Hi Shakespeare and all,
I agree the house price to wage and earnings ratio has been allowed to get well and truly out of whack. After watching the Four Corners real estate program earlier this week I can certainly understand the millennial generation frustration. As the reporter said this is the first generation that was awarded a trophy just for turning up they may take badly to being well educated but relegated to living in Mums basement.
I don’t think it has been done as part of any grand plan of governments or central bankers but allowing people to feel they are gaining more wealth due to their property values appears to have removed all the fire in the belly fight for a decent living wage. In my opinion this method of reducing living standards of our western societies has been as effective for our governments as their normal mode of theft through the hidden taxation of inflation. It may well be a serendipitous accident; however, it has certainly proved a good back up plan for our current state of deflation.
As a baby boomer and tax payer we have had a good run for our money and I feel we could easily give up a few of our advantages such as negative gearing to allow this very generous tax advantage to be passed along to the current generation of house buyers. We can hardly consider ourselves as part of an egalitarian society when we help one group buy 10-20 houses and deny the current generation their first home.
I do feel we are well over due for a real estate price re-set; however, even if we do see house prices drop by 40-50% with the current earning capacities even for very bright well educated professionals it is still not going to be easy. Then again was it ever meant to be!
As for me I shall stick with my physical Gold and companies that produce and search for it.
By the way for those that favour Gold coins take care where you buy them from:
http://www.cbsnews.com/news/chinas-latest-export-boom-fake-gold-coins/
Cheers and very best regards: Andy
