| This lacks recognition. So many factors could come into play. E.g. The downstream effects of house prices has to hit entrepreneurship. Previously a bunch of people would be in a good place to take a couple years off to start a business mid-career. Now people have these huge mortgages where your ability to start a business is hampered by your ability to get a financial buffer to take this year or 2 off. And lets not forget most businesses are created form people mid-career, not the TV typical university dropout. And small community business, how will they exist in the future. If someone wants to set up a local 'physical presence' vet/daycare type business that are typically mixed into residential areas the threshold is now too high to exist let-alone set up a new business. How can a daycare buy a million+ dollar house and expect to make money paying that back on having 30 local kids being looked after. Also what is going to happen with social services like retirement and periods of higher unemployment. I suspect society will be less stable as either the government has to foot much higher rent costs (unlikely) or we will see increased population movements during retirement, and now the government has to look after older people that before a family who lived nearby could help out with. And during low employment cycles society can no-longer absorb this downturn if people have large income-to-debt loans. Historically people could 'tighten belts' for a year while things improve, harder when you're neck deep in debt. So we will again see more movement of people, debt default etc. It will serve to exacerbate recessions etc. Also these higher prices skew the economy. When people are tied up in these ever increasing loan/income ratios there will be less spending on dining, holidays, hobbies etc. It will weaken the economy by concentrating the spend in limited areas. From this I really believe we should be talking seriously about ensuring affordable housing for owner occupiers. Residential investment need to be discouraged (note I'm not saying stopped) as a speculative asset class. I've seen a few suggested methods to achieve this but I feel the simplest is to place a yearly 'asset tax' on non-owner occupied residential property (I would also include farms). Having a % tax would make it easy to adjust to find the right balance given economic cycles change. Also this would encourage property hoarders not in heavy debt to sell for lower taxed asset classes. This I feel is important as most solutions focus on controlling the investment lending side which is limiting in reach. And the 'add supply' will always be a limited case solution. Good luck. It seems most western governments have stopped caring about looking past the most immediate budgets. |
I forgot to mention in my post that not only is the government in bed with the real estate industry (new rumors that the biggest real estate marketer in the city was notified weeks in advance about the new foreign buyer tax), but that they also "unexpectedly" took in 50% more than forecast, to the toon of $500+ million, in extra property transfer tax last year. Good luck getting them to slow down that gravy train.