Low interest rates fuelling another housing boom?

This morning we heard a commentator on radio expressing his concerns that the continuing low interest rates would fuel another housing boom. A valid concern. I remember a few years ago when I was arguing that interest rates should be zero, someone pooh poohed my argument and said "If anything interest rates should be higher."  There is the dilemma that Social Creditors and all monetary reformers need to face. Low interest rates bring on housing booms. Any real estate agent knows this. It is a fact of life under the current regime of holding land. And housing booms cause inflation which steals from all of us. As one of my colleagues wrote on a skype chat yesterday: "Why should I have to see my purchasing power eroded thanks to speculative property bubbles? Why should I be starved for working capital because the banks are lending into still more housing? Why should I accept official figures for CPI rates that exclude the price of land and therefore mask the real inflation rate? If given the choice between paying a land value tax which would by its design remain in the region (or country) and paying interest on a mortgage which will go to any number of collateralized note holders, I know which I will pick." Auckland has over 20,000 homes which are above 1 million. A Campbell Live programme on housing affordability showed the price of home in Auckland so high that the average person on an average wage can't afford to buy one.  The average price in 2012 is $402,000 there, up from $$193,000 in 2002. During that time the average wage only went up 37%. That housing boom of 2002 to 2007 was the steepest on record. We are faced with a good sized challenge – to come up with policies which deliver radical monetary reform, (turning money on its head) and puts a big enough price on the holding of land sufficient to stop housing booms. It is a big challenge and discussion will help us develop these policies. We are committed to halting land speculation and committed to doing it in the most effective way. We believe you should pay for what you hold or take but not for what you earn or make. Wellington members are organising a meeting on July 1st, a Sunday afternoon to form a Wellington branch. No doubt they will be discussing policy.

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