore or are eaten up in meltdown and restructure due to economic rationalism because of the crisis

  5. HI Ned,
    I agree! Good to see you have heard the Hudson interview. I feel you could be a candidate for geo-psychiatry! It is madness but how do we get thru?!!!! Laughing yoga is helpful, as is screaming whilst driving alone 😉 I feel the best way forward is to turn this knowledgebase in to camapaign-able issues. Give us a call if you need to, would love your help 03 9670 2754
    cheers
    Karl

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