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Our children can't afford to house themselves, situation can't be allowed to persist - Paul Keating
Topic Started: 20 Oct 2014, 01:24 PM (1,451 Views)
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Paul Keating says current housing situation cannot be allowed to persist

Jennifer Duke | 20 October 2014

The growing issue of affordability has seen former Prime Minister Paul Keating weigh in with his thoughts at MaxCap Group’s Developers and Dealers Forum last week, saying that the current situation cannot persist.

Keating said that there is a huge need for increased housing supply and a financing system to support developers in bringing those properties to fruition.

“We cannot persist with this position we are in where our children cannot afford to house themselves,” Keating said.

“No amount of demand is going to improve affordability without a supply response, which will determine a price equilibrium over time,” he noted.

In fact, the financing for the supply may just be the evolution of superannuation funds, the assets of which may at some point outshine those of the banks. He said that they could eventually be used to fund developments.

“Superannuation funds will have to do things in the spaces traditionally left to banks, such as property development, and we will see a shift in the balance in financing this industry,” he said.

Meanwhile, the banks suggested future partnerships with offshore banks, with specific reference to the Asia Pacific region.

Colin Robertshaw, the Commonwealth Bank of Australia's national head of property finance, business and private banking, said Chinese banks may be the alternative needed when banks hit full capacity.

MaxCap Group chief investment officer Brae Sokolski, said one thing was for certain: something will need to be done.

“There is no doubt that the traditional one-size-fits-all approach to finance is not the optimal solution in the current development environment and has in fact resulted in a shift towards utilising specialist consultants that can bridge the gap between development and finance,” said Sokolski.

Read more: http://www.propertyobserver.com.au/forward-planning/investment-strategy/politics-and-policy/36908-paul-keating-says-current-housing-situation-cannot-be-allowed-to-persist.html
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Veritas
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Paul Keating is a moaning gloomer.

The children in question should spend less time in the Apple store and drinking lattes.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
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Lef-tee
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I thought about adding this to the FHBer numbers thread but decided against it because the word of an ex-PM isn't really the same thing as evidence.

Paul keating says that speculative demand has finally begun to squeeze our young people who are the marginal players out of the ability to affordably house themselves - I think he is correct but I seriously doubt anything will be done about it despite the rhetoric.

I wonder how many IP's Paul owns?
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Bardon
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Good little nudge there on super funds for residential and also new alternative finance coming to the market.

On ya Paul.
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Bond
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Bardon
20 Oct 2014, 02:29 PM
Good little nudge there on super funds for residential and also new alternative finance coming to the market.

On ya Paul.
It is interesting that he is making these comments because generally he has not said a great deal about the downsides of some of the reforms introduced in the 1980′s.

Possibly, he is not keen generally on the growth of SMSF as they provide competition to the industry funds. The rise of SMSF has reduced the flows of funds to the retail and industry funds and those industry funds are like a retirement home for the hack-ocracy

Worth keeping in mind that one of his key mentors was Jack Lang so it is always possibly that Keating is starting to shift his position on some aspects of the deregulation of the FIRE sector. I doubt Jack Lang would have much nice to say about our FIRE fixated economy.

Would be good if he did as the ALP seem completely devoid of thinkers who question the current debt/bank centric focus of economic policy.
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peter fraser
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Lef-tee
20 Oct 2014, 01:32 PM
I thought about adding this to the FHBer numbers thread but decided against it because the word of an ex-PM isn't really the same thing as evidence.

Paul keating says that speculative demand has finally begun to squeeze our young people who are the marginal players out of the ability to affordably house themselves - I think he is correct but I seriously doubt anything will be done about it despite the rhetoric.

I wonder how many IP's Paul owns?
FWIW I agree with you and PJK, but a true fix would involve taking away the cost inputs that our three levels of government now enjoy and they know that if they take them away they will struggle to get an alternative, so my prediction is that they will stay.

Eventually political pressure will force a political solution, which will involve a grant on a once off basis to offset the input costs, and you know what that means.

Note that most of the developed world is now very similar or moving swiftly in this direction. That has made housing a safe investment for an investor who does their homework. Of course it will eventually change, it has to as the population in countries with high living standards peaks, but how far away is that?
Any expressed market opinion is my own and is not to be taken as financial advice
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miw
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Lef-tee
20 Oct 2014, 01:32 PM
I thought about adding this to the FHBer numbers thread but decided against it because the word of an ex-PM isn't really the same thing as evidence.

Paul keating says that speculative demand has finally begun to squeeze our young people who are the marginal players out of the ability to affordably house themselves - I think he is correct but I seriously doubt anything will be done about it despite the rhetoric.

I wonder how many IP's Paul owns?
Keating said nothing abut speculative demand. Not sure where you got that bit from. ??

What he says is pretty-much simple fact. If you have increasing demand and no supply response, then prices will inevitably rise until you do get a supply response.

I would tend to disagree that there has been no supply response. There has been and continues to be a very strong supply response in multi-dwelling units.

Australians are voting with their feet and purchasing choices, saying they would rather live in a well-situated apartment than in a fringe house. To me this is logical. I just don't see the utility in having a garden if you never get to see it in daylight hours.

Of course, you could just abandon Sydney altogether. That would also be a logical response. Then again even Brisbane is building apartments like crazy. I was back in BNE last week and was amazed to count 7 cranes from my balcony, all building hi-rise or medium-rise apartment blocks. Haven't seen that since the 1980s.
Edited by miw, 20 Oct 2014, 06:24 PM.
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Ex BP Golly
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Bond
20 Oct 2014, 03:46 PM
It is interesting that he is making these comments because generally he has not said a great deal about the downsides of some of the reforms introduced in the 1980′s.

Possibly, he is not keen generally on the growth of SMSF as they provide competition to the industry funds. The rise of SMSF has reduced the flows of funds to the retail and industry funds and those industry funds are like a retirement home for the hack-ocracy
+1.
What we are seeing is the logical outcomes of his reforms.

Im suprised that he seems to be suggesting that government subsidies developers.
WHAT WOULD EDDIE DO? MAAAATE!
Share a cot with Milton?
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