Image: Macrobusiness
The Australian housing bubble has evolved to an astronomic 84% overvaluation which has caused widspread social and economic damage.
(Preprint of the Economics Paper quantifying the Housing Market Overvaluation)
It is now at a level that poses severe economic threat to the nation by way of permanent stagnation or deep recession coupled with the possability of financial instability through bank insolvency.
If the three housing investor tax concession remain then the economy faces permanent stagnation, if they are abolished or curtailed a major market correction will occur.
These tax concessions have to go in any case because the nation is clearly running out of economic head room to sustain them, even with 40 or 50 year mortgage loan terms, more and more rental assistance, dual or multiple couples and groups of friends pooling resources to buy the communal home, the bubble will out pace these strategies in a very short time frame—What then?
To Australia’s young people and their parents— you get rid of investment property owning politicians and their three housing investor tax concessions at the next Federal Election and you will breathe life back into the Great Au Dream—you will be able to buy your own home once again— and you will escape the abominable rent slavery that has evolved because of these tax concessions.
For the individual the 84% overvaluation means that around 46% of the price paid for an established house today is investor driven inflation and the bubble is still growing.
House prices will also collapse the moment the majority of Australians recognise the extent of the bubble and anyone buying an established house today will find that when the bubble bursts and fully corrects their house price will fall to its real value of about half of what they paid for it.
The calamity for these people does not end there, they will still owe a bubble price mortgage to the bank and will ultimately pay about four times the real value of the house
What is astounding is that Australian financial and economic institutions like the RBA, Treasury, and the Ministries for Housing and Finance have access to ABS and RBA housing data and Figure 1 below, yet they haven’t noticed the bubble or they don’t understand what the data means or even worse they are taking advatage of the three investor tax concessions and investing in housing—putting self interest ahead of the responsibilities of their office.
Either way it is a catastrophic outcome for Australians and the younger generations in particular.
The Figure contains 3 Panels and 5 graphs which clearly show the growth of the bubble driven by housing investor participation in the market.
- Panel (a) shows house prices.
- Panel (b) shows the mass surge of investors (the red graph) entering the market as they get their second (1987) and then their third (1999) housing investor tax concessions.
- Panel (c) shows Investment Property Owners as a % of taxpayers which shows investors begin surging into the market in 1987.
Now it could be that house prices spontaneously erupted and accelerated in 1987 and then again in 1999 — see red vertical broken lines in Figure 1 — and the housing investors miraculously swarmed into the market in large numbers without effect or it could be that a fundamental of market economics played a part in the acceleration and growth of house prices.
In a market of limited supply, demand drives prices up—this is not doctrine, it is a fundamental economic reality of market economies including Australia’s housing market.
The three investor tax concessions made investment in residential housing so compelling for investors they went from about 3 – 5% before the extra concessions to around 40% of total housing market purchases on a monthly basis after the concessions. They have since purchased on average 36% of all houses ever sold.
This manipulated demand is in a market of limited supply and in a market of necessity no less.
How could such an outcome possibly go unnoticed by the Nation’s financial and economic institutions such as the RBA, Treasury, and the Ministries for Housing and Finance?
Are we to believe that 30 years of economists at these four institutions didn’t quite get the concept of market economies and hadn’t fully fathomed what tax incentivised manipulated demand actually looked like? Are we to believe they still don’t get it?
For the 92% of Australians who don’t own investment properties here are a few numbers that you had best be aware of if you are concerned about your children and your grand children’s chances of ever living in the security of their own home.
These numbers are from the Australian Bureau of Statistics housing data and the Australian Taxation Office.
- 8% of the population, that is 2.26 million investors own 3.3 million tax subsidised investment properties (ATO 2022-23 Taxation Statistics).
- One in every 3 houses across the country is a tax subsidised investment property.
- The investor 8% of the population own half of Australia’s entire residential housing stock with their own residencies included. (They won’t be living out of cars or cardboard boxes)
- Since the second tax concession, investors have purchased over 6 million properties as investment properties and resold 4.1 million, that is nearly two in every five Australian homes have been bought and sold as a consequence of investor speculative activity.
- With the number of investors’ personal residence added to their investment properties purchased and either traded or retained, by the end of 2023, investors either owned or have owned a total of 9.6 million homes out a total of 11 million homes.
- Approximately 90% of the equivalent number of the entire national housing stock has been in the possession of investors at one time or another since the second tax concession and until June 2023.
- Over 50% of the so called — “Honourable”— Members of the House of Representatives of 46th, 47th and 48th Federal Parliaments were and are property investors.
- This greater than 50% of Federal Politicians owning investment properties is in stark contrast to the 8% of the greater population and offers some insight into why these socially and economically damaging tax concessions were instituted in the first place and why they have been maintained for so long.
- As of May 2025 the median rent payed 75% of mortgage repayments on the averaged priced investment property. The —rent slave working class kids —cannot save for their own home while they pay off the investor’s investment property.
The 92% of naive Australians need to understand that these tax concessions allow high salary earning individuals to use Australian residential property as a vehicle to minimise and or recoup their income tax — taxes can be minimised to zero or fully recouped by capital gain.
Without these tax concessions and in particular the 50% CGT discount on the sale profits or capital gain of investment properties, these individuals would have no effective way to minimise or recoup their income tax to the same extent as these concessions allow.
It is important to note that high salary earning individuals are represented in the governing class in large number which would explain why there is such a high percentage of politicians who are property investors and why these economically damaging tax concessions have been allowed to persist for so long.
Furthermore, if every wage and salary earner—nurses, teachers, supermarket workers etc., could access these tax concessions, own enough investment properties, and benefit from the 50% capital gains tax discount, the Federal Government would effectively pay back all collected income tax, and the entire tax system would collapse.
Even partial participation in this scheme imposes a serious strain on public revenue.
the question is
In this section, “the question is”, questions are asked of members of the governing class that preside over governance of the economy and society at large and who make the governing laws and policies and who ultimately have a profound impact on the life of any given Australian.
Of these people, we have a democratic right to ask questions on governance and we must ask questions and we must insist on answers to these questions otherwise our democracy is on its knees and we are left with no trace of “government for the people by the people” but in its place “government for the political parties, these apparatus of the state for themselves, for lobby networks and groups, conglomerates, media moguls, cronies and the rest by the beguiled and ill informed people”.
Click the “ask the question” button and you too can ask “the question is” of these people.
The question is—Governor Bullock and this and the following questions are directed to all members of the RBA Boards as well—have you noticed the astronomical housing bubble that has evolved since the institution of the 50% Capital Gains Tax Discount on investment property sale profits?
If you or any members of the RBA Boards have not noticed the bubble then why not?
And if the RBA has not noticed the bubble take a look at your graph of Panel (a) supplied to the FRED by the RBA through the Bank of International Settlements. In case you and members of the Boards haven’t noticed, the bubble has been growing at a linearised 3 real Index point per year for decades and as can be seen the market is prevented from full correction by the three housing investor tax concessions — the very thing that fuels the bubble price growth in the first place.
Is this not a positive feedback loop that guarantees further bubble growth, regardless of minor corrections, to a final outcome of — total economic stagnation — even with an ever accelerating population growth to try to keep GDP per capita growth from slowing?
If you or the members of the Boards have noticed the bubble, have you tried to warn the Australian people through advising any of the past Federal Parliaments and the present Parliament about the existence and growth of the housing bubble and its ramifications on the broader economy?
The RBA is legally charged with maintaining macroeconomic and financial stability for the Australian economy under the Reserve Bank Act 1959 and the Treasury Laws Amendment (Reserve Bank Reforms) Act 2024. Would not the 84% overvalued housing market be a threat to that stability and therefore the Bank is legally responsible to try to deflate this bubble regardless of what Australia’s property investing Parliamentarians and their Property Investor infested Parliaments might think?
In the lead up to the 2019 Federal election where the Labour Party was intent on curtailing the housing investor tax concessions, investor demand fell from 35% of total purchases to 28%, a fall of 7% which caused a fall in real house prices from an index value of 123 to 109, a fall of 11%. Even with investor share of all house purchases still high at 28%, prices fell by 11%. On this metric alone, with manipulated demand curtailed by removal of the tax concessions house prices would fall 55%—Is this not further evidence of the tax concessions as the primary driver of the bubble and also— alarming evidence of the extent of the bubble?
Would you agree that — the astronomical housing bubble is the root cause of the Cost of Living Crisis — in and of itself — regardless of the cost of a tomato or that some working class householders accidently switched on a light bulb?
Would you agree that — the astronomical housing bubble is the root cause of of the death of the Great Au Dream—why millions of Australia’s young people are excluded from home ownership?
Do you and the members ot the Boards comprehend that the millions of Australia’s young people excluded from home ownership— because of this astronomical housing bubble— are condemed to a life of rent slavery—does this ring any bell anywhere in the RBA?
Governor Bullock, like Friedman’s fundamental pillar of Neoliberalism — the army of unemployed people to stop cost push inflation dead in its tracks — are the “ army of rent slaves” a second pillar of a more virulent form of Neoliberalism with unparalled wealth concentration central to its core?
For the young people who may read this—Friedman’s fundamental pillar of Neoliberalism — the army of unemployed people to stop cost push inflation dead in its tracks — is formally known as the “non accelerating inflation rate of unemployment” (NAIRU) and the RBA, mainly through immigration, ensures that the NAIRU unemployment targets are met— which today is around 4.5% of the workforce—about 660,000 people are maintained in this army permanently—and the young unemployed men who committed suicide while being wrongfully hunted by the LNP through Robodebt and its posse of private debt collectors— for bogus and illegal reclaimation of supposed unemployment benefit overpayments—were doing “a tour of duty” for the benefit of all Australians— including the odious Robodebt crew and their “hunt you down” private debt collectors—during their tour of duty these men were defending— the wealth of this odious outfit— from the ravages of inflation.
Furthermore—Jobseeker Payments are wrongfully named, payment to the unemployed need to be formally renamed —NAIRU Army Payment— payment for active service in the NAIRU Army defending wealth against the very real threat of inflation—the members of this army deserve payment for their services just like anybody else who does a service for the society.
Governor Bullock do the Members of the Boards form a nest of Neoliberals who want this unparalled wealth concentration through investment housing along with its odious rent slavery or is that that you collectively just haven’t noticed the bubble?
Do you and members of the Boards understand the inverse relationship between wealth concentration through investment property ownership and the strength of the domestic consumption engine— as wealth concentrates through housing the more immigration is required to support a weakened domestic consumption engine—mortgage services costs and rents — on bubble price houses— leave millions of households with little income left over to buy anything at all but food and often requiring the assistance of charaties like the Salvos to make up rent or buy that food?
Would you agree that if Australians become aware that the Nation is in a severe housing bubble, the market will collapse regardless of Federal Politician’s insistance on maintaining the three housing investor tax concessions?
Would you agree that the more safe opportunity to correct or deflate the housing bubble was with the 2016 Federal Election because the bubble was at a 60% overvaluation at the time which is substantially less than the 84% it is now at?
If you were the Governor of the Bank in 2015 would you have insisted that the RBA’s Submission to the House of Representatives Standing Committee on Economics (the Committee) Inquiry into Home Ownership be submitted with — unaltered ABS Census Home Ownership Rates?
Governor Bullock these and the next several questions are of grave importance today as the growth in the bubble since 2016 is compounding the nightmare of housing unaffordability for millions of Australia’s working class citizens—which is now targeting their children more than ever before.
Furthermore, in all likelihood the growth in housing unaffordability would have been reversed in 2016 with a truthful RBA Submission.
Is it not the case that the RBA by altering the ABS Census home ownership rate denominators by leaving out “tenure unknown” from the denominators, showed home ownership rates as increasing from 1991 (see * Note) — when in fact the unaltered ABS Census rates showed home ownership declining from 1986 and further declining from 1991?
In over half a century of ABS Census Home ownership rates why leave just the 1991 Census rate unaltered—what was so special about this one rate?
1991 was the first Census year after the extra housing investor tax concession was granted to investors in 1987. Prior to this, home ownership rates showed strong growth from the 1976 to the 1986 Census but from then on home ownership rates declined Census after Census.
Is it not the case that had the RBA submitted an honest Submission with unaltered ABS census Home Ownership Rates the Committee would have been alerted to the fact that the second tax concession of 1987 had caused a decline in home ownership rates and that the 50% CGT discount ensured the continuance of this decline?
Governor Bullock did the 2015 RBA Governor and Board seek to alter the outcome of the 2016 Federal Election with the presentation of the misleading Submission because in all likelihood Labour would have seized upon a truthful RBA Submission showing that the tax concessions were causing a decline in home ownership rates — and alerted the Australian people to this grave outcome?
A misleading Submission ensured that this could never happen and therefore enhanced the LNP’s chances at the 2016 ballot— was this the main aim of the RBA at the time?
Governor Bullock the RBA states in its 2015 Submission that it was invited to make a submission to the Inquiry, who on the Committee invited the RBA to make its submission and which political party did they belong to and since the RBA did agree why alter the ABS Census rates and completely falsify the 1986 and 2011 Home Ownership rates?
The 1986 and 2011 Home Ownership rates graphed by the RBA cannot be found using the ABS Census denominator minus “tenure unknown” as explained by the RBA’s * Note. No explanation of how the RBA arrived at these denominators can be found anywhere in the Submission.
Is it not the case Governor Bullock that these denominators were falsified by the RBA to suit a predetermined “required value” for the RBA’s misleading graph?
Is it not the case that had the —1986 RBA graphed home ownership rate —followed the * Note directive, the fall in home ownership rates from 1986 into 1991 would have indicated a catastrophic decline and would have caused the Committee to ask why—therefore best to falsify the rate and reduce it by 2.5% to be precise?
Governor Bullock, it seems inconceivable that RBA junior staff took it upon themselves to author a misleading Submission replete with manipulated and worse, falsified ABS Census data and then sneak it past the Board and the then Governor, Glenn Stevens for it to be presented to the Committee.
These junior staff would have faced certain instant dismissal if they were found out—clearly higher ranking RBA staff organised the authorship of this misleading document and saw to it that it was so presented to the Committee. Who were these senior Staff and you know and they know that they committed a crime under the Parliamentary Privileges Act 1987 once the document had been presented?
Governor Bullock if the RBA didn’t seek to alter the outcome of the 2016 Federal Election, what then was in it for the Bank to mislead Parliament and therefore the Australian people in 2015, what did the Bank expect to gain from this illegal behaviour?
It appears the present RBA Governor and members of the Boards are acting with the same contempt towards working class people—that these people deserve to be and will be “our rent slaves” and rent slaves for the more “aspirational” high salary earners — as the 2015-2016 RBA Governor and Board, because the ever increasing housing unaffordability crisis which affects people not from wealth, business or farming is a direct consequence of the astronomical and growing housing bubble yet not a word of warning about it from the RBA—Why not Governor Bullock?
Governor Bullock are the governing Boards of the RBA infected with the same cancer as the Nation’s Parliaments that is — over representation of investor tax subsidised investment property owners (ORITSIPO said “or it sipo”)?
Governor Bullock what is it about excessive investor tax incentivisied manipulated demand (36% of the all house purchases since 2000) in a— supply— limited— market that the RBA, the Nation’s preeminent economic institution, does not get regarding the effect this demand has on prices — the damaging and economically dangerous house price inflation must continue to aggressively ratchet up so long as this manipulated demand is allowed to persist through the maintainance of these housing investor tax concessions?
This skyrocketing inflation outcome cannot possibily exceed the collective economic intellegence of the RBA and therefore the only logical conclusion that any reasonable person can draw from the RBA’s deathly silence on the housing bubble is that the RBA governing boards and executives are indeed infected with the cancer— ORITSIPO and have been so infected for a very long time— it is this or otherwise a mutated form of Neoliberalism is being imposed on the Australian society with —rent slavery— as an added foundational pillar to the NAIRU.
Governor Bullock, I have directed the questions to you and the RBA Boards’ members because the RBA is under legislated obligation to maintain financial stability for the nation and— this— housing —bubble— threatens— that— stability.
Furthermore, there is no point in asking questions pertaining to the housing bubble of property investor politicians, for one, oddly enough, Australian politicians are under no obligation via — Constitutional Law, enacted law or oath — to pursue or defend economic prosperity and welfare of the Australian people and we already know their answer in any case— What bubble?
I almost forgot Governor Bullock, would you agree that politicians owning investment properties while in office is a grave conflict of interest given that housing is a necessity and that the housing investor tax concessions has led to the housing bubble and its consequent housing unaffordability crisis in both rent and mortgage.
Would you also agree that a single investment property politician would not skew any parliament but given that more than 50% of Federal Politicians are investment property owners the proper functioning of parliament will be compromised to the benefit of investment property owners generally and collectively this would be outright corruption of parliament and could be seen as such?
Investment property politicians putting their self interest above the responsibility of their high Office that is, “to act in the best interests” of all Australians is corruption in the extreme.
Would you agree Governor Bullock and to put it into perspective Mr. Albanese sold his investment property for $1.7M and Mr. Dutton while in office towards the end of his time in parliament had 3 investment properties—Mr. Albanese house was inflating at the rate of about $4,500 per week and if we assume Mr. Dutton’s properties were of average value then they were inflating in total at about $9,000 per week?
So you see Governor Bullock with more than 50% of the members of parliament owning investment properties and enjoying such lucrative passive benefit why would Parliament change a thing?
Would you agree that the 50% proportion may well be the tip of the iceberg given that the less greedy of these people may well opt to forgo the negative gearing tax concession for the privacy of investment property ownership by trust fund and target the 50% capital gains tax only, which is where the real money is?
Would you agree also Governor Bullock that since holding investment properties in trust funds is an “in private” tax minimisation strategy, politicians have to declare their trust fund but not what the trust fund holds, Australia’s Federal Parliament may well be 100% full of investment property owners who put their self interest above all else?
The general populace will never know and the RBA may well suffer the same corruption at the same extreme wouldn’t you agree Governor Bullock and again we will never know?
Governor Bullock why should — one — red — cent — of a tenant’s taxes— a citizen excluded from home ownership as a direct consequence of the investor tax concessions — be handed to the landlord by way of those same tax concessions— and this on top of the mortgage pay down rent— the entire arrangement is immoral?
Governor Bullock what hope do the five or six year old working class children starting school this year or ten years ago or ten years hence, intending to become a nurse or teacher or of some such vocation, have of buying their own home after graduation if the housing investor tax concessions are allowed to prevail?
Do you think these children know, Governor bullock, that they are players in a real live game of Manopoly with the likes of Anthony Albaneses, Tony Burke, Peter Dutton, Susan Ley, Karen Andrews, Tanya Pliberseck, Allegra Spender, Daniel Tehan, Michelle Rowland, David Littleproud etc., etc., etc…………. a game that they have already lost if they lack family money and in this loss— no matter what their choice of profession up to about the the tenth percentile past the average salary—they are already rent slaves and burdened with its hideous rent slave penury—they just haven’t arrived there yet?
With such powerful political and institutional forces ranged against these children, forces intent on allowing these tax concessions to remain in place no matter what the social and economic cost, isn’t it a fact Governor Bullock that these children are earmarked for rent slavery by a profoundly incompetent and totally corrupt governing class?
And all of this social and economic damage for the tax benefit of just 8% of the population Governor Bullock.
It simply beggars belief.
Governor Bullock I have invited readers of this article to ask these questions of you also—all they need do is click the button—