If investing is still "piling into" housing, what is the basis of complaints of housing shortages?
The feds often go on about the states not "opening up" enough land.
If we talk of housing shortages, are we talking about the same thing as accomodation shortages?
If state governments have to pay out for drains, roads etc, don't they have to keep taxes up to pay for these?
If state governments got more money off of Canberra, would states lowering taxes or being able to pay for infrastructure for new housing on the periphery help home buyers, since the costs of producing adequate housing are now beyond state economies alone?

By a curious conicidence Ross Gittins has an article;
"Housing crisis: we didit ourselves", in today's sydney morning herald.

Paul,
thanks for the reference to the Gitten article It's interesting:

I'll give it to you straight, as no politician would dare to: the difficulty people are having affording a home loan is largely of our own making.

Why so? Well lower inflation and interest rates gave us three options to choose from:

There were three ways we could have reacted to this favourable development. People could have left their mortgage payments unchanged, knowing this would mean they paid off their mortgage many years earlier.Or they could have cut their mortgage payments in line with the fall in interest rates, leaving them with more to spend on other things - a new car, or whatever.Or they could have greatly increased the size of their mortgage - roughly doubled it - without any increase in repayments and thus afforded to move to a better house.

Most people opted for the better house. But because so many people did this about the same time, the main thing they achieved was to bid up the prices of homes; more than double them, in fact.

That's right. It is also rational. We left some of the houses because they were so bad: small, dark and old. We wanted something better ---more modern--and better located. And we poured our money into it and this drove up prices.

Just a thought - What about negative gearing?

It encourages people to pour money into loss making ventures.

Why not change that like every other country in the world to something more sustainable. What about tax concessions for first home buyers like the US, where the entire loan taken out for your own home is tax deductable?

Paul,
I was at coffee shop this morning and I quickly glanced through the AFR that some kindly business man had left.

There was an article that linked housing stress to the Liberal marginal seats. My interest was in SA, which has had three marginal seats---Kingston, Wakefield and Makin.

The housing stress percentage ---for renters--- was 36.1% for Makin, 41.5% for Kingston and 41.6% for Wakefield. That's getting close to half of a household's income going on rent. It's struggle street. People are stressed.

Kingston is held by just 0.1% whilst Wakefield is held by 0.7%. I reckon the Liberals are gone in these two seats ---too much talk about big incomes for WA miners and not enough on the battlers in struggle street.

" We left the houses because some of them were...old. We wanted something more...modern...".
Poor bugger white fella. Wonder how much longer the real poor living in the slums of the "terrist" states will feel they have to starve their kids indulging precious, self absorbed westerners?.
Am in mind of that oxfam-ish add on telly a few years ago when the global poor rocked on the doors of rich Westerners to compassionately sarifice their rice money paying interest they owed the suffering yuppies of the West.
So touching.

Ramanuj,
yes, negative gearing works since 1999, but it has caused housing prices to increase.

Probably would need to put more money into public housing. It's gone out of fashion of late in favour of market solutions. But it does look as if it may need to be reivented given the effects of the market.

Nan's figures look pretty bad.

Paul,
well that's capitalism for you. I reckon my consumer desire account in a properous economy is a better explantion of increasing house prices than the Howard Government's (and IPA) account of it being due to a lack of land released on the fringes of the capital cities by the heavy handed and money grabbing states.

Gary,
the housing affordability issue is hotting up. The papers are saying that underlying inflation — the typical rise in product prices — shot up to 0.9 per cent in the June quarter, from 0.5 per cent in the two previous quarters.

The also say that consumer prices are rising. Fuel, food, housing and health costs all contributed to a 1.2 per cent price jump in the June quarter. Apart from the period around the introduction of the GST in July 2000, there has only been one quarter with worse inflation since 1995.

Financial markets now say the Reserve Bank is almost certain to push rates up by 0.25 percentage points when its board next meets on August 7.

A fifth rate rise would add to the Government's problems.