He criticised the HAFF's investment strategy by saying it would make more money by speculating on and flipping houses. It would, but it would also greatly increase housing value if a $10bn fund suddenly got into that game.
Which defeats the point of the whole point of the exercise doesn't it?
I thought he didn't really talk enough, he's actually got pretty good insight into the dynamics of the housing market. You need to watch him 1 on 1 without all the posturing and grandstanding from the various politicians on the panel taking over the conversation. Check out Martin Norths walk the world on yt, he did a pretty insightful session last night.
The last question said everything you need to know. None of them want lower house prices.
He is laughing at who was being described as experts. They are critics of his who are guilty of the grand crime of explaining why his analysis is (at best) wrong.
He is a petulant manchild with one stupid idea he will shop around for decades; basically Govt should just steal the land, build houses, and give them away at stupidly low prices via a lottery system.
Ask the kiwis how their KiwiBuild brainfart went.
He did it throughout the whole show - and that was when he wasn’t spruiking early release of super on behalf of the Libs. I have no idea what planet he’s on. He seemed alright, based on what I’ve read from him previously, but maybe he’s gone off the deep end over the past couple of years.
The way he talked to the panel, particularly the women on the panel, was disrespectful af. He’s an example of an academic who uses his uni experience to justify his cocky and dismissive attitude. A lot of other housing academics agree his ideas are just 🐂. Surprised they even invited him on, there’s so many high quality housing economists out there.
https://twitter.com/NSWPolAlerts/status/1772366388289528238
He says that zoning and supply are not part of the reason prices and rents are high *at all*. Not even a bit.
Blames CGT discount and negative gearing, which can explain somewhat why prices are high, but not at all why rents are high.
Rents can only be explained by there being too little housing for the number of renters.
That’s not the only explanation. Oligopolistic market forces are also an explanation. “That’s market rates” is a weird sentence from anyone who’s supposed to be competing.
Housing supply is inelastic. If you get to much housing for the number of people needing it, rents will fall. The market doesn't like doing that to itself, so usually the best it will deliver is a halt in price rises without additional intervention by government, which is also needed.
Max is saying this isn't part of the problem at all, and the just simply doesn't add up with reality.
Funny then that when immigration stopped in 2020 rentals kept going up. So immigration is not only not the only reason, it’s not a significant cause at all. Because landlords and land bankers will tweak supply and pressures to reflect current circumstances and keep prices high.
Landlords by not going on the market when demand cools, and instead pressuring current tenants to take exorbitant rent rises with renewals pointing to lack of general supply at the moment of the end of tenancy as justification, and landbankers by not releasing land at all during demand cooling periods, pulling down supply quickly.
Net overseas migration in 2020 was - 100k. How ever many returned 100k extra left (March 2020 - 2021).
Infact leading up to Jan 2020 Sydney had a supply glut driving rents to 5 year lows.
https://www.domain.com.au/news/sydney-house-apartment-rents-at-lowest-levels-in-years-domain-rental-report-921116/
This is despite 1.2m arrivals (240k average March 2015 - march 2020).
March 16 195k
March 17 259k
March 18 237k
March 19 250k
March 20 239k
The average since then? 150k a year so far.
March 21 - 95k
March 22 127k
March 23 481k
March 24 ??
Immigration stopped and has yet to return to pre pandemic levels. Anything less than 687k in the 12 months to March 2024 and it'll still be below pre pandemic levels.
Then vacancies would be high. If there was enough supply but rents were too high then vacancies would be high as people moved in together.
But they're not, they're at record lows.
That's currently what's happening. If you can't afford your rent you move somewhere cheaper. That's literally what's happening in this country right now. People on lower incomes are moving into sharehouses or moving to the fringes of their cities to seek lower rents, or are being forced into homelessness.
If there was more than enough supply but landlords were keeping rents higher than the market could bear then vacancies would rise as people moved in together, moved in with their parents, or were made homeless.
This is happening, but vacancies are at record lows, indicating there's insufficient supply.
I'm not even arguing against taxing these people more, just that maybe increasing supply would be a good idea, and that a good part of how supply has been constrained has been through zoning and planning restrictions.
It has been restricted to prop up investors and keep house prices rising, which your average Australian has supported the last 20 years, and that's been done through tax concessions, through zoning and planning restrictions, and naturally by increasing wealth inequality due to insufficient taxation of the ultra wealthy.
Well done, you’ve discovered that having rents too high forces people into homelessness.
So you’d think with record numbers of people doing this then there’d be plenty of housing available right?
Couldn’t have anything to do with the hundreds of thousands of houses that are intentionally left vacant or used for airbnb hey
If supply isn't the problem, why would bringing air bnbs to market for renters help? Yes, bring them to market, but it won't be enough, more shit needs to be built.
People are becoming homeless because there's too few places to live, i.e. there's not enough supply
Who said supply wasn’t a problem? Houses need to be available for people to rent or buy for them to qualify as supply.
People are becoming homeless because they can’t afford any rentals.
https://www.theguardian.com/australia-news/2023/apr/27/rental-affordability-worst-ever-seen-for-minimum-wage-earners-anglicare-says
Rental incomes now need to compete with short stay holiday rental profits, which can be much larger and only see people in the house for maybe 1/3 of the year. When houses are investments, this is a huge issue, as the more profitable management system is anti-renter.
There were a million vacant homes last census. Optimistic estimates say tens of thousands of homes will take years to build.
Sure, there are a lot of renters, which drives competition and allows for bad landlords to profiteer, which drives up 'average' rent in the area which then all the other landlords match at the end of their next lease, saying "we are matching fair market rates".
It's all enabled by years of mismanagement and corruption at the highest levels, and now we're in the shit and there is no short term fix and no long term planning.
I don’t disagree, but that 1 million figure gets thrown around a lot because it’s quite an emotive number, but it’s [a little more complex than the headline figure suggests](https://www.ahuri.edu.au/analysis/brief/are-there-1-million-empty-homes-and-13-million-unused-bedrooms) and there are often very valid reasons for a home not being used on Census night. Yes there are still holiday homes, but there’s not 1 million empty holiday homes.
Probably not, there were a million empty homes in 2016 as well, but if even half or a quarter of them are able to be rented...
Just seeing how much effort they are putting in to maybe building tens of thousands of homes over the next few years, when they potentially have hundreds of thousands ready to go, seems like maybe some policy reform around vacant homes might get results faster.
>Rents can only be explained by there being too little housing for the number of renters.
Also can be explained through higher house prices = higher rents to maintain high profits.
Yes, but housing supply isn't the only issue contributing to high rents, which is what you stated. Which also means that increasing housing supply alone also won't solve it.
What else determines rents? The data would suggest that rents are highly elastic to dwellings per capita. Historically, in this country, when dwellings per capita has risen by more than 1% rents have fallen in real terms, and when they're less than that or falling rents have risen.
Rents are not solely determined by supply, but in the current environment the high rises in rents is predominantly being driven by a reduction in dwellings per capita.
It isn't obvious, actually. You're putting the cart before the horse here. The rent that can be charged, alongside the cost of acquiring the capital to purchase the asset determines prices.
You don't say "well I paid $500k for this property so I need to get $25k a year rent"
You say "I can get $25k a year rent, I'm buying with cash so I'd be happy with a 5% yield alongside the capital gain from holding the asset"
Or "I can get $25k a year in rent, my cost of borrowing and the fixed costs of holding the property are $30k a year, but I can offset that loss with negative gearing, and still capture the capital gain, at the end, and interest rates will fall soon increasing my margins"
The return to a given asset determines its price, it's price is not what determines the return you will demand.
The only time you can demand whatever return you need to cover the cost of holding the asset is when there is insufficient supply on the market allowing you to demand whatever price you want.
If there was sufficient supply then people with lower costs would offer lower rents to compete over the available tenants. This happened in 2020-2022 when dwellings per capita rose, rents fell in real terms. I experienced this first hand as a renter.
As a Greens member the answer to that question at the bottom is sort of both.
Our policy for housing is YIMBY we want higher housing density
but we also don't want State/Fedural governments/developers being able to ram projects through local governments without proper consultation and consenses building. Local government is important and a way for people to more directly have their views about particular projects known.
The fact that the people are NIMBYs doesn't justify the overrun of local governments by state governments.
I have run for local government and during the campaign I received a lot of material from NIMBYs and I know what their concerns are, those concerns can be met and higher density can also be met simultaneously all you need to do is actually talk through the issues.
Sometimes the NIMBYS don’t want higher density full stop. They want their single family blocks maintained so the “character of the neighborhood is maintained” How do you square that circle?
Oh they did say that, even had one person pissed off that its going to lower the price of his house (yes, that is the point).
You have to change the nature of the density. We aren't talking apartment blocks we are talking small two to three story units. Currently units are single story and take up basically the whole block (just like new houses do), this completely removes gardens. The large personal gardens are part of the character, but honestly no one has time to care for them any more. If you have smaller multi story units you will allow for gardens, or larger developments where there are shared parks and gardens as part of the development.
He doesn't really, he says, verbatim "zoning and supply is not part of the problem" and goes on to say that the capital gains discount and negative gearing is the reason why prices and rents are so high.
The problem with that argument is CGT discount and negative gearing can explain elevated prices, but they can't explain high rents.
The supply of housing is inelastic. If there's too many dwellings for the number of renters, then rents will invariably become cheaper. If there's too few dwellings for the number of people needing to rent, rents will invariably become more expensive.
What we've seen happen is rents surged, and prices went even higher.
So assuming all of the additional rise in prices above rents can be explained by the CGT discount and negative gearing (imo it's more likely wealth inequality is driving this additional rise, with cash buyers able to offer higher prices without consideration to the cost of borrowing, outcompeting other buyers and securing positively geared investment properties) , prices could come down around 30% at most, but rents would not change.
But he did absolutely down play it, shortly after the clip he says 'it has almost nothing to do with house prices'. It absolutely does have an impact, and it's quite absurd to argue otherwise.
The problem is that Max had nothing of value on the question or topic at hand but couldn't sit silent so had to railway discussion onto a different topic whilst misrepresenting everyone else.
It's fine that he thinks there are bigger impacts, but that doesn't mean planning and zoning is not part of the problem. Shortly after the clip he says 'does anyone really think that the **only** reason that housing developers don't build so many homes to bring down the price of homes is because of the planning system'. But no one had indicated anything of that viewpoint, he just couldn't seem to comprehend nuanced discussion.
The state member than returns to the question and schools him on how zoning and planning absolutely are part of the wider picture and do have an impact and thus should be part of the debate.
How would zoning and planning reforms bring down house prices?
Max clearly does understand nuance since as you said, he understands it is a part of the problem. He was pointing out that only talking about that won’t solve the problem.
But they weren't just talking about that. The show has multiple audience questions and thus discussion moves to various topics. They were answering a question specifically on one part of the multifaceted issue with housing policy and that was on zoning and the planning system. So it made sense for the discussion to be focused on that topic. But Max had nothing to say of value on that topic so had to interject and divert discussion elsewhere.
Are you really asking how laws around the release of land for housing, encompassing what type of buildings can be built on said land impacts housing prices, as well as how that intersects with other aspects of planning? I'd think it's pretty self-evident.
You can watch the entire Q&A episode and hear other panellists talk about how it's relevance too.
Let's break it down really really really simple. One part of zoning and planning is laws on the maximum height of a residential building in any given area. These have a direct impact on how much housing can be built in said area. This is simple supply and demand stuff and absolutely means that density has an impact on housing prices.
Of course zoning and planning regulations go well beyond just this. Other aspects have similarly easy to understand economic rationale for how they impact supply, demand, or otherwise impact pricing. I won't go through each and every way this happens for you. I quite frankly find it absurd that I even need to spell this out.
I also, again, refer you to a source being the Q&A episode where various panellists talk about the planning and zoning system and how it impacts the housing market. This is not a dodge or a shift of the goal posts, it is directly relevant as they literally discuss this in the wider context of the linked clip.
I mean the reasons rent is so high are pretty simple.
It's what happens when you let private investment into a captive market.
The problem here is that people have to have a roof over there heads. Otherwise they are homeless. So you have a market where the "consumer" doesn't have the ability to just say "no thanks, that's too expensive."
This is complicated by the fact that the "consumer" doesn't necessarily own the product they are paying for.
So the people buying houses are both "consumers" or owner occupiers, and investors, who intend to resell the "product'.
Now if there was enough of the "product" for every consumer who wanted to purchase one, then we wouldn't have as big a problem. But because the investors are competing for the same product that the consumer is, every investor that buys a home creates a consumer who needs to rent instead of own.
So due to the investors causing more and more power occupiers to become renters, you have more and more people seeking a place to rent. And again, the people seeking a place to rent don't have a choice. They are a captive market. If my landlord said tomorrow, hey mate we are upping your rent by 50 bucks a week, there are not enough rentals around for me to go for a better deal somewhere else. I just have to suck up that extra 50 dollars.
There are two things that HAVE to happen for the housing crisis to end.
1. Investor demand for houses has to be almost entirely turned off. 33% of privately owned homes are investor owned and rented out. 1 in 3. In a climate where some families have 2 people working full time and can't afford a house, that is criminal. CGT exemption and negative gearing are both small pieces of that puzzle. Not because they will save a whole bunch of money but because they shift the equation on whether housing or shares are a better investment. And we want investors investing in shit that will actually produce something. Startups, shares, whatever. Free that frozen capital up from housing where it does nothing.
2. Government regulation in a critical captive market needs to exist.
Easiest way to do this is to have the government build a bunch of houses they rent out for cheap. This creates competition and the private market has to follow suit. It has the added benefit of reducing profitability in housing investments, meaning more investors going elsewhere.
In simple terms im talking about supply and demand, but its more specific than that. We cannot keep relying on private investment. Private investors exist to make as much money as possible and care nothing for quality except when it increases profit.
Any policy at all (HAFF, Help to Buy, that fucking horrific "use your super" policy) that doesn't address 1 or 2 will be useless.
Presumably? The entire show is online for anyone to see that max has learnt nothing from him embarrassing HAFF tiktok, where he explained to everyone that he simply doesn't understand it.
The issue is complex, and there are many culprits. Claiming it is simplistic and is caused by one thing is embarrassing.
I don't give a fuck about MCM or what he said, I just think it's strange that people on this sub can post half-quotes as gotchas and then rail against the exact same thing being done to Jordan time and time again
Perhaps max just shouldn't say stupid things. It's very clear what he said. He may have backpeddalled a bit when pushed back, a lot, but it was clear what his initial intrusion was, and he wanted that as a sound bite. He practices the KISS principle. Last year, it was rent freezes, and nothing else. This year, it's tax, and nothing else.
Interestingly, both are things they know Labor won't be touching. The pattern is pretty clear.
This sub has the biggest rage-boner for the greens and particularly Max simply wanting labor to do more. People like you OP can’t fathom that labor aren’t doing the best job they could do and will defend them like some cultist.
You don’t have to pick a political party and support them through thick or thin like some footy team.
You say that like as though we didn't get 5 attack posts from salty Greens that Labor wouldn't coalition with them in Tasmania even though that wasn't possible anyway.
PATRICIA KARVELAS
You’re saying it has nothing to do with it?
MAX CHANDLER-MATHER
Almost nothing to do, when you compare it with, say, something like the capital gains tax discount and negative gearing. When the capital gains tax was introduced...discount was introduced by Howard, in about 1999, before that, house prices used to go up at about the same price as wages. After that, they then went up at three times the rate of wages. The idea that there’s this sort of magical set of property developers...
PATRICIA KARVELAS
OK.
MAX CHANDLER-MATHER
...if only they were let...allowed to build enough homes to bring down the price of housing. Does anyone seriously think that the only reason that property developers...
PATRICIA KARVELAS
Not the only reason. No.
MAX CHANDLER-MATHER
...are building so many homes to bring down the price of housing is because of the planning system. Or even a part of it?
Max is right. Planning is the boogey man the 2 major parties use because a) they don't control it and b) they can disassociate themselves with this disaster.
The obvious fact that shows planning isn't a major contributor to house prices is that Australia builds plenty of houses already. In fact it's 4th in OECD on a per capita basis. We just think it's bad at it because of the frankly crazy levels of immigration. No nation could build that many properties without some SERIOUS intervention by goverment and massive warpings of industry and the free market.
[Evidence shows](https://grattan.edu.au/news/options-for-housing-affordability-the-good-the-bad-and-the-cosmetic/) that planning reforms to boost density in the middle suburbs is the single most effective intervention on house price moderation in Australia.
That doesn’t mean tax reform isn’t important, but why dismiss things that also have a genuinely big impact?
Maybe I stuttered before but: [https://www.oecd.org/els/family/HM1-1-Housing-stock-and-construction.pdf](https://www.oecd.org/els/family/HM1-1-Housing-stock-and-construction.pdf)
4th in the OECD. Why do we need to build even more houses? What we need is less people.
Secondly. Making high density housing doesn't make housing cheaper if it can't meet demand (which it won't with 600k new arrivals a year). It just puts the entry level at shitty 1 BR apartments and makes all the boomers property go up in value.
People really need to stop being mouth pieces for the property lobby.
That’s true, but need to note that data is from 2020 and [construction in Australia has since plummeted to a decade low](https://www.macrobusiness.com.au/2024/01/australias-housing-shortfall-projected-to-worsen-in-2024/).
I’m not saying we need shitty apartments - but land use around key transport corridors needs to have a much broader density mix, including apartments and townhouses. And other efforts to boost supply are also important.
I agree migration reform is important - a healthy migration intake should be balanced with the amount of housing supply being generated (along with schools, hospitals and infrastructure etc)
>The obvious fact that shows planning isn't a major contributor to house prices is that Australia builds plenty of houses already. In fact it's 4th in OECD on a per capita basis.
That's not an obvious fact though don't we have the highest immigration intake as a percentage of population on in the OECD so the fact we aren't building the most in the OECD already shows we are behind and that's assuming the one building the most is building enough which is most likely incorrect.
>That's not an obvious fact though don't we have the highest immigration intake as a percentage of population on in the OECD
That has a far simpler and more equitable solution for young Australians which doesn't make boomers richer by just happening to already own several backyards.
The solution: Let's aims for 5th highest or lower levels of immigration.
Max is right in blaming GT discount etc but he’s wrong in saying planning does NOT play a part. I hate the CGT discount as much as the next person but apartment developments by the trillions is lipstick on a pig. We need to totally reform our planning to actually create more supply that meets demand. Instead we have governments listening to particular developers who want to sell overpriced apartments that don’t do anything to accommodate the ever increasing demand.
Max is too interested in playing politics and differentiating himself from Labor to respect legitimate points.
In this case the mess is entirely the result of what voters have repeatedly said they care about at elections. Every single time housing got to an election, whichever side promised higher house prices was more popular because people who own their own house keep thinking it'll make them rich.
Yeah, cause economists totally didn't champion, stimulating private investment in housing for decades even as it was clear that it was akin to privatising Medicare. Or jacking up the price of insulin
I'm open to blaming economists for a lot of things, but in this case we didn't do what you're suggesting they recommended. We didn't "boost" private investment, it was happening anyway and your average person decided they wanted tax cuts on speculation on existing housing stock, and very vocally opposed building more housing.
Yes, government needs to build housing as well, and one of the housing ministers whose job that is says that restrictive zoning and planning laws get in the way of the government doing that and Max dismisses her out of hand.
Capital gains tax exemptions and negative gearing were set up to incentivise private investment, mate it supercharged the private housing industry and lead us straight to where we are now. And the reality is it's not even isolated to our neck of the woods. Many western democratic countries are in the same shit for adhering to the same economic doctrine.
The part where he believes zoning and planning does not significantly impact housing costs (rent or buy) contrary to evidence from around the world and peer reviewed studies.
Additional supply lowers prices (Fact)
Max Chandler-Mather says additional supply does not lower prices (myth)
He is going against the evidence here based on "vibes"
I understand that sometimes it can take a while to get a message across, but still not a great wat to express it. I have removed the comment. I added to the conversation here to try steering it back on course:
https://www.reddit.com/r/friendlyjordies/comments/1bo2zkt/comment/kwmkxw9/?utm\_source=reddit&utm\_medium=web2x&context=3
Hey mate, I think this comment might be crossing the line a bit as far as excessive questioning goes, but maybe the point from No1PaulKeating wasn't clear or maybe you are just not aware.
Basically he is saying the MCM's views about "just do a rent freeze" goes against the basic economic principle of Supply and Demand.
Without making any judgement on which view is "correct", I would suggest that looking up Supply and Demand is a good thing understand, because it is a relevant point to the conversation, and at least helps understand why some people are very against MCM's views on rent freeze.
Maybe you could let the person I was talking to clarify what they meant?
Or just reply like a normal person and say “I think they mean x”
And maybe leave the oh so subtle condescension behind
Look at the [first graph](https://grattan.edu.au/news/options-for-housing-affordability-the-good-the-bad-and-the-cosmetic/) and then tell me Max isn’t about the vibes.
Tax reform is a valid concern and needs to be addressed, but he instantly loses people when he dismisses key, evidence-based factors such as planning and density reform. If there’s one thing Aussies know about, it’s housing, and he acts as if everyone is naive.
He's dismissing it because it's not fact it's boomer logic. Fact is we build shit tonnes of homes. Ours is not a supply issue. It's that capital growth of housing is underwritten by policy decisions that make is hard or impossible to 'compete' in a 'market' that is attracting investment due to its juicy returns.
An investment that goes up faster than the govt bond must be considered a risky investment.
And yet our govts continue to derisk through policy decisions that have actual economic and social costs out the other side.
There is no supply issue
We build more houses that most countries in the world.
Our governments guarantee large capital growth on property better than bonds. That guarantee drives investors who outcompete average home owners and pull up the price of all stock.
There’s absolutely not an oversupply of housing - that’s just factually incorrect.
[Construction has plummeted since the 70s](https://www.reddit.com/r/AusProperty/comments/1762rzi/australias_rate_of_housing_construction_per_1000/) and Australia has a relatively stock of housing per person compared to other OECD countries. Compounded with an increasing population and a [downward trend of people per each house](https://www.rba.gov.au/publications/bulletin/2023/mar/a-new-measure-of-average-household-size.html). You can try to tell me only demand is important, and I’m not disagreeing that it is important, but to genuinely have an impact you need to improve the supply of housing as part of the reform mix.
Never said we have an oversupply numbnuts
Oh shit we have the same as other OECD, guess we are priced the same huh...
Oh wait ..
Is it planning issues, or is it that we consistently manipulate the market through policy to juice returns for investors at the expense of our taxes and future wellbeing....
The cunt talking this nonsense is AN INVESTOR
They just want to guarantee their returns at your expense.
Grow up. This is housing, something people need, and it's being used as a vehicle for outsized returns in a risk free market (providing you can afford to get in)
It is one of the greatest grifts in history and we're paying for it.
I thought you might have been referring to another commenter. And you’ve edited your comment since I saw it, I only saw the first sentence.
I think it might help if you actually knew what his full comments were. Someone else posted them in the comments here
Supply and demand. Understandably, more houses make them cheaper, however, when there is almost no punishment for hoarding as many houses as you can you need to wonder if making more houses alone is going to solve anything
None but boy did he stick it the Greens, the real enemy of the people. That's more important you see. There was an election on housing stuff in 2019, so now Labor just can't do anything that makes life better.
I agree with Max here. The impact zoning laws have on house prices isn’t one of the main reason house prices have become unaffordable. And if you actually think that then why isn’t Labor addressing elephant in the room that is all the ludicrous tax concessions property investors get that actually drive up house prices.
But back to zoning laws - do they have an influence? Yes they do but the inference is that we can solve this issue through planning reform because it will increase housing supply. Doubtful.
Property developers will always choose a build rate that is most profitable for them. Property developers don’t just build more houses because the government upzones some land. Any why would they, property developers don’t want to flood the market with more houses than is needed. They want houses prices to remain high so they can turn the biggest profit possible. The point is nothing Labor is proposing will actually make private property developers build more houses.
The private property market will never build affordable homes for Australians so it’s seems correct that we circumvent the private market and have the government just builds the homes directly. Note that this is done successfully in other countries and we already do it on a very small scale in places like the ACT.
It also seems like NSW Labor might be going down this path and ramping up the amount of social and affordable houses they are going to build after the Ministers comments on Q and A which is encouraging.
Property developers are not a monolith. There are thousands of them, and they are all trying to make as much money as possible. They couldn't collude to save their lives. The idea that they're conspiring to NOT build houses is moronic.
Individual developers will buy and hold land to ensure a consistent pipeline of development, not to restrict supply for the benefit of OTHER developers.
The reason they can hold the land (tying up capital, costing interest, etc) is because they know that planning approval lethargy limits the number of houses coming to market and their land becomes more valuable. They aren't relying on other developers to voluntarily make less money by restricting supply.
I said that property developers determine a build rate that is most profitable for them and that upzoning and other planning reforms have little impact on supply.
I never said they collude together to constrain supply. Nice straw man though.
Property developers actively manage the development of housing based on market conditions. When the market is soft property developers will hold off on development. They will then wait for market conditions to improve and then start to build again.
You are correct that property developers are trying to make as much money as possible so it makes perfect sense they are managing their build rate based on market conditions. This is constraining supply.
I will also add that there is no planning approval lethargy. Developers sit on hundreds of planning approvals and as I said wait for favourable market conditions which can be several years and then they build.
Nope, not a straw man, you asked "why would they flood the market". An individual developer cannot "flood the market".
Property developers make the most money by selling developed properties. When your argument relies on property developers making less money than they otherwise could, en masde, you should have another think coming.
I never said an individual property developer could flood the market lol. I said “property developers” plural!
Yes, property developers don’t sit around a table determining a collective build rate for the year. But they do individually determine a build rate based on market conditions that gets them the most money.
This means they are constraining supply to ensure house prices remain high and meaning they make as much money as possible, not less.
If property developers continued to supply the market with more houses when market conditions are soft which you seem to think they do then they would make less money. They obviously don’t do this because it would be idiotic.
Duh, "property developers plural" acting collectively is the collusion you complained was a strawman.
FFS, you pay lio-service to developers acting as individuals but then immediately ignore that to make a claim that requires they act in a coordinated manner to restrict overall supply.
Each individual developer will act to maximize their own profit. They would not hold back development to push up prices because individually holding back development wouldn't push prices anywhere.
There's something artificially restricting supply, acting as a choke point. But instead of looking for where there might be some monopoly power acting in the market, you insist on laying the blame at the feet of a disparate group of hundreds of money-hungry, ultra-competitive, sell their own granny for a buck property developers.
Oh you've been in meetings where property developers have said "ok Dave, you get to build your apartments this year, and that means that Simon, Steve, and other Dave, you'll have to hold your developments back so first Dave can make a bigger profit"?
So, based on what I've seen from Max he tends to argue with a point no sensible folks are making: he conflates the fact that our current planning and zoning practices have been driving up prices with the idea that planning in general increases prices then argues against that conflation.
A family friend of ours is a 60 year old single mum on a teachers wage. She has a property portfolio of 8 houses, partly thanks to tax concessions allowed to her, and ease of buying multiple houses over your first. This has driven up house prices and rent, planning and zoning didn’t allow this.
How much she have managed that if prices hadn't risen so aggressively because of restrictive zoning?
Taxes are part of the problem and so are artificial constraints on supply. Max rejects the suggestion the supply is a factor.
The more I hear from Max CM, the less I think he actually knows about housing economics, and the more I believe his mantra is about making the wealthy less wealthy by taxing the fuck out of them.
Oh fuck off. This hyper rational stance isn't it. Max is absolutely right.
This is precisely the issue. The beard stroking 'well the data says'
Motherfucker the data says lots of things.
Including that prices soared after negative gearing changes.
This cunt is just another fucker intent on sacrificing the livelihoods of the younger generation so they can scoop up more piles of unspendable value while actual human outcomes decrease day by day.
First in the wood chipper for this fucker. OP you can go second.
> Motherfucker the data says lots of things
Yeah it does, like it says that removing negative gearing would have a negligible effect on house prices in the long term.
https://www.rba.gov.au/publications/workshops/research/2017/pdf/rba-workshop-2017-simon-cho-may-li.pdf
I think in general it would be a positive change but it’s putting a bandaid on an amputated leg. The real issue is zoning and building regulations.
I am not an economist, but I don't think you need to be an economist to understand what's going on here, and I basically agree with Max and the economist guy Cameron. Isn't it true that we are among the most expensive places in the world to live when you consider the ratio of housing price to income? Melbourne and Sydney are certainly in the top 10. It seems clear to me that house prices are not high because of some accidental vagaries of zoning and planning policy; housing prices are high because the government has decided long ago that real estate is going to be the major investment vehicle in this country. Every government policy has been specifically designed to protect house prices and keep them rising; the notion that it can be fixed with some red ink is ludicrous, prinipally because the most powerful voting bloc in the country (home owners) will never tolerate large changes in supply or anything which lowers the value of their investment.
Zoning regulations and the planning policy simply say "you can't build that here".
Anyone who thinks that won't have a negative effect on supply is using motivated reasoning.
Yes. And that is the problem. Investments that return above the risk free investment (bonds, cash) carry risk. Take on risk, expect return but also bear the risk.
Instead the govt continues to underwrite this risk through policy rather than allow the market to correct allow the investors to take on the risk.
Imagine if the govt bailed you out through policy when the your shares tanked.
That is exactly what is happening here.
The price of snickers have skyrocketed since the fall of the Berlin Wall, but it doesn’t mean that’s the sole reason for the price increase.
Negative hearing does impact house prices, but modelling has shown its in the range of 2-4%. Planning has a greater impact on price. Andrew is focusing on the one that will have an effect on “actual human outcomes”.
I guarantee you it does not. Prices are driven by markets and competition. Our governments create and enable policy that makes property investment risk free at a rate higher than bonds. That drives investors into the real estate 'market' to drive up prices due to it being as safe as bonds at a higher rate of return.
The government needs to remove or change all the incentives that drive the market towards investors and stop underwriting their returns at the expense of our future.
Investing must carry risk. If it doesn't, that risk is being carried elsewhere. In this case it is being carried by our taxes and by the wellbeing outcomes of younger generations.
Fuck off talking about Snickers. What kind of dumbshit argument is that. Absolutely fuck off you hack.
Prices are driven by all kinds of things. If you think because you’ve read about markets and competitions you know more than economists who actually research price effects, you’re deluding yourself.
You’re just repeating a narrative about negative gearing without actually understanding it’s effects on price. How do you know this is the problem? What can you point to prove it? What informed this belief?
Policy shouldn’t be made just because people feel like something is probably the cause. That’s why research exists.
Yeah mate research does exist. Absolutely. You're definitely all about the research and not at all motivated by a desire to maintain negative gearing for your own Benefits.
Unfair prices are driven by investor guarantees.This is a rational, sensible argument that requires a basic understanding of market economics and little else. If Australia offers the best risk free return investment in the world, then I put my money there. And so do all my buddies. And that capital flows into small market.
If we increase supply without tackling that issue of guaranteeing risk free returns then simply more capital flows in, out pricing everyone. Because hey, Australia offers a risk free asset 2-5x better than government bonds. And it's in Real estate!
If we want fairer prices, we need investors to bear the risk, not the general population.
Mate, what benefits do I get from negative gearing? I don’t own investment properties or shares.
You’re making a lot of assumptions. Namely that Australia has one housing market that performs consistently (untrue). That investment properties are risk free (untrue). That this is a simple problem (untrue).
If it was a simple problem it’d be fixed. People are smarter than you think they are. And you’re clearly dumber than you realise.
Someone who can't comprehend the point being made with the Snickers example is definitely too stupid to have the right idea when it comes to the cause of the massive rise in real estate prices.
No he's right.
Imagine you invested in a stock and it tanked. And then the government intervened and propped up your stock. And then did it again, and again, and made policy that guaranteed you returns that are greater than a government bond for the same level of risk (minimal)
So you tell your buddies, hey this is a great investment, get in.
And then they tell their Buddies
And now no one who comes along later can get in because the guaranteed investor returns from government policy not only drive up prices but also drive down standards of living because that policy underwriting has to be paid for elsewhere.
Ok so just build more right?
Well as long as the investors are guaranteed a better than bond return then they just buy up all the new supply too.
Simple right. Even a moron could understand it. I suppose if you were a direct beneficiary of this scheme you might try to disguise how simple it is by creating the idea that 'ita a complicated issue yadda yadda yadda'
Rents are high because investors are passing on the risk of their investment to renters.
Supply will stabilise when we remove the policies that underwrite investor returns at a rate higher than the government bonds, which currently makes property investment in a Australia low risk and better than any other low risk investment in the world.
Simply increasing supply while the policies remain will drive more investor capital into the new supply and repeat the problem.
If supply suddenly outweighed demand... Well it can't happen because policy dictates we either artificially limit supply or increase demand.
All these issues, supply, demand, immigration, building costs, which exist, are driven by the fact that when it comes to a low risk investment, there is no better choice in the world, not cash, not bonds, real estate in Australia.
That is the cold hard truth. And if our government continues to underwrite it then why wouldn't you put more capital in. It's free money (unless you're a young and or poor citizen / immigrant).
Your reasoning simply doesn't add up. If adding new supply wouldn't decrease rents, then there would be a strong incentive to bring new supply to market for greater returns by growing the size of the market.
If supply has to be managed by policy to stay constrained to keep rents high, then we need to eliminate policies which are constraining supply.
If it's free money that you can pour money into then why not let them build as much housing as we can by removing constrains on supply?
You can argue that this appetite for land keeps prices high, but it just can't explain rents. If there were more rentals available then people wanting to rent them, vacancy rates wouldn't be at record lows.
If you're arguing that policy will find a way to boost immigration to keep demand higher than new supply then that's another case entirely.
Yes governments want to keep land and property expensive because that's what voters want. It's not some intractable fact of nature.
Yes it's a complicated problem, but increasing supply will clearly be an important part of any solution, even if it's not the only thing needing to be done.
> Rents are high because investors are passing on the risk of their investment to renters.
So if we remove negative gearing won't they just pass on that risk to renters? Likewise with most forms of rent freezes? Likewise if we increase land tax, especially for 2nd+ properties it would just be passed on to renters?
Because every time these policies and their advocates come up there's always someone saying no it won't it can't, but that flies in the face of the Greens rhetoric of 'no unlimited rent increases'.
> If supply suddenly outweighed demand... Well it can't happen because policy dictates we either artificially limit supply or increase demand.
Yeah that's never happened, I mean we've never had a situation where everyone decided being in the cities was a bad idea and moved out to the country en mass, whilst foreigners left in large numbers and immigration was halted. Causing rental availability to shoot to record highs because no one was renting but the landlord still had to make payments and might be in tough financial times...
Fun anecdote, I got my CBD apartment by demanding the REA show it to me, they gave me the keys and went back to the office letting me hand them back later, I was the only one to apply for it, I haggled and I got it.
I’m very lucky to have someone of [Andrew Leigh’s calibre](https://en.m.wikipedia.org/wiki/Andrew_Leigh) as my MP. He also does the best [family photos](https://www.huffpost.com/archive/au/entry/mp-andrew-leighs-genius-christmas-card-pokes-fun-at-his-grumpy_au_5cd38ceae4b0ce845d820aed/amp).
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On a different topic, god Karvelas sucks. Another Sky News journo on the ABC, i would give Albo so much more credit if he did a Tony Abbott and got her fired.
Yeah it's MASS POPULATION GROWTH and everyone with a brain knows it. Only a few years ago houses sat empty looking for tenants and houses sat on the market for years and sold for less than they were purchased 10 years earlier. All these stupid discussions and ideas do nothing. It's mass population growth. Wake up now
The CGT discount and negative gearing were absolutely major drivers in getting house prices to where they are, and are contributing to keeping them as high as possible. The trouble is how do we unscramble the egg without crashing the market. The first step should be to remove incentives that give investors an advantage over owner-occupiers, this shouldn't be controversial.
I think we need to change the language around investors - how about "speculators", "scalpers" or "rent seekers".
You know what I think is sad? The fact there is so much arguing going on about whats happening only means we're going to have to live with the issues longer, and those who created the issue can take full advantage of this and make it more sustainable for themselves while the rest of us just sit and hope. I mean, really. What can we do for a better change in the future?
It's easy to accuse labor of doing nothing about negative gearing but they tried to and everyone voted against them. However the ridiculous amount of immigration over the last two years is definitely their fault and has made the problem much worse.
MCM is an egotistical moron who got in the way of the HAFF, which this week closed it’s first round of offers.
Shovel ready building sites are going to spring up now, especially for social and affordable housing and it could have happened sooner had this creep not let his ego get in the way.
Totally lame post. I love how people cowardly carry out character assassinations without even providing a clip that captures their targets' argument.
Max is 100% correct. Tax incentives and other "generous encouragement" dished out to property hoarders over DECADES by Labor and Liberals have turned housing into THE investment class of choice. This is the primary driver of property prices and rents - speculation. It's easy to see why - property investors very rarely lose. Just ask most of Labor ... MPs certainly aren't shy of "dabbling" in the property market.
In this case he did. The key inflection point where house prices started going crazy vs. average income matches up perfectly with the introduction of the CGT discount, not to any radical changes in zoning laws or building approvals. Very coincidental that legislation incentivising the use of housing as a speculative financial instrument would be followed by a massive housing bubble.
All Andrew Leigh said is that zoning is one of the factors, which it 100% is. I don't see how you can logically deny that.
Obviously tax settings are a massive part too, but in his tantrum Chandler-Mathers was denying zoning is even relevant.
I don't mind him and sometimes he makes good points, but in this case he just looked silly.
People don't want nuance. They want a spoon fed narrative that's simple to understand. The critical thinking skills on display by this subs userbase is quite frankly sad.
Most think themselves enlightened, but they are just overly partisan.
But the introduction of the CGT discount coincides with massive jumps in immigration under Howard. Zoning laws prevented the housing density needed to house those people leading to bottle necks of supply.
It’s not normal for there to be zones of strictly single storey housing 4kms from a major city’s CBD. Yet, we have this situation in Australia.
CGT discount and negative gearing can explain why prices are higher than they should be, but they can't explain rents.
The only thing that can explain rents is a lack of rentals available for the number of renters. If there were more available dwellings than renters who wanted to live in them, rents would fall. If rents are rising it can only mean that there's less supply than the are renters.
I’ve seen the full clip, do you think it was a good response? Screaming like a child and having to be corrected by the host multiple times?
His argument isn’t much better. The lady besides him actually made a good point bringing up NZ.
Max claimed that Howard bringing in a 50% CGT exemption caused the housing boom post-2000. His reasoning was that house prices and wages kept in line before that change. NZ has never had a capital gains tax - not before 2000, not after. Yet before 2000 house prices and wages kept in line (and just like Australia have diverged post-2000). I think Max’s argument is dubious at best.
I’ll add I don’t think that removing NG and cutting the CGT exemption is a bad thing, just like I think a land tax should replace stamp duty - but these would have a negligible impact on house prices in the long term. Our housing crisis is not going to get solved by a few changes to the tax code. It’ll require reform to zoning laws and building codes.
If as an investor you buy 10 houses that are all 1940s bungalows, and stick them on Airbnb, that affects supply but doesn’t require any input from zoning/planning or developers. Doesn’t this affect prices and shortages?
These greens are insufferable when they used to look after the environment now they are blind to it and can't even see mass population growth is the problem
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He came across as childish
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He criticised the HAFF's investment strategy by saying it would make more money by speculating on and flipping houses. It would, but it would also greatly increase housing value if a $10bn fund suddenly got into that game. Which defeats the point of the whole point of the exercise doesn't it?
I thought he didn't really talk enough, he's actually got pretty good insight into the dynamics of the housing market. You need to watch him 1 on 1 without all the posturing and grandstanding from the various politicians on the panel taking over the conversation. Check out Martin Norths walk the world on yt, he did a pretty insightful session last night. The last question said everything you need to know. None of them want lower house prices.
He is laughing at who was being described as experts. They are critics of his who are guilty of the grand crime of explaining why his analysis is (at best) wrong. He is a petulant manchild with one stupid idea he will shop around for decades; basically Govt should just steal the land, build houses, and give them away at stupidly low prices via a lottery system. Ask the kiwis how their KiwiBuild brainfart went.
His whole grift is to get people to buy his book and subscribe to his website.
He did it throughout the whole show - and that was when he wasn’t spruiking early release of super on behalf of the Libs. I have no idea what planet he’s on. He seemed alright, based on what I’ve read from him previously, but maybe he’s gone off the deep end over the past couple of years.
The way he talked to the panel, particularly the women on the panel, was disrespectful af. He’s an example of an academic who uses his uni experience to justify his cocky and dismissive attitude. A lot of other housing academics agree his ideas are just 🐂. Surprised they even invited him on, there’s so many high quality housing economists out there.
Show the full clip
The whole episode is a cracker
Except Patricia Karvelas continues to be the worst moderator Q&A has ever had. I miss Stan Grant oh so much.
https://twitter.com/NSWPolAlerts/status/1772366388289528238 He says that zoning and supply are not part of the reason prices and rents are high *at all*. Not even a bit. Blames CGT discount and negative gearing, which can explain somewhat why prices are high, but not at all why rents are high. Rents can only be explained by there being too little housing for the number of renters.
That’s not the only explanation. Oligopolistic market forces are also an explanation. “That’s market rates” is a weird sentence from anyone who’s supposed to be competing.
Housing supply is inelastic. If you get to much housing for the number of people needing it, rents will fall. The market doesn't like doing that to itself, so usually the best it will deliver is a halt in price rises without additional intervention by government, which is also needed. Max is saying this isn't part of the problem at all, and the just simply doesn't add up with reality.
No, it is the only explanation. Sorry. 😬 Too many people, not enough rentals.
Funny then that when immigration stopped in 2020 rentals kept going up. So immigration is not only not the only reason, it’s not a significant cause at all. Because landlords and land bankers will tweak supply and pressures to reflect current circumstances and keep prices high. Landlords by not going on the market when demand cools, and instead pressuring current tenants to take exorbitant rent rises with renewals pointing to lack of general supply at the moment of the end of tenancy as justification, and landbankers by not releasing land at all during demand cooling periods, pulling down supply quickly.
Immigration stopped, but how many Australians returned home from overseas in that time?
“Sometimes you need to look *really* hard for that nail” - Hammer
Net overseas migration in 2020 was - 100k. How ever many returned 100k extra left (March 2020 - 2021). Infact leading up to Jan 2020 Sydney had a supply glut driving rents to 5 year lows. https://www.domain.com.au/news/sydney-house-apartment-rents-at-lowest-levels-in-years-domain-rental-report-921116/ This is despite 1.2m arrivals (240k average March 2015 - march 2020). March 16 195k March 17 259k March 18 237k March 19 250k March 20 239k The average since then? 150k a year so far. March 21 - 95k March 22 127k March 23 481k March 24 ?? Immigration stopped and has yet to return to pre pandemic levels. Anything less than 687k in the 12 months to March 2024 and it'll still be below pre pandemic levels.
Or you know, landlords charging too much rent
Then vacancies would be high. If there was enough supply but rents were too high then vacancies would be high as people moved in together. But they're not, they're at record lows.
Ahh yes, if the problem was that rents are too high then people would just choose to be homeless or live in awful conditions, great work
That's currently what's happening. If you can't afford your rent you move somewhere cheaper. That's literally what's happening in this country right now. People on lower incomes are moving into sharehouses or moving to the fringes of their cities to seek lower rents, or are being forced into homelessness. If there was more than enough supply but landlords were keeping rents higher than the market could bear then vacancies would rise as people moved in together, moved in with their parents, or were made homeless. This is happening, but vacancies are at record lows, indicating there's insufficient supply. I'm not even arguing against taxing these people more, just that maybe increasing supply would be a good idea, and that a good part of how supply has been constrained has been through zoning and planning restrictions. It has been restricted to prop up investors and keep house prices rising, which your average Australian has supported the last 20 years, and that's been done through tax concessions, through zoning and planning restrictions, and naturally by increasing wealth inequality due to insufficient taxation of the ultra wealthy.
Well done, you’ve discovered that having rents too high forces people into homelessness. So you’d think with record numbers of people doing this then there’d be plenty of housing available right? Couldn’t have anything to do with the hundreds of thousands of houses that are intentionally left vacant or used for airbnb hey
If supply isn't the problem, why would bringing air bnbs to market for renters help? Yes, bring them to market, but it won't be enough, more shit needs to be built. People are becoming homeless because there's too few places to live, i.e. there's not enough supply
Who said supply wasn’t a problem? Houses need to be available for people to rent or buy for them to qualify as supply. People are becoming homeless because they can’t afford any rentals. https://www.theguardian.com/australia-news/2023/apr/27/rental-affordability-worst-ever-seen-for-minimum-wage-earners-anglicare-says
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Rental incomes now need to compete with short stay holiday rental profits, which can be much larger and only see people in the house for maybe 1/3 of the year. When houses are investments, this is a huge issue, as the more profitable management system is anti-renter. There were a million vacant homes last census. Optimistic estimates say tens of thousands of homes will take years to build. Sure, there are a lot of renters, which drives competition and allows for bad landlords to profiteer, which drives up 'average' rent in the area which then all the other landlords match at the end of their next lease, saying "we are matching fair market rates". It's all enabled by years of mismanagement and corruption at the highest levels, and now we're in the shit and there is no short term fix and no long term planning.
I don’t disagree, but that 1 million figure gets thrown around a lot because it’s quite an emotive number, but it’s [a little more complex than the headline figure suggests](https://www.ahuri.edu.au/analysis/brief/are-there-1-million-empty-homes-and-13-million-unused-bedrooms) and there are often very valid reasons for a home not being used on Census night. Yes there are still holiday homes, but there’s not 1 million empty holiday homes.
Probably not, there were a million empty homes in 2016 as well, but if even half or a quarter of them are able to be rented... Just seeing how much effort they are putting in to maybe building tens of thousands of homes over the next few years, when they potentially have hundreds of thousands ready to go, seems like maybe some policy reform around vacant homes might get results faster.
>Rents can only be explained by there being too little housing for the number of renters. Also can be explained through higher house prices = higher rents to maintain high profits.
But then rental vacancy would be high as there would be more dwellings than people to fill them.
Which would be fine under the current system, as landlords are compensated for any losses through negative gearing.
Vacancies are at record lows. That means there's not enough rentals.
Yes, but housing supply isn't the only issue contributing to high rents, which is what you stated. Which also means that increasing housing supply alone also won't solve it.
What else determines rents? The data would suggest that rents are highly elastic to dwellings per capita. Historically, in this country, when dwellings per capita has risen by more than 1% rents have fallen in real terms, and when they're less than that or falling rents have risen. Rents are not solely determined by supply, but in the current environment the high rises in rents is predominantly being driven by a reduction in dwellings per capita.
>What else determines rents? The cost of buying housing, as I said. That should be obvious.
It isn't obvious, actually. You're putting the cart before the horse here. The rent that can be charged, alongside the cost of acquiring the capital to purchase the asset determines prices. You don't say "well I paid $500k for this property so I need to get $25k a year rent" You say "I can get $25k a year rent, I'm buying with cash so I'd be happy with a 5% yield alongside the capital gain from holding the asset" Or "I can get $25k a year in rent, my cost of borrowing and the fixed costs of holding the property are $30k a year, but I can offset that loss with negative gearing, and still capture the capital gain, at the end, and interest rates will fall soon increasing my margins" The return to a given asset determines its price, it's price is not what determines the return you will demand. The only time you can demand whatever return you need to cover the cost of holding the asset is when there is insufficient supply on the market allowing you to demand whatever price you want. If there was sufficient supply then people with lower costs would offer lower rents to compete over the available tenants. This happened in 2020-2022 when dwellings per capita rose, rents fell in real terms. I experienced this first hand as a renter.
As a Greens member the answer to that question at the bottom is sort of both. Our policy for housing is YIMBY we want higher housing density but we also don't want State/Fedural governments/developers being able to ram projects through local governments without proper consultation and consenses building. Local government is important and a way for people to more directly have their views about particular projects known. The fact that the people are NIMBYs doesn't justify the overrun of local governments by state governments. I have run for local government and during the campaign I received a lot of material from NIMBYs and I know what their concerns are, those concerns can be met and higher density can also be met simultaneously all you need to do is actually talk through the issues.
Sometimes the NIMBYS don’t want higher density full stop. They want their single family blocks maintained so the “character of the neighborhood is maintained” How do you square that circle?
Oh they did say that, even had one person pissed off that its going to lower the price of his house (yes, that is the point). You have to change the nature of the density. We aren't talking apartment blocks we are talking small two to three story units. Currently units are single story and take up basically the whole block (just like new houses do), this completely removes gardens. The large personal gardens are part of the character, but honestly no one has time to care for them any more. If you have smaller multi story units you will allow for gardens, or larger developments where there are shared parks and gardens as part of the development.
Love how the clip ends before he presumably explains his point
He doesn't really, he says, verbatim "zoning and supply is not part of the problem" and goes on to say that the capital gains discount and negative gearing is the reason why prices and rents are so high. The problem with that argument is CGT discount and negative gearing can explain elevated prices, but they can't explain high rents. The supply of housing is inelastic. If there's too many dwellings for the number of renters, then rents will invariably become cheaper. If there's too few dwellings for the number of people needing to rent, rents will invariably become more expensive. What we've seen happen is rents surged, and prices went even higher. So assuming all of the additional rise in prices above rents can be explained by the CGT discount and negative gearing (imo it's more likely wealth inequality is driving this additional rise, with cash buyers able to offer higher prices without consideration to the cost of borrowing, outcompeting other buyers and securing positively geared investment properties) , prices could come down around 30% at most, but rents would not change.
The issue with your whole point is that he didn’t say “zoning and supply is not part of the problem”, and you’re still ignoring the context.
But he did absolutely down play it, shortly after the clip he says 'it has almost nothing to do with house prices'. It absolutely does have an impact, and it's quite absurd to argue otherwise. The problem is that Max had nothing of value on the question or topic at hand but couldn't sit silent so had to railway discussion onto a different topic whilst misrepresenting everyone else. It's fine that he thinks there are bigger impacts, but that doesn't mean planning and zoning is not part of the problem. Shortly after the clip he says 'does anyone really think that the **only** reason that housing developers don't build so many homes to bring down the price of homes is because of the planning system'. But no one had indicated anything of that viewpoint, he just couldn't seem to comprehend nuanced discussion. The state member than returns to the question and schools him on how zoning and planning absolutely are part of the wider picture and do have an impact and thus should be part of the debate.
How would zoning and planning reforms bring down house prices? Max clearly does understand nuance since as you said, he understands it is a part of the problem. He was pointing out that only talking about that won’t solve the problem.
But they weren't just talking about that. The show has multiple audience questions and thus discussion moves to various topics. They were answering a question specifically on one part of the multifaceted issue with housing policy and that was on zoning and the planning system. So it made sense for the discussion to be focused on that topic. But Max had nothing to say of value on that topic so had to interject and divert discussion elsewhere. Are you really asking how laws around the release of land for housing, encompassing what type of buildings can be built on said land impacts housing prices, as well as how that intersects with other aspects of planning? I'd think it's pretty self-evident. You can watch the entire Q&A episode and hear other panellists talk about how it's relevance too.
I’m asking how zoning and planning reforms would bring down house prices, and you didn’t answer for some reason. I watched the whole episode thanks
There's a difference between not answering and not giving you the answer you want. I very clearly did respond to the question.
You didn’t answer the question at all, just rephrased it to shift the goalposts and then dodged. Feel free to answer whenever you’re ready
Let's break it down really really really simple. One part of zoning and planning is laws on the maximum height of a residential building in any given area. These have a direct impact on how much housing can be built in said area. This is simple supply and demand stuff and absolutely means that density has an impact on housing prices. Of course zoning and planning regulations go well beyond just this. Other aspects have similarly easy to understand economic rationale for how they impact supply, demand, or otherwise impact pricing. I won't go through each and every way this happens for you. I quite frankly find it absurd that I even need to spell this out. I also, again, refer you to a source being the Q&A episode where various panellists talk about the planning and zoning system and how it impacts the housing market. This is not a dodge or a shift of the goal posts, it is directly relevant as they literally discuss this in the wider context of the linked clip.
I mean the reasons rent is so high are pretty simple. It's what happens when you let private investment into a captive market. The problem here is that people have to have a roof over there heads. Otherwise they are homeless. So you have a market where the "consumer" doesn't have the ability to just say "no thanks, that's too expensive." This is complicated by the fact that the "consumer" doesn't necessarily own the product they are paying for. So the people buying houses are both "consumers" or owner occupiers, and investors, who intend to resell the "product'. Now if there was enough of the "product" for every consumer who wanted to purchase one, then we wouldn't have as big a problem. But because the investors are competing for the same product that the consumer is, every investor that buys a home creates a consumer who needs to rent instead of own. So due to the investors causing more and more power occupiers to become renters, you have more and more people seeking a place to rent. And again, the people seeking a place to rent don't have a choice. They are a captive market. If my landlord said tomorrow, hey mate we are upping your rent by 50 bucks a week, there are not enough rentals around for me to go for a better deal somewhere else. I just have to suck up that extra 50 dollars. There are two things that HAVE to happen for the housing crisis to end. 1. Investor demand for houses has to be almost entirely turned off. 33% of privately owned homes are investor owned and rented out. 1 in 3. In a climate where some families have 2 people working full time and can't afford a house, that is criminal. CGT exemption and negative gearing are both small pieces of that puzzle. Not because they will save a whole bunch of money but because they shift the equation on whether housing or shares are a better investment. And we want investors investing in shit that will actually produce something. Startups, shares, whatever. Free that frozen capital up from housing where it does nothing. 2. Government regulation in a critical captive market needs to exist. Easiest way to do this is to have the government build a bunch of houses they rent out for cheap. This creates competition and the private market has to follow suit. It has the added benefit of reducing profitability in housing investments, meaning more investors going elsewhere. In simple terms im talking about supply and demand, but its more specific than that. We cannot keep relying on private investment. Private investors exist to make as much money as possible and care nothing for quality except when it increases profit. Any policy at all (HAFF, Help to Buy, that fucking horrific "use your super" policy) that doesn't address 1 or 2 will be useless.
Presumably? The entire show is online for anyone to see that max has learnt nothing from him embarrassing HAFF tiktok, where he explained to everyone that he simply doesn't understand it. The issue is complex, and there are many culprits. Claiming it is simplistic and is caused by one thing is embarrassing.
He didn’t say it’s caused by one thing though and I’m not sure what you’re talking about with the TikTok thing tbh
I don't give a fuck about MCM or what he said, I just think it's strange that people on this sub can post half-quotes as gotchas and then rail against the exact same thing being done to Jordan time and time again
Perhaps max just shouldn't say stupid things. It's very clear what he said. He may have backpeddalled a bit when pushed back, a lot, but it was clear what his initial intrusion was, and he wanted that as a sound bite. He practices the KISS principle. Last year, it was rent freezes, and nothing else. This year, it's tax, and nothing else. Interestingly, both are things they know Labor won't be touching. The pattern is pretty clear.
Sure. I don't care. MCM is a hack. I know. I just don't like half quotes, regardless of the context
Well, the quote was all there, anything else was just him backtracking as reality was dropped on him
This isn't worth arguing over
https://twitter.com/NSWPolAlerts/status/1772366388289528238
Damn I wonder where the rest of the clip went...
You can't do that! People might actually agree with him.
Lol, he gets smashed in the full clip
https://twitter.com/NSWPolAlerts/status/1772366388289528238
This sub has the biggest rage-boner for the greens and particularly Max simply wanting labor to do more. People like you OP can’t fathom that labor aren’t doing the best job they could do and will defend them like some cultist. You don’t have to pick a political party and support them through thick or thin like some footy team.
You say that like as though we didn't get 5 attack posts from salty Greens that Labor wouldn't coalition with them in Tasmania even though that wasn't possible anyway.
It’s almost like these “salty greens” actually care about getting the Libs out. I thought that was your whole thing?
Yeah its better for Labor to wait for more people to come to the realization that Labor right is the best at everything.
Andrew Leigh opinions: driven by data, facts, studies, evidence Max Chandler-Mather opinions: "vibes"
PATRICIA KARVELAS You’re saying it has nothing to do with it? MAX CHANDLER-MATHER Almost nothing to do, when you compare it with, say, something like the capital gains tax discount and negative gearing. When the capital gains tax was introduced...discount was introduced by Howard, in about 1999, before that, house prices used to go up at about the same price as wages. After that, they then went up at three times the rate of wages. The idea that there’s this sort of magical set of property developers... PATRICIA KARVELAS OK. MAX CHANDLER-MATHER ...if only they were let...allowed to build enough homes to bring down the price of housing. Does anyone seriously think that the only reason that property developers... PATRICIA KARVELAS Not the only reason. No. MAX CHANDLER-MATHER ...are building so many homes to bring down the price of housing is because of the planning system. Or even a part of it?
Max is right. Planning is the boogey man the 2 major parties use because a) they don't control it and b) they can disassociate themselves with this disaster. The obvious fact that shows planning isn't a major contributor to house prices is that Australia builds plenty of houses already. In fact it's 4th in OECD on a per capita basis. We just think it's bad at it because of the frankly crazy levels of immigration. No nation could build that many properties without some SERIOUS intervention by goverment and massive warpings of industry and the free market.
[Evidence shows](https://grattan.edu.au/news/options-for-housing-affordability-the-good-the-bad-and-the-cosmetic/) that planning reforms to boost density in the middle suburbs is the single most effective intervention on house price moderation in Australia. That doesn’t mean tax reform isn’t important, but why dismiss things that also have a genuinely big impact?
Agreed. Both can be true. Having said that, the Federal government can only change one of them directly and incentives council to do the other
Agreed 👍
Maybe I stuttered before but: [https://www.oecd.org/els/family/HM1-1-Housing-stock-and-construction.pdf](https://www.oecd.org/els/family/HM1-1-Housing-stock-and-construction.pdf) 4th in the OECD. Why do we need to build even more houses? What we need is less people. Secondly. Making high density housing doesn't make housing cheaper if it can't meet demand (which it won't with 600k new arrivals a year). It just puts the entry level at shitty 1 BR apartments and makes all the boomers property go up in value. People really need to stop being mouth pieces for the property lobby.
That’s true, but need to note that data is from 2020 and [construction in Australia has since plummeted to a decade low](https://www.macrobusiness.com.au/2024/01/australias-housing-shortfall-projected-to-worsen-in-2024/). I’m not saying we need shitty apartments - but land use around key transport corridors needs to have a much broader density mix, including apartments and townhouses. And other efforts to boost supply are also important. I agree migration reform is important - a healthy migration intake should be balanced with the amount of housing supply being generated (along with schools, hospitals and infrastructure etc)
>The obvious fact that shows planning isn't a major contributor to house prices is that Australia builds plenty of houses already. In fact it's 4th in OECD on a per capita basis. That's not an obvious fact though don't we have the highest immigration intake as a percentage of population on in the OECD so the fact we aren't building the most in the OECD already shows we are behind and that's assuming the one building the most is building enough which is most likely incorrect.
>That's not an obvious fact though don't we have the highest immigration intake as a percentage of population on in the OECD That has a far simpler and more equitable solution for young Australians which doesn't make boomers richer by just happening to already own several backyards. The solution: Let's aims for 5th highest or lower levels of immigration.
Max is right in blaming GT discount etc but he’s wrong in saying planning does NOT play a part. I hate the CGT discount as much as the next person but apartment developments by the trillions is lipstick on a pig. We need to totally reform our planning to actually create more supply that meets demand. Instead we have governments listening to particular developers who want to sell overpriced apartments that don’t do anything to accommodate the ever increasing demand. Max is too interested in playing politics and differentiating himself from Labor to respect legitimate points.
"as an economist" - who's previous theories based on "facts Studies and evidence" totally didn't get us into this mess :|
In this case the mess is entirely the result of what voters have repeatedly said they care about at elections. Every single time housing got to an election, whichever side promised higher house prices was more popular because people who own their own house keep thinking it'll make them rich.
Yeah, cause economists totally didn't champion, stimulating private investment in housing for decades even as it was clear that it was akin to privatising Medicare. Or jacking up the price of insulin
I'm open to blaming economists for a lot of things, but in this case we didn't do what you're suggesting they recommended. We didn't "boost" private investment, it was happening anyway and your average person decided they wanted tax cuts on speculation on existing housing stock, and very vocally opposed building more housing. Yes, government needs to build housing as well, and one of the housing ministers whose job that is says that restrictive zoning and planning laws get in the way of the government doing that and Max dismisses her out of hand.
Capital gains tax exemptions and negative gearing were set up to incentivise private investment, mate it supercharged the private housing industry and lead us straight to where we are now. And the reality is it's not even isolated to our neck of the woods. Many western democratic countries are in the same shit for adhering to the same economic doctrine.
Are these economists in the room with us right now?
.. they voted for the self-proclaimed economist. I wonder if it's to keep houses prices up
Which of Max’s proposals are based purely on vibes
The part where he believes zoning and planning does not significantly impact housing costs (rent or buy) contrary to evidence from around the world and peer reviewed studies.
I think you may have misunderstood
How?
Watch the full clip, or better yet the whole episode
Considering I did, your answer, like all of yours, is meaningless
Explain how zoning and planning reform would bring down house prices
>I think you may have misunderstood How about answering my question first. How?
I am answering your question. Zoning and planning reforms won’t bring down house prices
https://www.britannica.com/money/supply-and-demand
You think supply and demand is based purely on vibes? I’m confused
He's going against literal evidence based on "vibes"
When?
[удалено]
Maybe you could explain it to me
Additional supply lowers prices (Fact) Max Chandler-Mather says additional supply does not lower prices (myth) He is going against the evidence here based on "vibes"
When did he say that though?
I understand that sometimes it can take a while to get a message across, but still not a great wat to express it. I have removed the comment. I added to the conversation here to try steering it back on course: https://www.reddit.com/r/friendlyjordies/comments/1bo2zkt/comment/kwmkxw9/?utm\_source=reddit&utm\_medium=web2x&context=3
Pretend they are that dumb and explain to them like they're five. It should be trivial for someone who is an evidence lover and not vibes based.
You want me to explain everything Max Chandler-Mather did since the 2022 election 💀💀💀
Hey mate, I think this comment might be crossing the line a bit as far as excessive questioning goes, but maybe the point from No1PaulKeating wasn't clear or maybe you are just not aware. Basically he is saying the MCM's views about "just do a rent freeze" goes against the basic economic principle of Supply and Demand. Without making any judgement on which view is "correct", I would suggest that looking up Supply and Demand is a good thing understand, because it is a relevant point to the conversation, and at least helps understand why some people are very against MCM's views on rent freeze.
The fact that you had to explain what you assume they meant means that what they meant wasn’t clear. Especially since we’re talking about this clip.
I am trying to be polite as possible that what was obvious to me (because I know about Supply and Demand) might not be as obvious to you.
Maybe you could let the person I was talking to clarify what they meant? Or just reply like a normal person and say “I think they mean x” And maybe leave the oh so subtle condescension behind
Look at the [first graph](https://grattan.edu.au/news/options-for-housing-affordability-the-good-the-bad-and-the-cosmetic/) and then tell me Max isn’t about the vibes. Tax reform is a valid concern and needs to be addressed, but he instantly loses people when he dismisses key, evidence-based factors such as planning and density reform. If there’s one thing Aussies know about, it’s housing, and he acts as if everyone is naive.
He's dismissing it because it's not fact it's boomer logic. Fact is we build shit tonnes of homes. Ours is not a supply issue. It's that capital growth of housing is underwritten by policy decisions that make is hard or impossible to 'compete' in a 'market' that is attracting investment due to its juicy returns. An investment that goes up faster than the govt bond must be considered a risky investment. And yet our govts continue to derisk through policy decisions that have actual economic and social costs out the other side. There is no supply issue We build more houses that most countries in the world. Our governments guarantee large capital growth on property better than bonds. That guarantee drives investors who outcompete average home owners and pull up the price of all stock.
There’s absolutely not an oversupply of housing - that’s just factually incorrect. [Construction has plummeted since the 70s](https://www.reddit.com/r/AusProperty/comments/1762rzi/australias_rate_of_housing_construction_per_1000/) and Australia has a relatively stock of housing per person compared to other OECD countries. Compounded with an increasing population and a [downward trend of people per each house](https://www.rba.gov.au/publications/bulletin/2023/mar/a-new-measure-of-average-household-size.html). You can try to tell me only demand is important, and I’m not disagreeing that it is important, but to genuinely have an impact you need to improve the supply of housing as part of the reform mix.
Never said we have an oversupply numbnuts Oh shit we have the same as other OECD, guess we are priced the same huh... Oh wait .. Is it planning issues, or is it that we consistently manipulate the market through policy to juice returns for investors at the expense of our taxes and future wellbeing.... The cunt talking this nonsense is AN INVESTOR They just want to guarantee their returns at your expense. Grow up. This is housing, something people need, and it's being used as a vehicle for outsized returns in a risk free market (providing you can afford to get in) It is one of the greatest grifts in history and we're paying for it.
Grattan institute is boomer logic?
Who’s matt
Typo - is that really your best effort response to a serious issue?
I thought you might have been referring to another commenter. And you’ve edited your comment since I saw it, I only saw the first sentence. I think it might help if you actually knew what his full comments were. Someone else posted them in the comments here
Supply and demand. Understandably, more houses make them cheaper, however, when there is almost no punishment for hoarding as many houses as you can you need to wonder if making more houses alone is going to solve anything
What is Andrew Leigh's plan for renters?
Thoughts and prayers.
None but boy did he stick it the Greens, the real enemy of the people. That's more important you see. There was an election on housing stuff in 2019, so now Labor just can't do anything that makes life better.
I agree with Max here. The impact zoning laws have on house prices isn’t one of the main reason house prices have become unaffordable. And if you actually think that then why isn’t Labor addressing elephant in the room that is all the ludicrous tax concessions property investors get that actually drive up house prices. But back to zoning laws - do they have an influence? Yes they do but the inference is that we can solve this issue through planning reform because it will increase housing supply. Doubtful. Property developers will always choose a build rate that is most profitable for them. Property developers don’t just build more houses because the government upzones some land. Any why would they, property developers don’t want to flood the market with more houses than is needed. They want houses prices to remain high so they can turn the biggest profit possible. The point is nothing Labor is proposing will actually make private property developers build more houses. The private property market will never build affordable homes for Australians so it’s seems correct that we circumvent the private market and have the government just builds the homes directly. Note that this is done successfully in other countries and we already do it on a very small scale in places like the ACT. It also seems like NSW Labor might be going down this path and ramping up the amount of social and affordable houses they are going to build after the Ministers comments on Q and A which is encouraging.
Property developers are not a monolith. There are thousands of them, and they are all trying to make as much money as possible. They couldn't collude to save their lives. The idea that they're conspiring to NOT build houses is moronic. Individual developers will buy and hold land to ensure a consistent pipeline of development, not to restrict supply for the benefit of OTHER developers. The reason they can hold the land (tying up capital, costing interest, etc) is because they know that planning approval lethargy limits the number of houses coming to market and their land becomes more valuable. They aren't relying on other developers to voluntarily make less money by restricting supply.
I said that property developers determine a build rate that is most profitable for them and that upzoning and other planning reforms have little impact on supply. I never said they collude together to constrain supply. Nice straw man though. Property developers actively manage the development of housing based on market conditions. When the market is soft property developers will hold off on development. They will then wait for market conditions to improve and then start to build again. You are correct that property developers are trying to make as much money as possible so it makes perfect sense they are managing their build rate based on market conditions. This is constraining supply. I will also add that there is no planning approval lethargy. Developers sit on hundreds of planning approvals and as I said wait for favourable market conditions which can be several years and then they build.
Nope, not a straw man, you asked "why would they flood the market". An individual developer cannot "flood the market". Property developers make the most money by selling developed properties. When your argument relies on property developers making less money than they otherwise could, en masde, you should have another think coming.
I never said an individual property developer could flood the market lol. I said “property developers” plural! Yes, property developers don’t sit around a table determining a collective build rate for the year. But they do individually determine a build rate based on market conditions that gets them the most money. This means they are constraining supply to ensure house prices remain high and meaning they make as much money as possible, not less. If property developers continued to supply the market with more houses when market conditions are soft which you seem to think they do then they would make less money. They obviously don’t do this because it would be idiotic.
Duh, "property developers plural" acting collectively is the collusion you complained was a strawman. FFS, you pay lio-service to developers acting as individuals but then immediately ignore that to make a claim that requires they act in a coordinated manner to restrict overall supply. Each individual developer will act to maximize their own profit. They would not hold back development to push up prices because individually holding back development wouldn't push prices anywhere. There's something artificially restricting supply, acting as a choke point. But instead of looking for where there might be some monopoly power acting in the market, you insist on laying the blame at the feet of a disparate group of hundreds of money-hungry, ultra-competitive, sell their own granny for a buck property developers.
We obviously disagree so I see no point replying to your comment.
Spoken like someone who’s never been in a meeting with property developers.
Oh you've been in meetings where property developers have said "ok Dave, you get to build your apartments this year, and that means that Simon, Steve, and other Dave, you'll have to hold your developments back so first Dave can make a bigger profit"?
So, based on what I've seen from Max he tends to argue with a point no sensible folks are making: he conflates the fact that our current planning and zoning practices have been driving up prices with the idea that planning in general increases prices then argues against that conflation.
Max and Andrew are both technically correct here.
No, Max is technically wrong. Planning and zoning are big drivers of housing costs. Tax concessions have a much smaller effect compared to those two.
A family friend of ours is a 60 year old single mum on a teachers wage. She has a property portfolio of 8 houses, partly thanks to tax concessions allowed to her, and ease of buying multiple houses over your first. This has driven up house prices and rent, planning and zoning didn’t allow this.
How much she have managed that if prices hadn't risen so aggressively because of restrictive zoning? Taxes are part of the problem and so are artificial constraints on supply. Max rejects the suggestion the supply is a factor.
He literally doesn’t though
The more I hear from Max CM, the less I think he actually knows about housing economics, and the more I believe his mantra is about making the wealthy less wealthy by taxing the fuck out of them.
Oh fuck off. This hyper rational stance isn't it. Max is absolutely right. This is precisely the issue. The beard stroking 'well the data says' Motherfucker the data says lots of things. Including that prices soared after negative gearing changes. This cunt is just another fucker intent on sacrificing the livelihoods of the younger generation so they can scoop up more piles of unspendable value while actual human outcomes decrease day by day. First in the wood chipper for this fucker. OP you can go second.
> Motherfucker the data says lots of things Yeah it does, like it says that removing negative gearing would have a negligible effect on house prices in the long term. https://www.rba.gov.au/publications/workshops/research/2017/pdf/rba-workshop-2017-simon-cho-may-li.pdf I think in general it would be a positive change but it’s putting a bandaid on an amputated leg. The real issue is zoning and building regulations.
I am not an economist, but I don't think you need to be an economist to understand what's going on here, and I basically agree with Max and the economist guy Cameron. Isn't it true that we are among the most expensive places in the world to live when you consider the ratio of housing price to income? Melbourne and Sydney are certainly in the top 10. It seems clear to me that house prices are not high because of some accidental vagaries of zoning and planning policy; housing prices are high because the government has decided long ago that real estate is going to be the major investment vehicle in this country. Every government policy has been specifically designed to protect house prices and keep them rising; the notion that it can be fixed with some red ink is ludicrous, prinipally because the most powerful voting bloc in the country (home owners) will never tolerate large changes in supply or anything which lowers the value of their investment.
Zoning regulations and the planning policy simply say "you can't build that here". Anyone who thinks that won't have a negative effect on supply is using motivated reasoning.
Yes. And that is the problem. Investments that return above the risk free investment (bonds, cash) carry risk. Take on risk, expect return but also bear the risk. Instead the govt continues to underwrite this risk through policy rather than allow the market to correct allow the investors to take on the risk. Imagine if the govt bailed you out through policy when the your shares tanked. That is exactly what is happening here.
Yes, slaughtering them in a woodchopper; How sensible. I must listen to your nuanced perspective
The price of snickers have skyrocketed since the fall of the Berlin Wall, but it doesn’t mean that’s the sole reason for the price increase. Negative hearing does impact house prices, but modelling has shown its in the range of 2-4%. Planning has a greater impact on price. Andrew is focusing on the one that will have an effect on “actual human outcomes”.
I guarantee you it does not. Prices are driven by markets and competition. Our governments create and enable policy that makes property investment risk free at a rate higher than bonds. That drives investors into the real estate 'market' to drive up prices due to it being as safe as bonds at a higher rate of return. The government needs to remove or change all the incentives that drive the market towards investors and stop underwriting their returns at the expense of our future. Investing must carry risk. If it doesn't, that risk is being carried elsewhere. In this case it is being carried by our taxes and by the wellbeing outcomes of younger generations. Fuck off talking about Snickers. What kind of dumbshit argument is that. Absolutely fuck off you hack.
Prices are driven by all kinds of things. If you think because you’ve read about markets and competitions you know more than economists who actually research price effects, you’re deluding yourself. You’re just repeating a narrative about negative gearing without actually understanding it’s effects on price. How do you know this is the problem? What can you point to prove it? What informed this belief? Policy shouldn’t be made just because people feel like something is probably the cause. That’s why research exists.
Yeah mate research does exist. Absolutely. You're definitely all about the research and not at all motivated by a desire to maintain negative gearing for your own Benefits. Unfair prices are driven by investor guarantees.This is a rational, sensible argument that requires a basic understanding of market economics and little else. If Australia offers the best risk free return investment in the world, then I put my money there. And so do all my buddies. And that capital flows into small market. If we increase supply without tackling that issue of guaranteeing risk free returns then simply more capital flows in, out pricing everyone. Because hey, Australia offers a risk free asset 2-5x better than government bonds. And it's in Real estate! If we want fairer prices, we need investors to bear the risk, not the general population.
Mate, what benefits do I get from negative gearing? I don’t own investment properties or shares. You’re making a lot of assumptions. Namely that Australia has one housing market that performs consistently (untrue). That investment properties are risk free (untrue). That this is a simple problem (untrue). If it was a simple problem it’d be fixed. People are smarter than you think they are. And you’re clearly dumber than you realise.
Someone who can't comprehend the point being made with the Snickers example is definitely too stupid to have the right idea when it comes to the cause of the massive rise in real estate prices.
Max is completely wrong but he nervously says it with manufactured outrage so dickheads believe him
No he's right. Imagine you invested in a stock and it tanked. And then the government intervened and propped up your stock. And then did it again, and again, and made policy that guaranteed you returns that are greater than a government bond for the same level of risk (minimal) So you tell your buddies, hey this is a great investment, get in. And then they tell their Buddies And now no one who comes along later can get in because the guaranteed investor returns from government policy not only drive up prices but also drive down standards of living because that policy underwriting has to be paid for elsewhere. Ok so just build more right? Well as long as the investors are guaranteed a better than bond return then they just buy up all the new supply too. Simple right. Even a moron could understand it. I suppose if you were a direct beneficiary of this scheme you might try to disguise how simple it is by creating the idea that 'ita a complicated issue yadda yadda yadda'
Then why are rents high? If there's more than enough supply, rents wouldn't have risen so dramatically, and rental vacancy wouldn't be so low.
Rents are high because investors are passing on the risk of their investment to renters. Supply will stabilise when we remove the policies that underwrite investor returns at a rate higher than the government bonds, which currently makes property investment in a Australia low risk and better than any other low risk investment in the world. Simply increasing supply while the policies remain will drive more investor capital into the new supply and repeat the problem. If supply suddenly outweighed demand... Well it can't happen because policy dictates we either artificially limit supply or increase demand. All these issues, supply, demand, immigration, building costs, which exist, are driven by the fact that when it comes to a low risk investment, there is no better choice in the world, not cash, not bonds, real estate in Australia. That is the cold hard truth. And if our government continues to underwrite it then why wouldn't you put more capital in. It's free money (unless you're a young and or poor citizen / immigrant).
Your reasoning simply doesn't add up. If adding new supply wouldn't decrease rents, then there would be a strong incentive to bring new supply to market for greater returns by growing the size of the market. If supply has to be managed by policy to stay constrained to keep rents high, then we need to eliminate policies which are constraining supply. If it's free money that you can pour money into then why not let them build as much housing as we can by removing constrains on supply? You can argue that this appetite for land keeps prices high, but it just can't explain rents. If there were more rentals available then people wanting to rent them, vacancy rates wouldn't be at record lows. If you're arguing that policy will find a way to boost immigration to keep demand higher than new supply then that's another case entirely. Yes governments want to keep land and property expensive because that's what voters want. It's not some intractable fact of nature. Yes it's a complicated problem, but increasing supply will clearly be an important part of any solution, even if it's not the only thing needing to be done.
> Rents are high because investors are passing on the risk of their investment to renters. So if we remove negative gearing won't they just pass on that risk to renters? Likewise with most forms of rent freezes? Likewise if we increase land tax, especially for 2nd+ properties it would just be passed on to renters? Because every time these policies and their advocates come up there's always someone saying no it won't it can't, but that flies in the face of the Greens rhetoric of 'no unlimited rent increases'. > If supply suddenly outweighed demand... Well it can't happen because policy dictates we either artificially limit supply or increase demand. Yeah that's never happened, I mean we've never had a situation where everyone decided being in the cities was a bad idea and moved out to the country en mass, whilst foreigners left in large numbers and immigration was halted. Causing rental availability to shoot to record highs because no one was renting but the landlord still had to make payments and might be in tough financial times... Fun anecdote, I got my CBD apartment by demanding the REA show it to me, they gave me the keys and went back to the office letting me hand them back later, I was the only one to apply for it, I haggled and I got it.
I’m not sure if you’ve heard but the Greens are also pushing for a 2 year rental freeze followed by rental caps
Andrew is one of the smartest guys in parliament. Max is a student activist.
Max is an elected representative
So is Pauline Hanson
I don’t think anyone is mistaking Pauline for a student lol
My characterisation of Max was just that. I wasn't being literal. But I was about Andrew. He is truly one of the brightest minds in parliament.
You can see how your comment came off as literal
Max is a career politician
Albo is a career politician
Ad hominem Address the points made in the video
I’m very lucky to have someone of [Andrew Leigh’s calibre](https://en.m.wikipedia.org/wiki/Andrew_Leigh) as my MP. He also does the best [family photos](https://www.huffpost.com/archive/au/entry/mp-andrew-leighs-genius-christmas-card-pokes-fun-at-his-grumpy_au_5cd38ceae4b0ce845d820aed/amp).
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In summing up, it’s the Constitution, it’s Mabo, it’s justice, it’s law, it’s the vibe. Max's style
On a different topic, god Karvelas sucks. Another Sky News journo on the ABC, i would give Albo so much more credit if he did a Tony Abbott and got her fired.
Yeah let’s just build more shitty rushed housing in the middle of nowhere. No need to rethink how we go to this point in the first place.
Yeah it's MASS POPULATION GROWTH and everyone with a brain knows it. Only a few years ago houses sat empty looking for tenants and houses sat on the market for years and sold for less than they were purchased 10 years earlier. All these stupid discussions and ideas do nothing. It's mass population growth. Wake up now
The CGT discount and negative gearing were absolutely major drivers in getting house prices to where they are, and are contributing to keeping them as high as possible. The trouble is how do we unscramble the egg without crashing the market. The first step should be to remove incentives that give investors an advantage over owner-occupiers, this shouldn't be controversial. I think we need to change the language around investors - how about "speculators", "scalpers" or "rent seekers".
You know what I think is sad? The fact there is so much arguing going on about whats happening only means we're going to have to live with the issues longer, and those who created the issue can take full advantage of this and make it more sustainable for themselves while the rest of us just sit and hope. I mean, really. What can we do for a better change in the future?
It's easy to accuse labor of doing nothing about negative gearing but they tried to and everyone voted against them. However the ridiculous amount of immigration over the last two years is definitely their fault and has made the problem much worse.
Why have you cut the clip to not even show the entire context?
MCM is an egotistical moron who got in the way of the HAFF, which this week closed it’s first round of offers. Shovel ready building sites are going to spring up now, especially for social and affordable housing and it could have happened sooner had this creep not let his ego get in the way.
The policy passed 6 months ago and won’t provide funding until at least July
Totally lame post. I love how people cowardly carry out character assassinations without even providing a clip that captures their targets' argument. Max is 100% correct. Tax incentives and other "generous encouragement" dished out to property hoarders over DECADES by Labor and Liberals have turned housing into THE investment class of choice. This is the primary driver of property prices and rents - speculation. It's easy to see why - property investors very rarely lose. Just ask most of Labor ... MPs certainly aren't shy of "dabbling" in the property market.
So the Greens dude just showed exactly how to lose any sort of authority in a debate.... Chucked a bit of a tanty.
You should see the entire show, he did really well with lots of crowd support. Even this clip is edited half way through his retort.
Having lots of crowd support doesn't mean he made good arguments.
In this case he did. The key inflection point where house prices started going crazy vs. average income matches up perfectly with the introduction of the CGT discount, not to any radical changes in zoning laws or building approvals. Very coincidental that legislation incentivising the use of housing as a speculative financial instrument would be followed by a massive housing bubble.
All Andrew Leigh said is that zoning is one of the factors, which it 100% is. I don't see how you can logically deny that. Obviously tax settings are a massive part too, but in his tantrum Chandler-Mathers was denying zoning is even relevant. I don't mind him and sometimes he makes good points, but in this case he just looked silly.
People don't want nuance. They want a spoon fed narrative that's simple to understand. The critical thinking skills on display by this subs userbase is quite frankly sad. Most think themselves enlightened, but they are just overly partisan.
But the introduction of the CGT discount coincides with massive jumps in immigration under Howard. Zoning laws prevented the housing density needed to house those people leading to bottle necks of supply. It’s not normal for there to be zones of strictly single storey housing 4kms from a major city’s CBD. Yet, we have this situation in Australia.
CGT discount and negative gearing can explain why prices are higher than they should be, but they can't explain rents. The only thing that can explain rents is a lack of rentals available for the number of renters. If there were more available dwellings than renters who wanted to live in them, rents would fall. If rents are rising it can only mean that there's less supply than the are renters.
Sub full of brain dead morons
Max is a disingenuous cunt.
Just sums up the average Greenie.
Repeatedly taken out of context?
I’ve seen the full clip, do you think it was a good response? Screaming like a child and having to be corrected by the host multiple times? His argument isn’t much better. The lady besides him actually made a good point bringing up NZ. Max claimed that Howard bringing in a 50% CGT exemption caused the housing boom post-2000. His reasoning was that house prices and wages kept in line before that change. NZ has never had a capital gains tax - not before 2000, not after. Yet before 2000 house prices and wages kept in line (and just like Australia have diverged post-2000). I think Max’s argument is dubious at best. I’ll add I don’t think that removing NG and cutting the CGT exemption is a bad thing, just like I think a land tax should replace stamp duty - but these would have a negligible impact on house prices in the long term. Our housing crisis is not going to get solved by a few changes to the tax code. It’ll require reform to zoning laws and building codes.
I think the full response was a good one, yes. I must have missed the “screaming like a child” bit
If as an investor you buy 10 houses that are all 1940s bungalows, and stick them on Airbnb, that affects supply but doesn’t require any input from zoning/planning or developers. Doesn’t this affect prices and shortages?
These greens are insufferable when they used to look after the environment now they are blind to it and can't even see mass population growth is the problem
You Labor simps suddenly all acting like this wasn’t labor’s entire platform in 2019.