I've had many conversations with economists where I pointed out that the widening gap between debt and incomes is a bubble that's inflating. Either they're really good actors and are only pretending that they think I'm wrong or they're incredibly thick.
APRA has a lot to answer for when it comes to unaffordable housing in Australia. They've allowed the banks to extend too much credit to speculators. The RBA could have put a stop to it, but didn't.
It seems like a combination of people living a lifestyle they cannot afford and the greed of the banks. There is also the idea that the banks are too big to fail. If everything collapses the banks will just get bailed out. Thus, they don't have to worry about the real risks of lending to those who will struggle to make the repayments.
I don't blame people for wanting to buy a home and paying an inflated price for it. They don't have much of a choice other than to move to another country.
And investors are led to believe that they're smart to own a lot of properties and collect rent from people who actually work for a living. I'll never forget the photo of a young woman in her 20's holding an enormous bunch of keys for all of the houses that she owned and the accompanying article that painted her as a role model.
Lowering other taxes and replacing them with a land value tax would benefit the vast majority of Australians. It would also deal with the issue of absentee landlords sending the money they've collected from rent offshore and prevent corporations from evading taxes by declaring revenues in offshore tax havens.