Cut deep to keep the property market moving
It's time the Reserve Bank realised Australia is competing in a world economy and cuts rates accordingly. Buyers are staying away from purchasing at the current interest rate level.
To worry about retired people and their income from low rates of interest is correct. But that’s what happens in the world where interest rates are a lot lower.
It’s time we watch other countries and not try to be smarter than everyone else either with our carbon tax or our interest rates.
If the inflation rate rises, and I hope it does, then real estate will rise with it and the retired people’s homes will rise in value with it. They should be so lucky. So whether they will get 1 to 2 per cent less in the meantime is irrelevant. And at the moment our interest rates are too high by world standards.
We are a lucky country. We are the only place which is empty and the environment hospitable. That will in the end get us out of the problem of slow progress to date.
The mining and oil income are in jeopardy because of our bureaucrats and politicians. Plus our policy of high cost labour. Wherever Australians don’t want to work foreigners should be brought in and they should be paid less to work there. This is the way the world works and we are competing with the world. We are not there to change or teach the world.
The boat people should be discouraged from coming. But they want to work, so when they arrive we should give them work where they are needed and where we do not want to work. They should not be sent to Nauru or elsewhere where they do nothing.
The fringe parties in parliament must be responsible and not just talk about things which they think will bring them votes. In the end a successful economic policy is what will be rewarded. Not empty slogans which cannot be fulfilled.
Back to housing, Australians refuse to buy houses at these prices with the interest rates as they are. And that has been going on for many years. Prices will be reduced when the authorities enable efficient production.
The NSW government refuses to stop the Office of Fair Trading from continuing their policies which put the purchaser against developers.
We are helped by the Chinese because their prices are high. And the Chinese pay higher prices in China and so Australia looks cheap. But the Chinese only buy in certain areas. The Chinese will not buy in outlying areas where Australians are happy to see development but where they are reluctant to live.
Developments must be approved quickly. Otherwise we have no production. And the delays cause much greater costs which have to be recouped.
We have a stupid approach. The government planners are scared to make minor mistakes in planning, because it is safer to do nothing or very little.
And so someone is incapable or refuses to do his job in the government he is never punished. But if someone works hard and makes a small mistake in the government departments he is quickly reprimanded.
So why should he do anything?
Our standards are too high for what the people want to pay. The question is not what is the best development? The question is what is the best development that people can afford? But that is never considered by the bureaucrats.
For example, there is a big problem with car spaces. Underground car spaces can be very costly but no one cares if they are above ground level or below, except for some finicky experts.
We read many articles now where renting is compared to buying and some reporters advise people to rent because repayments are not the only expense that home buyers will face. The reporters are correct because of the burden of rates.
However, there is a second side to the story.
If a person decides to rent, he must allow for the expenses of moving because of a change of mind by an owner.
The markets are depressed and it must be assumed that they will move up. If the renter did not buy the unit he will miss out on the capital gain. I don’t see properties dropping anywhere if they are around $650,000 to $700,000 or lower. So the risk appears to be small if one buys. Besides, every person really prefers to have his own apartment, rather than be moved at the owner’s whim.
Harry Triguboff is managing director of property group Meriton.