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Michael Marquette’s “View from the Bridge”: Who’s to Blame for the Economy, Employment & Real Estate Troubles?

by Marquette Turner Luxury Homes

in Features, Special Reports, View From The Bridge

I was reading an article yesterday that suggested that housing prices may decrease by up to 10% when the First Home Owners Grant (FHOG) ends in December. It’s about time that the media started addressing this issue and my regular readers know how strongly I feel that the FHOG has set thousands of families up for a fall – a fall that will destroy families, lives and dreams.

The Grant has artificially pushed prices up for properties under $500,000. In the last 2 years first home buyers have borrowed an extra $52,000 on average for their purchase which is a massive and unsustainable increase. The Government instead of making housing more affordable have made housing more expensive and the withdrawal of the insidious Grant will cause even more problems than it has created.

More than one quarter of new home loans right now are being made to first home buyers – most of which are highly geared and paying too much for their home. What will happen when the Grant is stopped and the equity in their home becomes negative? I know of many first time buyers who have purchased in the last 2 or 3 years and are facing the prospect that their hard earned deposit is gone – thanks to prices heading south.

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I also am concerned about the employment situation in Australia and abroad. The unemployment figures released yesterday only tell part of the story as they fail to show underemployment and the number of discouraged workers. To get the complete picture of how our economy is travelling we must look at unemployment, underemployment and discouraged workers – that way we can see how many people are hurting.

The 5.8% national unemployment rate fails to show how many people are working 15-20 hours each week, are ineligible for Government benefits and could easily work more hours if employment was available. These people are hurting badly and account for almost 1 million people or around 9% of the workforce. Discouraged workers account for another 2-5% of the workforce. When all three groups are considered a massive 17-20% of our workforce is unemployed, underemployed or discouraged.

To add further to my concern many parents have helped their children to purchase homes using equity in the family home and the FHOG. Many have paid too much for properties, have lost large amounts of money on the stock market and have realized that their own family home has decreased in value, thus lowering their equity stake. Unless the Government has a “secret strategy” that they haven’t told us about, many people will continue to experience enormous pain.

All of this considered it’s hard to believe that any respectable media outlet could claim that housing prices are universally on the rise. We have fundamental problems in our economy that are not going away and while small pockets of property are performing well the majority of the growth is a sham, being fueled by the FHOG. This will come to an end and so will the inflated prices being paid. Luxury Home prices are well down – something many in the media forget to mention in their haste for a headline.

Read previous “View from the Bridge” articles HERE

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