8/14/2019 House Price Bubble Brochure

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ALL BUBBLES BURST

Keynes once famously said a market can stay irrationallonger than you can stay solvent.

As well as pointing to the tendency for bubbles to lastlonger than most expect, another investor truth isimplicit in this statementbubbles always burst.

Moreover, the larger this bubble is permittedeven

encouragedto inflate, the greater will be theconsequences to our economy and our society when itdoes burst.

RENTING IS CHEAPER

The news is not all bad for those fortunate enoughto have good incomes.

Based on median house rents and prices, renting issignificantly cheaper than buying in all Australiancapital cities even at current very low interest rates.

As mortgage rates climb above 7% that gap and theextra costs of the mortgage will grow larger.

www.homes4aussies.com/renvbuy2.pdf

So, at current prices, renting is certainly a smartoption, especially when the savings are allowed toaccumulate in a high interest account or in otherrewarding investments.

IF THINKING ABOUT BUYING,

DO YOUR OWN RESEARCH

AND THINK FOR YOURSELF!

AND ALL OF US NEED TO

TELL OUR POLITICIANS TO STOPBORROWING AGAINST OUR KIDS

FUTURES TO PERPETUATE THIS

BUBBLE MAKING THEM PAY

MORE TO RENT OR BUY A HOME

IT IS BOTH UNFAIR ANDUN-AUSTRALIAN

AND IT IS NOT IN THE LONGTERM INTEREST OF OUR

COUNTRY

For more information:

www.bubblepedia.net.au

www.debtdeflation.com/blogs

www.homes4aussies.com

www.whocrashedtheeconomy.com

PRINTED BY BOPWWW.BARGAINONLINEPRINTING.COM.AU

AUSTRALIAN HOUSES MOSTEXPENSIVE IN THE WORLD!FOR 24 YEARS!!

Graph by Reserve Bank of Australia

IS THIS REALLY WHAT YOU WANTFOR OUR COUNTRY AND OUR KIDS?

8/14/2019 House Price Bubble Brochure

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THE GREATESTBUBBLE INHISTORY

This is how respected economist Professor RossGarnautyes, the same economist charged by thisFederal Government to lead our response to ClimateChangedescribed our current housing market inhis recent bookThe Great Crash of 2008.

In his book, Prof. Garnaut stridently argues againstthe typical hype surrounding our housing market.

1.He is unequivocal in his view that Australianhouse prices have been driven primarily byspeculation; and

2.Garnaut is skeptical that there is any actualshortage of housing.

By many measures, the housing bubble in Australiais much more extreme than it was in the US before itburst.

RBA CONCERNED FOR THEVULNERABLE IN SOCIETY

In a recent speech,senior RBA official TonyRichards said:

when the price of housing rises, higher-income householdstend to benefit at the expense of lower-income households.As I have noted before, as a nation, we are not really

any richer when the price of housing rises, but the morevulnerable tend to be hurt

In other words, the housing bubble has benefitedthe wealthyat the expense of the poor who havebeen hurt. Now that is a stinging indictment by theRBA.

HOW DID IT GET TO THIS?

The causes are myriad but they essentially distill

down to thissuccessive State and FederalGovernments have promoted our homes asspeculative assets.

Over the last few decades, taxation andsuperannuation rules have increasingly encouragedspeculation in housing. This was highlighted byformer RBA Governor Bernie Fraser recently in thepress in saying for example AUSTRALIA mustadopt a fairer, more progressive tax system through reforms tocapital gains tax and negative gearing allowances.

And planning has artificially limited the supply ofland and inflated its cost.

Even the First Home Owners Boost wasintroduced to keep the housing bubble alive. It notonly stopped Australian house prices fromcorrecting, it caused further strong priceincreases, decreased affordability for first timebuyers, and increased their debt burdens.

Graph by Steve Keenwww.debtdeflation.com/blogs

This graph above shows the affect of increasing thefirst home owners grant at the start of the decade tokick off the bubble, and then at the endwith theboost to reignite it.

DEBT EXPLOSIONThe house price bubble inflated well above realincomes. Consequently, the size of loans especially to first time buyers accelerated.

RBA data show that the gap between first timebuyer loan size and house prices has increased eventhough loan sizes increased sharply.

Therefore,young Australians are taking muchbigger risks with higher loan to valuation ratio

mortgages, which require a much greater shareof their income at comparable interest rates toservice to buy homes that are further belowthe median standard.

Moreover, the RBA has said a higher level of housingprices and rents allows less spending over our lifetimes on otheritems, thus highlighting the serious long termconsequences to our economy of the houseprice bubble being prolonged.