The property porn bubble

Property has become a deity in Australian culture. We worship the stuff. Aussie enlightenment is only attained when you own (or a bank/ parent/ Russian ‘social club’ lends you the cash to say you do) 500sqm patch of ground

The purchasing of property, and to some extent the construction of it, props up our economy. We used to rely on mining which was all about pulling stuff out of the ground, now we rely on property which is about building stuff on it. The only next logical economic booster for the nation has to then come from the mass throwing of dirt into Asian waters so that China can fashion new islands out of it.

The current talk is of a property bubble, with Sydney now more expensive per square meter than Beyonce's wardrobe. We have had this talk many times in the recent past. As always, economists try to predict the future based on their most (post-grad) educated guesses. They have one of two options - things will go up or things will go down. What I particularly like is the rouge economists who come along trying to build careers through outlandish predictions, in the hope they’ll proven right and hailed a visionary. 

These financial false prophets say things like “ You can expect that in the next two years the Tasmanian economy will become solely reliant on the sale of dolphins” or “the government has to abandon negative gearing and to start charging stamp duty on letterboxes and novelty garden ornaments if it has any chance of re-election.”

We all know this would never happen! Negative gearing, the practice of purchasing an investment property with borrowed funds and then claiming a loss on the rental yield against the loan repayments for tax purposes, is a sacred cow in this country. It is a a holy construct, written into the fabric of any true blooded property purchasing Australian. 

Our brave servicemen and women did not die for this country so Joe Average had to buy a few investment units in Nunawading without the luxury of any tax incentives. Ned Kelly did not write the Jerilderie letter so that Mum and Dad investors would be forced to put their retirement savings into the consistently performing sharemarket. Kathy Freeman did not race her heart out during the Sydney 2000 olympics just so our property market would ensure realistic and sustainable growth in relation to wages. That is not the Australia I know, love and can barely afford to live in!

Today our culture has pornified property. Lusting and leering at it for our own gratification. If it isn't through purchasing, it is renovations for those that are in the position to afford and do them. For the those that aren't and can’t, there are a plague of TV shows, blogs, magazines, and social media feeds to help us get our fix. 

Recently our Treasury Secretary John Fraser was quoted as saying ‘I think I’ll have a pie for lunch’ which wasn't as newsworthy as the remark he later made around the housing bubble.

"I'm not talking just about buying housing, I'm talking about investing in housing. You've just gotta see a plethora of these renovation shows to realise something's amiss," he said.

Renovation shows! At last someone in the top echelons of government is getting to the real issues. These hardware store ads masquerading as entertainment are semi-responsible for the democratisation of property investment. Sure record low interest rates help, and the fact Pinterest now exists means any suburban dog-washing Deanne with 20/20 vision can interpret basic design principles and navigate a replica furniture showroom. 

But renovation shows are fuelling the property porn problem. It is streaming the ‘improve your house, improve your life’ lie into the households of those that can least afford it. 

The market wins when demand is high and supply is low. Low interest rates and government sweeteners like negative gearing all help create the current high demand for housing. What is blowing more air into the bubble is the property porn. But, much like the annoying limpy cat from next door or nu-metal, it will all go away if we just ignore it. 

The bubble will deflate, interest rates will rise along with  the mortality rates of baby boomers, who in this country hold the vast majority of government seats and property. With their deaths may also come the death of negative gearing and the birth of a more affordable future for all.