A housing CHOICE?
Life would be greatly improved for a vast number of Australians if they were able to keep themselves out of unnecessary debt.
Land prices are unnecessary. Title for exclusive possession of a home and land could be given on payment of a sum for the house and any other improvements, on the basis of an agreement to continue to pay the annual rent for the site. This would be on the reciprocal arrangement that the purchaser(s) were not to pay income tax, GST, nor any other form of tax, as long as the annual site rent is paid into the public coffers after sale of the property. The federal government would pay the site’s value to a vendor as they sold off their property to a purchaser who signed such a commitment.
The average residential site currently comprises some 75% of the total price of a property in Australia, therefore, as people took up the option—which is not to be forced, as they could continue to pay the land price to vendors and existing taxes if they chose to do so—Australia’s land prices would decline substantially and remain ‘flat’.
As capital prices of homes and debt levels declined, the productive side of the economy would resurrect, and wages would increase.
The best time to introduce such a home owner’s option is, of course, when the present real estate bubble and land prices collapse and mortgage debt has been written back to market anyway (as President Obama promised, but failed, to do in the USA in 2008). Politicians and banks, currently wed to a perceived need to keep land prices inflated because “banks are too big to fail”, would be less resistant to this home-owners’ policy initiative in the scenario of a collapsed market.
Potential benefits for Australia would be extraordinary: banking would assume its role as a servant of people and the economy, instead of their master; real estate speculative activity would decline, and; real wealth-creating productivity must increase as a result.
Threats? Well, the 0.1% who currently have both sides of the political spectrum protecting them at the moment, together with a rampant banking and real estate sector invested in inflating land prices at the expense of the community and productivity. Rent-seeking interests have been “dividing and ruling” the political system and the economy as people have increasingly become debt-slaves to them.
Do I speak of new world in which publicly-generated land rent is captured publicly – thereby bringing people together instead of continuing to divide them? Yes, I do.