This Morrison guy is a real lunatic. The Aussies need bring back the ghost of Robespierre and the Reign of Terror for psychos like this.
When he responds about the crazy housing prices as; "Live with it, that's how the market operates", and "...If renters can't afford high rents then buy a house", truely this guy is F.I.T.H? I think so.
Opinion A generational betrayal confronts the next government - and that’s why we need to raise the GST By Tom Akhurst and Josh Steinert April 12, 2022 https://www.smh.com.au/politics/fed...we-need-to-raise-the-gst-20220211-p59vqs.html If the polls are right, Anthony Albanese may well be prime minister in under six weeks. The Labor leader is promising “reform, not revolution”, but to avert a looming generational betrayal, he would need to lead significant change. For the first time in Australia’s postwar history, our nation’s children could live poorer lives than their parents. This is because our economy has become generationally imbalanced. Deep-seated structural inequities are prohibiting younger Australians from having a fair go, while transferring unprecedented wealth to older Australians. The tax burden casts a long shadow over Australia’s younger workers. Credit:Justin McManus The problem begins with our tax system. It is leaning overwhelmingly on younger Australians to subsidise the growing cost of supporting our ageing population. Personal income tax is the largest source of government revenue. In Australia, it accounts for 42 per cent of all tax revenue, almost double the OECD average of 23 per cent. By 2035, it will account for more than half of all tax receipts. Significantly, it is younger working people who pay the majority of income tax. John Howard’s reforms in the late 1990s and 2000s reduced the tax liability of capital gains and introduced the pensioners’ tax offset. Following his reforms, the share of people aged over 60 who pay income tax collapsed from 27 to 15 per cent. At the same time, wealth has become increasingly concentrated among older generations. While the average household wealth of 25 to 34-year-olds has crawled from $190,000 to $300,000 since 1994, it has surged from $530,000 to $1.3 million for people aged 65 to 74. As of 2018, those under the age of 45 own just 23.7 per cent of wealth while making up nearly 60 per cent of the population. A lot of this trend has been driven by excessive speculation in our housing market, which is rewarding unimproved land far more in value gains than the average worker can earn in income. An increasing number of young Australians are having to rent from older home owners for longer periods, transferring further wealth between generations. Many younger Australians will grow old still renting. Generational inequality is likely to have worsened dramatically through the pandemic as lockdowns disrupted income-earning while the value of assets such as homes and financial stocks – owned predominantly by older Australians – surged. It is not fair or sustainable to force young Australians, who have a diminishing share in our national prosperity, to carry an unprecedented and disproportionate share of our tax burden. They are already confronted by the housing crisis and precarious work in the gig economy. Economists such as Jesse Rothstein of Berkeley have shown how early career Australians will experience poorer employment and wages outcomes across their lives as a result of the COVID-19 pandemic, where their older peers will be relatively unaffected. In the meantime, older Australians are consuming the lion’s share of public expenditure in health and aged care, and have never been more wealthy. They should make a greater tax contribution. The Coalition government has simply refused to engage with this issue. In fact, its headline $420 tax offset for low and middle-income households relies on $98.5 billion in higher income tax revenue and lower income support outlays over the forward estimates due to low unemployment. More people in jobs is great, but without any initiative to broaden the tax base, younger Australians will continue to receive diminishing returns from their labour. They will have to pay back that offset, and much more, in income tax across their working lives. The contradiction in the Coalition’s approach is that it wants to grow income tax revenue by growing the economy, rather than hiking the income tax rate. Inconveniently, the existing tax architecture is acting as a handbrake on growth by being a disincentive to work and investment in productive non-housing assets. Labor isn’t offering much by way of an alternative. Albanese’s team has endorsed the $420 tax offset while only paying lip service to “problems that have been a decade in the making”. If Albanese and shadow treasurer Jim Chalmers want to deliver on their spending commitments, which will no doubt be higher than the Coalition’s, they will either have to further worsen generational inequity or commit to rebalancing our tax system. Blueprint Institute calls on the next government to raise and broaden the GST as part of a revenue-neutral package to make the tax system fairer. Labor has traditionally shunned the GST for its supposed anti-progressive effects – without compensation, it tends to hurt lower-income more than wealthier people. But Albanese must recognise that the tax justice position has changed. The income tax system is making it harder for young people to get ahead and other alternatives, such as a crackdown on negative gearing and capital gains concessions, have been rejected by Labor since its defeat at the 2019 election. The next government is going to have to raise revenue from somewhere, and without change it will be coming from the income tax paid by working households. A higher and broader GST, coupled with income tax cuts for low and middle-income households, would guarantee a fairer and more sustainable tax system. Our politics is stuck in a mutually reinforcing cycle of under-ambition. Albanese wants to win government by promising to preserve the status quo. As prime minister, he would need to lead significant reform if our country is to guarantee a fair go for younger Australians. Tom Akhurst is a Research Scholar and Josh Steinert is director of Research at Blueprint Institute.
Sky-high prices push potential home buyers to borrow to the max By Elizabeth Redman April 11, 2022 Talking points Some buyers are borrowing as much as possible to get into the pricey property market. First-home buyers are more likely to borrow their maximum, while upgraders are becoming more cautious. Interest rates are expected to rise soon, making mortgage repayments more expensive. Some first-home buyers are stretching their borrowing to the limit to try to get into the pricey property market despite looming interest rate rises, mortgage brokers warn. Other buyers, especially owners looking to upgrade, are starting to take a more conservative approach to their debt levels as they plan for borrowing costs to rise. Borrowers are taking on large loans just as interest rates are expected to rise. The large loans being taken out highlight the challenge of buying a home after house prices have soared by double digits during the pandemic, and fallen by only a fraction in the past few months. Major economists expect the Reserve Bank to lift the cash rate in June for the first time in more than a decade, pushing up the cost of a mortgage, although the impact will be delayed for borrowers already on fixed-rate products. When prices were booming last year, potential buyers who missed out at auction were going back to the drawing board and asking if they could borrow more than they initially felt comfortable with. Some even overspent at auction and hoped their bank would lend them the difference later, while brokers started pre-approving clients for their maximum in the first place to avoid having to do the paperwork twice. In the face of sky-high prices, some are still hoping to borrow as much as possible. Some home buyers are stretching their budgets at auction.Credit:Joe Armao Mortgage broker Chris Foster-Ramsay said borrowing to the maximum was still common, although pro-risk customers are more likely to be stretching themselves than risk-averse ones. “A lot of our pre-approved customers are putting everything into that,” the principal broker at Foster Ramsay Finance said. “[They’re saying] ‘We are at the maximum at the moment, we are still looking, we expect there to be some plateau [in prices] but our concern is what if rates go up?’ “There are customers there who are wanting to borrow as much as they can sensibly in order to enter the market now, so they can buy where they want to buy.” Equilibria Finance managing director Anthony Landahl is still seeing home buyers looking to borrow the maximum amount they can, in order to purchase in a market where prices are still high despite a recent slowdown. “We are still seeing buyers, particularly home buyers as distinct from investors, looking to get an appetite to borrow the maximum amount they are able to, to give them that ability to get into the market,” he said. “There has been a net gain in price and people are still recalibrating where they can buy and what they can afford … Affordability is still an issue.” For existing mortgage holders, many have been taking advantage of rock-bottom rates over the past couple of years to make extra repayments and get ahead on their loans, he said, while new borrowers are being assessed to make sure they can meet repayments once rates rise. The housing market has eased, but prices are still high.Credit:Flavio Brancaleone These buffers are in focus for the Reserve Bank, which has noted that some homeowners have managed to get ahead on their repayments, and emphasised the importance of banks maintaining lending standards for new borrowers. A recent change from the bank regulator forces lenders to check if buyers could meet their repayments if interest rates rose 3 percentage points. Axton Finance principal mortgage broker Clinton Waters is seeing second- and third-home buyers become more conservative about not taking on too much debt before rates go up. Their income-earning capacity is getting towards its peak and they may have children to account for too, he said. But first-home buyers often expect their incomes will rise over time, and think more of taking a risk. Economists expect the Reserve Bank to lift interest rates in June. Credit:Louie Douvis “First-home buyers, they just get so emotionally involved, they go, ‘we have got to stretch ourselves, we have got to get it’,” he said. “What these younger borrowers don’t always think about is what a single-income household looks like.” Mortgage Broker Sydney principal Michael Brown said almost all first-home buyers are trying to borrow as much as they are able, but there was a small shift for upgraders as the market eased. “We are able to go at a slightly more normal or sustainable pace in our home-loan buying process in terms of preparing applications,” he said. “Because there is a little more time they are not under quite so much pressure and they make better decisions now, so they don’t necessarily go for the last dollar.” But first-time buyers generally do not have the luxury of only borrowing, for example, $800,000 from a capacity of $1.2 million, he said. Even some clients who had self-imposed limitations spent almost a year looking for a home and eventually realised they needed to borrow more to meet the market, he said, although this kind of decision was becoming less common. “They come to understand there are definitely going to be interest rate rises and people need to cater for not just a small increase but potentially a significant increase,” he said.
Morrison's suggestion is, the government won't take responsibility to drop housing prices, rather let responsibility fall on prospective home owners to pony up with additional money in an already inflated market. The government by making it easier for 1st home buyers via cash grants, is further adding fuel to the fire, more money, more inflation, higher prices, greater debt, higher risk. Building costs (bricks, timber etc) are rising and home builders are becoming insolvent as much of what they build are on fixed price contracts. Scott Morrison says renters should buy a house if they want rent relief Scott Morrison has a controversial proposal for renters who are struggling with the rising cost of living...... https://www.news.com.au/finance/eco...d/news-story/2e8208699dddcdfd9dc383d38e5055e7
Warning as thousands could be impacted by construction company collapses A building insider has revealed the shocking state of the industry with half of construction companies in trouble and a “terrible” impact in store for customers. Sarah Sharples April 7, 2022 - 12:12PM https://www.news.com.au/finance/bus...s/news-story/548089eb06066385e762bd1ef7c7b54e Probuild: Aussie construction giant collapses Up to 750 jobs are hanging in the balance after major construction firm Probuild was placed into voluntary administration. A stark warning has been issued that half of Australia’s building companies are on the brink of collapse, and it could see thousands of people’s homes impacted in the coming months, according to an industry insider. Two major Australian construction companies including Gold Coast-based Condev and industry giant Probuild have already gone into liquidation this year, alongside smaller operators like Hotondo Homes Hobart. And it has sent shockwaves through the sector. But it’s the “tip of the iceberg” according to Russ Stephens, co-founder of the Association of Professional Builders, who has estimated around 50 per cent of Australian building companies are currently trading insolvent – which means they can’t pay their bills. It could leave customers forking out hundreds of thousands extra to get homes completed once a company collapses, he said. “Just one building company collapse could literally impact thousands of consumers,” he told news.com.au.......
Opinion https://www.afr.com/companies/financial-services/the-rental-crisis-is-just-beginning-20220411-p5acj5 The rental crisis is just beginning As the real estate market cools, property investors will be looking to hike rents to ensure they continue to earn satisfactory returns. Karen Maley Columnist Apr 12, 2022 “There’s a perception that rents are high now,” one of the country’s most highly regarded bankers tells me. “But rents are going to go through the roof once investors start to recognise that there won’t be significant capital gains from now on.” This is unequivocally bad news for renters. They’d been hoping that the sharp run-up in housing rents – which are on track to climb by at least 10 per cent nationally this year – might start to abate as the boom in house prices finally shows signs of tapering off. Instead, it appears that we are at the beginning of a period of significant rental stress, as surging demand and a lack of rental stock have sent vacancy rates plummeting to a 16-year low. Rents are set to increase as residential real estate owners realise the days of easy capital gains are over. Even worse, vacancy rates are expected to tighten further with the reopening of the international border and the resumption in migration and the return of foreign students. But, the leading banker explains, there are financial factors at play which will also put upward pressure on rents. “If you own an apartment, by the time you’ve paid strata levies, repairs and taxes, the returns are pretty meagre. “Until now, investors have put up with that because rising property prices have meant they’ve enjoyed strong capital gains. So, overall, it’s still worked out to be quite a good investment.” But, he warns, this dynamic will change as rising interest rates cause home prices to stabilise – or even decline. [In its latest Financial Stability Review, the Reserve Bank warned that house prices could fall by around 15 per cent over a two-year period if interest rates were to rise by 2 percentage points.] “If there’s no prospect of significant capital gains, investors will have to try to increase their returns through higher rents,” he explains. “And you can see that already. Rents are already going up.” What’s more, although lending to property investors nudged up by 3.9 per cent in the 12 months to February 2022, he points out that many property investors have been offloading their apartments. “This is partly because investors have been taking advantage of high prices to sell, and partly a response to the eviction restrictions that were imposed during the pandemic, which made some investors decide that owning rental property wasn’t such a great deal any more”, he says. “And for others, it’s a desire to reduce their gearing because they’re apprehensive about rising interest rates.” Offshore is soaring Of course, rents are also soaring offshore. In the United States, for instance, average monthly rents jumped more than 14 per cent in the year to December. In many major cities, including Austin, Texas and Miami, rents increased by more than 30 per cent. As in Australia, the surge in US rents reflects a number of factors, including a shortage of housing inventory. At the same time, many people who moved back with family in the early days of the pandemic are now flooding back into the rental market, boosting demand, and making it easier for landlords to hike rents. In addition, after central banks slashed interest rates close to zero to soften the impact of the pandemic, many people decided to take advantage of ultra-low home loan rates to buy houses. As house prices surged, many people have been pushed out of the buyer market and into the rental market. Landlords, meanwhile, are looking to claw back the drop in income they sustained during the pandemic, when they offered discounted rents to entice new tenants, or when existing tenants missed rental payments. Of course, people on lower incomes – such as hospitality and retail workers – are those hardest hit by soaring rents, which are rising much faster than their wages. As the Reserve Bank noted in its April Financial Stability Review, “historically, renters have been more likely to experience financial stress than indebted owner-occupiers”. The Reserve Bank added that “although renters are unlikely to pose direct risks to the stability of the financial system (as they have less debt), financial stress for renters could translate to repayment difficulties for indebted landlords or pose indirect risks by constraining household consumption and so economic activity”. Rent control calls Of course, the surge in rents is already sparking calls for increased controls that would limit annual rental increases. Rent controls have existed in New York since 1943, when the US government legislated a rent freeze in the city to fight wartime housing inflation. Just under half of rental units in New York City are subject to rent stabilisation rules, which set the maximum rent increases, based on real estate costs and the cost of living. But more US cities are now introducing rent controls. Last October, local officials in Santa Ana, California, went further than the state’s rent controls which limit annual rent increases to 5 per cent plus local inflation. They decided to restrict rent increases in the City to 3 per cent for apartments built before 1995. And last November, Minneapolis voters gave the green light to introducing of the country’s most stringent rent control policies, which sets a 3 per cent cap on annual rent increases. What’s more, the controls also apply to newly constructed buildings. Meanwhile, lawmakers in Miami and Tampa – where rents have climbed more than 30 per cent over the past year – have discussed declaring housing emergencies to introduce rent controls. Landlords and the real estate industry are pushing back against rent controls. They argue that they discourage new apartment construction, which further chokes off the supply of rental accommodation. And while such controls benefit people who have rental accommodation and don’t want to move, they act as a major disincentive for people to convert their properties into rental accommodation. This makes it extremely difficult for new renters to find accommodation. The other disadvantage is that rental controls discourage landlords from spending money on the upkeep of their apartments, which disadvantages renters. Of course, it’s highly unlikely that Australian politicians would even contemplate riling Mum-and-Dad property investors by introducing rental controls, but rising rents will undoubtedly fuel social discontent, and increase the pressure on lower-paid workers to secure larger wage rises.
I suppose Western countries have higher rates of immigration. Every 3rd world resident nearly wants to move west and no Westerners want to move East. As well, often 3rd world people have more children than Western families.