Re:China May Have $5.8T in Hidden Debt with ‘Titanic’ Risks
by wp381640 on Wednesday October 17, 2018 @01:47AM
(#18236413)
There was a campaign in Australia to remove the income tax deduction on investment properties as it was cited as the cause of high property prices
What most people ignored is that it would spike rents and cause more short-term harm, especially as lending tightened
Everybody was casting for something to blame and ignored the most obvious solution staring them in the face - an increase of property supply (as you've said)
But in Australia you cannot tax-deduct the interest on your own home, whereas in the US (IIRC) you can. I would expect the artificial inflation to be higher under the US system.
The real causes of the high house prices IMO are: a) poor government policy, from federal to council level, the net effect of which is preventing the market to be adequately supplied with new housing; and b) a range of cultural factors (notably the image of housing as a safe investment, that is being cultivated with increasing desperation by the real estate industry) that results in channeling of investment into established housing.