Meanwhile, insane sales have continued, with a modest 4 bedroom house on a 929 sq m block in Strathfield selling for $5.4M, $800,000 above reserve, in late April. The house is earmarked for demolition although it is unknown whether it will be replaced with a larger house or high density accommodation.I was looking at realestate.com.au around Chatswood and the prices are astonishing. Why should an average house be $5 million, who is benefiting from those outrageous prices? I don't understand why there are people who are still cheering this insanity on, clearly normal working people cannot afford to actually own property in that place any longer.
Bubbles like this are proof that traders do not always act in their rational self-interest. Emotion and desires are a big factor.
Ordinary houses on ordinary blocks of land are not special. Everyone needs somewhere to live so they can get out and be productive elsewhere in the economy - generating real wealth. Houses don't produce anything as such; the land on which they are built in theory can be productive, but our society is not very productive in general anymore at any level except for primary industries. The rest of it is just fluff.
The unproductive reality of houses doesn't matter while debt is so cheap. Banks have tightened somewhat but on the whole they are still throwing money at people in low rate mortgages, which fuels demand and keeps that bubble inflated. Cheap debt also allows all manner of unsustainable activity to continue in the economy because the can can always be kicked down the road.
Anna Bligh is a shameless disgrace. To think that the ALP has gone from pushing to nationalize all banks in the late 1940s to fostering this sort of behaviour in 2017. Compromised, infiltrated, undermined, hollowed-out.