Australia is quite a few steps ahead of New Zealand on this delightful journey toward outright social and generational conflict. At least in NZ you now seem to have a real public debate and perhaps some hope for change.
In the last election the Prime Minister (ex-Goldman, owns many properties including a literal mansion on the harbour), and the Treasurer (ex-honcho at the Property Council), openly campaigned to maintain the huge tax advantages investors hold over owner-occupiers. They won the election.
There are many, many weaknesses in enforcement around money-laundering and foreign "investment" in property. These have been called out for over a decade by international and local anti-corruption organisations. The Reserve Bank and other financial regulatory bodies periodically wring their hands and do nothing.
The major banks are hugely profitable and "not risky at all" based on revaluing their collateral upward as the bubble grows and they lend more into it.
At this point it's quite obvious the people who can fix the problem do not want to.
Why? Because the Australian government successfully turned housing into a one-way investment for the demographic majority (mainly baby boomers). They cannot taper the ponzi scheme without making those people poorer, and those people are their electoral support. Those people have come to believe they are clever rather than lucky, and this psychology prevents them from understanding they are hurting their children.
Most if not all government MPs own investment property, i.e. they have taken a leveraged bet on this arrangement continuing.
The way property has permeated every aspect of the culture and it's political and economic strategy really needs to be seen to be believed. I've been returning every couple of years over the past decade or so and it's like visiting an alien planet.
Australia is quite a few steps ahead of New Zealand on this delightful journey toward outright social and generational conflict. At least in NZ you now seem to have a real public debate and perhaps some hope for change.
In the last election the Prime Minister (ex-Goldman, owns many properties including a literal mansion on the harbour), and the Treasurer (ex-honcho at the Property Council), openly campaigned to maintain the huge tax advantages investors hold over owner-occupiers. They won the election.
There are many, many weaknesses in enforcement around money-laundering and foreign "investment" in property. These have been called out for over a decade by international and local anti-corruption organisations. The Reserve Bank and other financial regulatory bodies periodically wring their hands and do nothing.
The major banks are hugely profitable and "not risky at all" based on revaluing their collateral upward as the bubble grows and they lend more into it.
At this point it's quite obvious the people who can fix the problem do not want to.
Why? Because the Australian government successfully turned housing into a one-way investment for the demographic majority (mainly baby boomers). They cannot taper the ponzi scheme without making those people poorer, and those people are their electoral support. Those people have come to believe they are clever rather than lucky, and this psychology prevents them from understanding they are hurting their children.
Most if not all government MPs own investment property, i.e. they have taken a leveraged bet on this arrangement continuing.
The way property has permeated every aspect of the culture and it's political and economic strategy really needs to be seen to be believed. I've been returning every couple of years over the past decade or so and it's like visiting an alien planet.
More here for anyone interested: http://www.macrobusiness.com.au/