At the end of the day property prices is all about supply/demand.
Governments use monetary policy and fiscal policy to direct a country's economic goals.
BREAKING DOWN 'Monetary Policy'
Broadly speaking, there are two types of monetary policy, expansionary and contractionary. Expansionary monetary policy increases the money supply in order to lower unemployment, boost private-sector borrowing and consumer spending, and stimulate economic growth.
Do you even understand why money supply is increased in the first place? To support the mirage?
Also have you actually read what I have posted or just skim thru?
Australia is one of the highest income country in the world - do more research dude.
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first home grants the average unit in Sydney was 400G. They then followed with this by allowing Super to buy into the market and then interest rates were dropped to create what they perceived they needed which was growth.
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First home grant was introduced to stimulate growth (i.e. more supply to the market, hence why the word 'FIRST'. If new supply is added onto the market, how is that saying the government wants to push property prices up? It is merely to stimulate the economy.
Secondly for super, people have been using their superannuation to buy property in their SMSF for decades now but it really came to the fore when SMSFs were allowed to borrow to buy assets in 2007 and when this was given more clarity in terms of borrowing to buy residential property in 2010.
Thirdly interest rate drops has nothing to do with this IMO. There is a multitude of reasons for how the RBA sets the interest rates. Australia's interest rate will stay low for years – Reserve Bank governor
Philip Lowe says RBA officials are still trying to work out what ‘normal’ level of rates may be given slow wages growth
The Reserve Bank governor has confirmed that Australia’s official interest rate will remain near historical lows for years, with inflation unlikely to hit 2% until the end of 2019 at least.
Dr Philip Lowe said RBA officials were still trying to figure out what the new “normal” level of interest rates might be, because wages growth and inflation were not behaving as they have in the past.
He said the bank was flummoxed by the behaviour of wages, given that the unemployment rate had been falling steadily, and GDP growth was expected to pick up to average roughly 3% over 2018 and 2019, but wages remained stagnant and were showing few signs of lifting noticeably.
But he said he was generally happy with the shape of the economy and, if current conditions persisted, then the next likely interest rate move would be up.
Speaking at the Australian Business Economists’ annual dinner in Sydney on Tuesday, Lowe said it was time for a “new narrative” for Australia’s economy because the mining investment boom had all but wound down, and the labour markets in Queensland and Western Australia had shown significant signs of improvement.
He said Australia’s unemployment rate, at 5.4%, was still heading towards 5%, which the RBA considered to be “full employment”.
The improvement in business conditions had led to the strong employment, he said, with the number of people with jobs increasing by about 3% over the past year, “the fastest rate of increase for some time”. This had led to a pick-up in labour force participation, especially for women.
But Lowe expressed frustration at the pace of wages growth and inflation, saying the RBA had spent considerable time over the past 12 months trying to figure out when the improvements in the labour market would translate into a pick-up in wages, which hadn’t happened yet.
“A distinguishing feature of Australia’s recent economic performance has been the slow growth in wages,” he said.
“The wage price index has increased by just 2% over the past year. Whereas in earlier years, Australians had got used to average wage increases of around the 3.5–4% mark, 2–2.5% is now the norm.
“Growth in average hourly earnings has been weaker still: in trend terms it is running at the lowest rate since at least the 1960s.”
He said other advanced economies were experiencing a similar phenomenon with low wages growth so Australia was not alone, but he found the phenomenon perplexing.
He said the business environment had improved, leading to a gentle upswing in investment, and more firms were now prepared to take a risk and invest in new assets.
The improvement in business conditions had not led to growth in consumer spending, and this was weighing on the economy.
“The most likely explanation for the ongoing subdued consumption outcomes is the combination of weak growth in real household income and the high level of household debt,” he said. “The growth in household debt has been outpacing the very low growth in household incomes for a few years now.”
Lowe said many workers still felt as though they had less bargaining power than they once did, owing to increased competition from workers overseas and advances in technology, and many businesses were still focused on cutting costs, so that was contributing to stagnant wages.
But he was hopeful that a tighter labour market should still push up wages and prices, “even if it takes a little longer than we are used to”.
“We are starting to see some hints of this,” he said.
Lowe said the RBA had been watching the buildup of household debt but the risks had so far been contained. The low level of interest rates meant that even though debt levels were higher, the share of household income devoted to paying mortgage interest was lower than it had been for some time.
“Perhaps reflecting this, as well as the recent decline in the unemployment rate, aggregate indicators of household financial stress remain quite low,” he said.
Putting all this together, Lowe said underlying inflation was expected to pick up “only gradually” and remain below average “for some time yet”, so interest rates were unlikely to rise significantly for a number of years.
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So now to maintain our life style so we sell off our assets to foreign interests.
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Are you really that naive? Foreign investors can only purchase brand new dwellings which will actually stimulate growth (economy) and also make developments more viable and hence increases the supply of properties coming into the market.
Under Australia’s foreign investment framework, foreign persons generally need to apply for foreign investment approval before purchasing residential real estate in Australia.
The Government’s policy is to channel foreign investment into new dwellings as this creates additional jobs in the construction industry and helps support economic growth. It can also increase government revenues, in the form of stamp duties and other taxes, and from the overall higher economic growth that flows from additional investment.
Foreign investment applications are therefore generally considered in light of the overarching principle that the proposed investment should increase Australia’s housing stock (be creating at least one new additional dwelling).
Consistent with this aim, different factors apply depending on whether the type of property being acquired will increase the housing stock or whether it is an established dwelling.
It is important that foreign investors understand and comply with Australia’s foreign investment framework as strict criminal and civil penalties may apply for breaches of the law, including disposal orders.
Amanda Lynch, CEO of the Real Estate Institute of Australia (REIA), told realestate.com.au Australia has a regulated approach to foreign investment, especially when compared with the open door approach of countries like the US.
“The objective of Australia’s foreign investment policy, as it applies to residential property, is to increase the supply of new housing,” Lynch says. “And it has been proven to do this.”
While temporary residents can invest in new property, they can only buy one existing residential property and must use it as their primary residence. If they’re not living in it they must sell it. However, foreign investors can buy new properties or vacant land in Australia.
Lynch says that without this foreign investment many new building projects would simply not be viable. The REIA believes foreign investment is good for Australia as it adds to the supply of new housing and increases the supply of rental properties, keeping rental prices from rising.
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The working class people in Sydney are moving 30/40 kms form their work now , crossing from one side of the city to the other.
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Yeah you better be grateful it's just 30/40 kms. People living in other major capital cities around the globe have to travel 1-2 hour to work. (1 direction). Otherwise just buy a 1 bedroom apartment in the CBD if you can't afford to buy a landed property?
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Your so called list of wealthy countries are nothing more than a representation of the the top 5% the rest are living day to day trying to make ends meet and governments printing money to the support the mirage. I know I have a strong connection with Europe.
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Maybe you should go to third world countries like Malawi, DRC, Liberia, Burundi, Togo, Ethiopia, Mali, Mozambique to know what living day to day trying to make ends meet really means. Probably more like working day to day and sometimes you can't even make ends meet.
If you are looking at the median on a global scale, I think Australia is definitely doing much better than most other countries around the world even when comparing to first world countries. Do your own research and don't expect to be spoon-fed.
