Pure Poison IconHere’s a story from yesterday about the news that house prices in the capital cities have “finally” risen even further out of reach of average Australians:

Capital city house values finally on the up – but only just

HOMEOWNERS have received a bout of good news at year’s end, with a private survey showing the first rise in capital city home values in eleven months.

Let’s ignore for the moment that the source for these sorts of claims is usually those in the industry who profit directly from prices being high, and thus who have a massive incentive to inflate buyers’ and sellers’ expectations of where those prices are going (and who will do and say anything to minimise news that might dampen those expectations), and instead consider the angle these stories – particularly from the media that rely on real estate advertisng – almost always take: that a rise in house prices is “good” and something to be cheered.

Who loses from house prices rising even further ahead of wages?

  • Everyone who doesn’t presently own a house. The entire next generation.
  • Any parents who’d like their kids to move out of home before they’re 50.
  • Renters, because new landlords will have paid more for the rental properties and will pass that on to tenants, thus inflating rents for those in existing properties.
  • Homeowners who don’t intend to sell and move out of the market entirely – inflated prices just push up their rates.
  • Future victims of crime – there’s a long-standing inverse correlation between home ownership and crime – home ownership brings a stake in the local community, and something to lose, and thereby reduces the desire to commit, and increases the penalties for committing, crime. Creating a generation where a much higher proportion of people do not have any hope of owning a house is likely therefore to have the opposite effect.

Who does house prices rising ahead of inflation benefit?

  • Real estate agents on commission.
  • Media who rely on real estate advertising.
  • Those with investment properties – those who’ve chosen to allocate their investment capital away from industries and companies that actually create things and potentially improve our lives.
  • Homeowners who want to use the ability to redraw against their house to build up a bigger debt to a bank.
  • Those who own the retirement villages etc that can charge boomers more now that the houses they’re moving out of are “worth” more.
  • Those who already own their own home who will inherit the leftover assets of their boomer parents.
  • Governments who get to pretend that, on average, we’re all wealthier – because the increased “on paper” wealth of those with houses masks the lower living standards of everyone else.

In other words, there are clearly at least as many losers from house prices rising as there are winners.

Perhaps our newspapers might like to take that into account when reporting these figures. Perhaps report reactions from both sides of the fence. Because there must be an ever-growing proportion of their audience they’re seriously antagonising every time they paint news like this, news that represents a further blow to their hopes of owning a home (or their hopes of their kids finally moving out), as some kind of triumph.

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