Macrobusiness misunderstands EZFKA, doubles down on housing oversupply fantasy, gets ready to be monstrously embarrassed

Today Macrobusiness reprised its housing oversupply fantasy, repeating exactly the same arguments, but adding a few new charts.

The fantasy continues to be wrong, of course, for the same reasons: a short period of overbuilding (even if it does eventuate) does not make up for the decades of underbuilding.

…Just like EZFKA’s momentary budget surplus did not mean that the public debt disappeared. No, the debt was just reduced a tiny bit, before blowing out again. Stocks and flows….

In other news, one swallow does not a summer make.

The other thing that Macrobusiness forgets (keeps forgetting) is that the EZFKA is not a one-move game. So we can also say that a short period of overbuilding (even if it does eventuate) can be expected to be met with a suitable government response. The EZFKA government has been playing this game of choking demand and poking supply for a LONG time. They’re good at it. Experience counts.

File this latest fantasy next to the “mortgage rates will rise” fantasy from two years ago. That was a cracker!

June 2018

in reality, this is where things are really at – $200+ to share a room way out west.

A real housing glut will be evident when decent accommodation is plentiful and, therefore, cheap. We are nowhere near that. We are not even in the same fucking timezone.

PS: the would-be-flourish at the end is equally whimsical:

I would not want to be a financially stretched landlord in either Sydney or Melbourne right now. On the flipside, it will be great for renters.

With 2% interest rates, even $700,000 hovel only costs $14,000 a year to hold. An easy $300/week rent sees it turn a sweet cash profit. That’s the effect of the low low rates that you’ve been praying for, boys!