by Maireid Sullivan

Cross-posted from the Global Arts Collective website.

http://globalartscollective.org/economic_history.htm

AUSTRALIA’S capital city house prices have experienced its greatest quarterly increase in 18-years, which is emboldening sellers to lift asking prices.

According to Domain’s latest Asking Price Edits report, the combined capital city median house price increased by $539 every day over the first three months of the year.

For Sydney and Canberra, the past three months represents the fasted quarterly acceleration in almost three decades, increasing by $1145 and $909 a day respectively.

As a result, sellers have been increasingly raising asking prices mid-campaign, to match the accruing capital growth experienced over a four-week sales period.

In Sydney and Canberra this accruing capital growth would add a respective $32,060 and $25,452 over the four-week campaign.

Likewise in Melbourne where house prices rose $499 a day over the first quarter, this would represent an additional $13,972.

Dr Nicola Powell, senior research analyst at Domain, said the housing market is clearly not static.

“For buyers, purchasing can become challenging during a period of significant momentum, as competition and prices move quickly, which has been seen to date in 2021. For sellers, receiving a quick or multiple offer(s), especially if above the asking price, can indicate strong levels of competition and be a sign the market has moved upwards from the initial asking price.

“The more expensive areas of Sydney and Melbourne have the highest percentage of asking price revisions upwards over April. This suggests the upper end of the market will continue to lead price growth in the coming months,” Powell added.

Though the trend for increasing asking prices mid-campaign began to level out across most capital cities in April.

At its peak in Sydney, almost 10% of sale listings saw an upwards revision of the asking price over March, dropping to 9.3% in April.

In Sydney mid-campaign increases were most prevalent in the Eastern Suburbs, at 14%, followed by Sutherland at 12.7% and the Inner West at 12.1%.

In Melbourne it peaked this year in March at 8.9%, compared to March 2020’s near 10%, before dropping to 7.8% in April.

Mid-campaign increases in Melbourne were seen most significantly in the Inner South at 11.4%, Inner at 9.1% and Inner East and North East both at 8.7%.

While Darwin was the only capital city to hold at its peak into April at 5.7%.

Due to greater price volatility in capital city housing markets, this trend has been less pronounced amongst regional markets.

Market conditions, including elevated levels of demand and competition amongst buyers have enabled sellers to successfully increase prices mid-campaign.

Powell said while these mid-campaign price hikes will lead inevitably to annual price dwelling growth, it is forecasted that will mean a one-month lag between revised asking prices and price growth.

“When we see more homes for sale with the advertised asking price revised higher during the sales campaign, it provides an on-the-ground lens of buyer sentiment and level of market competition. It is intuitive that this would then translate into a change in pace of property price growth,” she continued.

“This data set suggests that prices will continue to grow in the coming months. However, the fast pace of price growth recorded early 2021 is likely to be less steep, supported by the fact most capital cities are now easing from a recent peak in asking prices being raised.” Powell concluded.

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My comment herewith

Some tweets suggesting we do this:

Cross-posted from Prosper Australia

18 May 2021 MEDIA RELEASE
LAND TAX DRIVES STABILITY Changes to land tax and the introduction of a windfall gains tax will drive stability in the Victorian housing market, according to Victorian economics research group Prosper Australia. Prosper advocacy director Karl Fitzgerald says the property lobby’s outcry is the reaction of an industry group caught with its hand in the honeypot, profiting from rezoning, minimal land taxes, poorly enforced vacancy taxes, and land values rising in the billions – virtually each and every year. “These changes are a drop in the ocean for an industry that had billions of public money thrown at it during the pandemic through Job Keeper, Job Seeker, land tax discounts and rental relief.  “Victorian residential land values increased by $135.6 billion during 19-20. Even commercial property, which faced stronger headwinds during the pandemic, saw land values rise by $6.6 billion over the year. If we were to multiply such gains over four years, the property tax increases seem quite reasonable in light of such large returns. “Sharing the load via higher land taxes and stamp duties is commensurate with rebuilding an economy that was brought to its knees by the pandemic,” he said. “Government investment in growth-boosting infrastructure also boosts land values – disproportionately benefitting landholders.” “The speed with which property has accelerated out of lockdown is alarming. No other industry enjoyed such a rapid rebound on the back of government support.  “The higher land prices go, the more is needed each time we have a major crisis. With the covid crisis hitting after we’ve barely recovered from the GFC, it’s a reminder that the boom-bust nature of property is a cost borne upon the entire society. With great rewards, comes great responsibility. Prosper Australia advocates for a fairer tax system, where reward for effort is encouraged over and above speculating on scarce assets. “Land tax is a much more efficient way of taxing the property market. It improves turnover of property and encourages more efficient land use, penalising those who use “land banking” as a profit making strategy. The move to tax rezoning windfalls is long overdue. Both moves will take some of the speculative heat out of the market, improving stability.” The annual Speculative Vacancies report reveals thousands of properties in Melbourne lying empty each year, with the most recent finding 69,004 (2019) empty properties in Melbourne alone.   “The higher land tax would have the effect of pushing some of these top end vacancies back onto the market. Rather than sitting on property and waiting for prices to rise, owners are forced to lower rents or sell, or pay for the privilege of speculating on the property market at the expense of renters.” Fitzgerald says with 69,000 more rental properties in the market, tenants would have many more options to move if landlords tried to pass on the land tax. ENDS   EDITOR’S NOTES: Contact: Karl Fitzgerald  0400 676 457 About Prosper: Prosper Australia is a research institute which aims to hold up a light to the dusty corners of our economic system that aren’t working for the common good anymore. In particular, we believe the missing piece in economic and taxation analysis is land. https://www.prosper.org.au

THE Roaring ’20s had much in common with the 1880s worldwide land boom. The early to mid-1920s actually featured a land boom which became overwritten by the better-known late-’20s stock market bubble which burst into the Great Depression of the 1930s. (This was very similar to the 1973 land price bubble having been written out of history in favour of the story of the OPEC crisis.)

AN excellent account of the early 1920s property bubble in Germany was given by the Austrian foreign correspondent Bruno Heilig in 1941. We are aware of the Weimar Republic’s immediate hyperinflation (less aware of how Germany remedied it!) and only too aware of how the Great Depression saw Germany elect Hitler to power.

ALTHOUGH it came to extend across much of the nation, the USA 1920s real estate boom became known as “The Florida Bubble”.

MAYBE the peak of the 1920’s property bubble in Australia was best characterised by the arrival of the attractive “Californian Bungalow” in the mid-1920s.

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BUT there was something other than high living and flappers, that accompanied the mad frenzies of the 1880s and the 1920s. This was rampant poverty amongst the underclasses. (Is it impossible levels of private debt today?) It was only newspaper headlines that presented the image of fun and glitz to a suffering wider populace.

MARK TWAIN, friend of the American social philosopher Henry George, had noted the superficiality of the 1880s boom period when he labelled the period as “The Gilded Age”. Twain had recognised the heart of George’s Progress and Poverty painted high land prices to be the root cause of low wages and profits.

SO, here we are again in the 2020s with rip-roaring property markets again, as though the sub-prime loans affair only 14 years ago never occurred, and with central banks and their governments pumping land values for all they’re worth. Their complicity in the real estate Ponzi is truly mind boggling!

THE financial depression of 2026 beckons.

“We need to import cheap labour?”

Nup!

“But small business can no longer afford these ‘minimum’ wage levels.”

OK, let’s investigate.

We tax incomes, goods and services, and these taxes are passed on in prices. Some people consider we need even higher taxes in order to be able to fund increasingly essential government expenditure, but as we’re finding during the pandemic, the other side of public expenditure is that it generates jobs within the private sector, thereby paying for itself.

So, we don’t need higher levels of taxation, but business does need to support a universal income.

“Why?”

Well, if we were to take a peep at Table 61 in ABS Catalogue 5204, we’d see that our total commercial and industrial land values comprises 9% of all Australian land values. Looking after the other residential 91% is actually in the interest of businesses, because people will have more to spend.

And here’s the clincher. If we had a universal income, business wage costs would fall because they would only have to pay some amount additional to the universal income in order to retain or attract employees!

“Wow! OK, but a universal wage would be very inflationary!”

Not so! Not if you understand that inflation is not a function of ‘excess money’ nor of ‘excess demand’, because supply should rise to meet the demand, but of the deadweight losses from taxing labour and capital passed off in prices: and of land prices – even though land has no cost of production!

So, if governments don’t need to tax in order to be able to fund productive spending, and if taxes and land prices are the generators of inflation, we should be abolishing taxes and taxing land prices instead. What the classical economists called “ground rent”, or a ‘tax’ on land prices, can’t be passed on in prices as with taxes on labour and capital.

“OK. Didn’t the Henry Tax Review suggest something like that? But it didn’t recommend a universal income?”

That’s right, but it could have, because there’s plenty available, and it’s currently being expropriated by rent-grabbers. Take a look at this chart, and you’ll see the case for a universal income is a win/win for people and for businesses.

“Amazing! I clicked on the image and saved it, so I could study it in greater detail and at greater length, and you’ve convinced me. We need a universal income!”

Thank you!

The modern versions might see a connection between privatised rent and ‘leaky gut’.

And again ….

It’s an old game!

…. well, maybe ‘rent’, rather than ‘capital’?

What’s wrong with the statement below in this industry super fund TV advertisement?

“We’ve worked all our lives for this place. We’d hate to have to sell it to fund our retirement.”

What have we come to? How sad is it that Australians must now work all their lives to have a roof over their heads? What the hell’s wrong with the country? A home should be affordable and easily obtainable for all.

For example, when people first came to Canberra, all they had to do to was to pay five pound rental per year to obtain a residential home site.

Now, the starting price for a site in Melbourne or Sydney is about $1,000,000, although land has no cost of production! Something is awry.

And what sort of a country is Australia that we must fret about how we can possibly fund our retirement? Why do we require an army of advisers to tell us how we might be able to afford it?

Inadequate public capture of land rent explains a lot. As does superannuation funds and taxation taking more and more of our wages.

Could it be that taxes and land prices are the problem?

And I couldn’t agree with you more that we DON’T need foreign capital, Senator Rennick!