What does the housing market have to do with pumpkin plants?
When we had the deluge with blankets of water falling from the remnants of Cyclone Debbie a couple of weeks ago, the pumpkin plants in the backyard started to look very sad. However, the basil seemed to thrive. I was devastated (slight exaggeration), because prior to Debbie I had been watering the pumpkin sprouts every day and took great joy in seeing them grow (that is not an exaggeration – my wife would laugh every time I would take the girls outside to see how much the sprouts had grown). What I learnt from this was that what is good for one plant isn’t necessarily good for another.
Well, similarly, when a blanket rule is set by government regulators – whether they be Treasury, ASIC or APRA, the housing market in one location will respond differently to the market in another location . It is easy for government to damage localised economies (communities and families) with the flick of a pen! However, the government isn’t the problem, the market system in relation to housing is the problem.
In line with common thinking, the following quotes from today’s SMH article (click link) look at housing as a (speculative) commodity rather than as a human right…”The seeds of future slowdown are already well and truly sown. The better that NSW looks now, the greater the troubles that this state is storing up for the future,” the outlook warned.
“The joy of rising wealth eventually gives way to the pain of servicing gargantuan mortgages. Interest rates are beginning to rise around the world and although official interest rates in Australia may not follow suit until 2018, that augurs badly for the disposable incomes of Sydneysiders.”
Taking the profit motive and speculation out of home ownership, by putting properties in a Community Land Trust, ensures perpetual affordability and removes the need for government regulators to intervene. This in turn creates certainty in housing and community stability.