High house prices in Australia are caused by…

By Andrew Mackinnon

High house prices in Australia are caused by:

> bank lending to property investors for investment properties, which should be banned. This includes bank lending to property investors who are also using their superannuation in order to fund part of the purchase price of their investment properties. The very definition of investment entails purchasing an asset out of savings. No bank in Australia should be allowed to lend for the purpose of the borrower purchasing an asset for investment with the objective of making a capital gain over time, such as real estate, shares, precious metals, coins, antiques or art. Borrowing for such a purchase is not investment. It’s speculation. However, if such a purchase is financed out of existing savings, rather than borrowings, then it can correctly be called an “investment”. Read more...