Renegade Economists Show #279
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It’s time for an overview of the current state of the residential property market in Australia. Two words can describe it, says Dr Gavin Putland, “suspended animation”. Interest rate reductions have not made any substantial difference to housing affordability. First home buyers are even less inclined to buy now than last year. This limited change has been facilitated by record-low interest rates.
Renters have no encouragement to buy, and nor should they, says David Collyer, while the costs of buying are so far from long term averages. Stamp Duty, says Dr. Putland, is simultaneously penalising home-buyers for wanting to move. A land tax would make this huge financial burden redundant.
The “Don’t Buy Now” campaign continues to grow, encouraging renters to avoid a lifetime of record mortgage debt. No other generation has been forced to pay 40% of their income on somewhere to live, let alone being told its ‘perfectly normal’.
“Land tax assists with affordability because it imposes a cost on holding the land and hence it imposes a cost on sitting on the land waiting for the price to rise,” says Dr Putland.
Meanwhile, another secret subsidy has been revealed for Victoria. Land inside the urban growth zone (but outside the Precinct Structure Plans) has been deemed agricultural by default, exempting land-owners from Land Taxes. David Collyer has uncovered this remarkable news and explains the consequences on the show.
Locally, Melbourne is due to see another sky-scraper emerge. Dr Putland and Collyer discuss what this means for Victoria now and in the future.
Podcasters also can hear an assessment of the effect of Cyprus’ bailout conditions and alternatives.