Jan 27, 2020
Today – look at Why a Government benefit from high property prices, and why they might want high housing prices? To the point it moves away from being affordable – hurting population while benefiting Govs
They all say they don’t – and that their policies will help reduce prices - but why this is either just promises, or a known a lie –
Governments could easily solve the property price issues –
Wealth effect – The wealth effect looks at the impact of the rising value of assets on consumer spending - A rise in house prices creates an increase in wealth for householders. As a consequence of this increase in house prices, householders will generally:
Why maintain high property prices? Theory - How does a fall in house prices affect the economy?
LVR constraints – are there signs of this in the economy – well, yes – the defaulting rates –
Wealth effect – like anything economic manipulated- has diminishing marginal returns and can create a misallocation of resources
Instead of Governments trying to decrease housing prices – their policies seem to be making it worse –