L F ECONOMICS report on
The Great Australian Housing Market Bubble and Government Action (and Inaction)
Property Prices under LNP Howard Government rose 121%.
A fascinating aspect of the Great Australian Housing Market Bubble is that most of the price growth has occurred under LNP governments, not ALP. Although a small housing cycle occurred during the late 1980s on the back of the enormous commercial and industrial real estate bubble, it deflated slowly throughout the early 1990s recession, reaching a cyclical trough during the mid-1990s.
From 1986 Q2 to 1996 Q1, housing prices, adjusted for inflation and quality, increased by a paltry 9.1% over the course of the ALP government. This amounts to a less than 1% annual increase in housing prices over a decade-long period.
Enter the Howard government. Prices escalated by 121.4% between 1996 Q1 and 2007 Q4, driven by the exponential increase in mortgage debt. While subject to much commentary, the price rises were clearly not opposed by government, industry – particularly the FIRE sector – home owners and property investors.
The contribution to price growth by government is as follows (red = ALP; blue = LNP):
ALP: 9.1%
LIB: 121.4%
ALP: -0.4%
LIB: 31.0%
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