Sky business has just reported that the Australian Prime Minister, Mr Malcolm Turnbull is adamant building more dwellings is the secret to curbing property prices.
In an interview with Neil Mitchell on 3AW Radio today, Mr Turnbull said
“There is a tendency for people, particularly on the left, to overlook the fundamental reality that the reason housing affordability has deteriorated is simply because demand has consistently been exceeding supply”
Mr Turnbull, like the MAJORITY of economist, investors, financial journalists and the general public as a whole, continue to proport these half true motherhood’s. And by doing so Mr Turnbull and his entourage of economic believers continues to ensure that the MAJORITY of people remain subscribed to populist thinking that inevitably dooms them to making EXACTLY the same investment mistakes that are always made.
Sure supply will have “some” impact – but as we continue to say, Land does not comply with the normal laws of supply and demand. Land behaves differently to other factors of production. There are many other drivers of property prices that are simply disregarded.
Our underlying economic structure guarantees that ALL productivity gains will eventually be included in the price of property. SIMPLE – but totally ignored by Mr Turnbull (and others).
So while everyone is mesmerised by the “Supply Argument” property prices will continue to rise. Banks will continue to extend credit against these ever-increasing property prices. And then out of the blue, our prime minister and all the economists, investors, financial journalists and the general public, will be caught by the unexpected BUST!
Its exactly the same for the share market. They climb a wall of worry because people don’t understand their real economic drivers.
Black Swan event? Ha! Only if you think “Supply is the Issue in Housing Affordability”……
The only question for you, is how do you profit from it?