Does it though, construction still adds to growth and like I said at the moment it is keeping us out of recession, right now without it we would be in the proverbial. On face value right now it is as close to a perfect capatalist system as has ever been created before. On the home stretch of 3 decades of growth, every decade seeing booming growth and the majority of the population benefitting from it.
The system is even so good it is not affected by things that collapsed other nations markets, primarily over supply. Melbourne has been heavily publicised about its oversupply issues and predictions that by 2018 Sydney and brissy will be the same. None of this has has made a shred of difference to prices apart from rents which in turn should have an even greater impact on prices but it didn't, in fact the opposite occurred.
Even the jump in unemployment towards the mid sixes didn't raise an eyebrow from anyone.
It has been an infallable system to date I really can't see why it can't be replicated in some form in other countries to allow them to emerge from the doldrums.
It's just dragging demand forward. We're already in the proverbial. 20 times more spent on housing speculation than startups doesn't bode well for the future.
Negative gearing is just a sweetener that causes preference of one form of investment over another. The issue is that it is a market distortion that redirects money somewhere away from where it would be normally directed.
There is nothing magic about houses. Rent is tied to fundamentals i.e. business health, productive output & median wages. Prices are tied to credit availability and mental health of said buyers.
Artificially pumping construction by forcing ridiculous debt loads isn't growth. It's just reshuffling debt and delaying the repayment until another day. We have created a monster and we need to feed it, otherwise it will die (and kill us in the process). That's a problem - everyone screams panic over any news that say "housing slowdown". What "housing slowdown"? Since when do houses carry the economy?
The only (proper) way forward are housing policy changes to ease pressure (i.e. land releases, more freedoms to build your own house, more freedoms to subdivide etc) and incentives for entrepreneurship / business to improve competition (i.e. gut public servant wages instead of bending over in front of their unions and their demands).
When we have a situation where a postal worker / police / paper shufflers are swimming in money, business owners are struggling and wealth is stored in houses, the country is done for.
Let me assure you that this isn't one of those shady pyramid schemes that you've been hearing about. No sir, our model is the Trapezoid which guarantees each investor an 800% return within hours. Those who can, do. Those who can't, teach. "It's an itchy blanket, it's designed to remind you how lucky you are"
This is like saying that everyone should use ice because they'll be more productive at work and have more time awake at home to enjoy their personal lives.
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