Government HomeBuilder Policy Designed to Prop Up Housing at All Costs

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Yesterday I asked the question, will COZEN-20 kill you next?

‘Cozen’ is not actually a virus in the traditional sense. Cozen by definition is the artful coaxing and deception of someone.

And that’s exactly what world leaders are doing right now.

They’re continuing to treat the public the same way they and central banks have treated the economy over the last decade. They realise they’ve stuffed up, but they will never go back on their mistakes, instead preferring to kick the can down the road.

And the hole they dig gets deeper and more dangerous to you and me and generations to come every, single, day.

And they continue to brandish popularist politics in our faces as though we’re blind to what they’re doing. Take for instance the wonderful, exciting HomeBuilder policy the Aussie government has decided is a real winner…

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Lining up to do a renovation worth around $150,000 to $750,000? Sweet mate. No worries, here’s a $25K leg up to get some fancier German imported kitchen appliances. I bet you always wanted to cook with two ovens.

Of course, as a household you need to earn less than $200K combined. Or if you’re flying solo, less than $125K.

Which should be interesting, because I’d love to hear from anyone under those levels that is about to partake in a $750,000 renovation project. But if you’re building a new home, well that’s good too, if its total value including land is up to $750,000, then you’re $25K quid in too.

That should help underpin the only ace the Aussie government has anymore.

Can’t cut rates any further. Can’t pay people to be off work anymore than they already do. What’s left? Housing. Prop up housing at all costs.

Of course, the need for these policies continues to be baffling.

The need for any of this economic mess continues to be baffling. Research after research paper is coming out now delivering data that the risks to working age populations is considerably less than to those over 60 and worse, to those over 80.

And if you’re under 20, well there’s really not much of a threat of death at all. You’re more likely going to die in the car, on the pavement, or at your own hand.

I happened to be looking at some data in the UK today. And so far, total deaths of people under the age of 20 has tallied up to 14. That’s out of a population size around the 10.5 million mark.

That’s right, so far, of the 10.5 million people in the UK under the age of 20, just 14 of them have died from COVID-19. 14 is horrible whichever way you look at it. One death is horrible. And sadly, I know what it’s like when a child in the family dies. Nothing changes that grief ever.

Still for a point of comparison about the rampant fear being thrust upon communities…

In Q4 of 2019 in the UK 45 people under the age of 20 committed suicide. Of those, 44 of them were between the ages of 14 and 19. But no one, and I really mean no one, is talking about the threats to the mental health of young people during this period.

Whether those numbers spike in Q1 and Q2 of 2020? I don’t know. There’s an argument that with all the fear and anxiety, the numbers will spike. But there’s also the argument that due to most people being at home, it’s much harder to undertake the act.

Whichever the outcome, we need to balance the incessant rhetoric of fear. That’s not to say fear isn’t required, but it needs to be tapered to those who really are most at risk, the elderly.

And instead of announcing big investment and expenditure on really protecting the vulnerable and the elderly — the government gets out to the outer realms of suburban Australia, walks all over some poor bloke’s newly seeded lawn and proceeds to back pat each other about keeping the housing industry bubbling along.

If these are the power brokers supposed to represent the interests of the people — then they all need to be sacked.

Still, like I’ve said week after week here, there’s only so much you can do about it right now. You’ll make those decisions as needed when you can at elections, but even then not much ever really changes.

And in absence of buying into the misguided messaging, the self-congratulatory posing, and the rampant fear, you need to make decisions for yourself and your family to do what’s right now.

That means of course making sure you do your utmost to protect those who need it, the vulnerable and elderly. Be hygienic, wash and disinfect your hands, if you’re showing any sort of symptoms, stay at home, basically do all the things you’d do if you had the flu — because if you’re under 50 more evidence is suggesting the risk of death is no worse than the flu.

And don’t forget all this data and research you need to counter with the fact that Australia is virtually unscathed by all of this.

Which also brings us to something else you can do, and that’s take advantage of the mess the government has landed the economy in, by looking for the opportunities that exist on the market as the world wakes up to the real impact of this.

One area I think that continues to lag the bounce that a lot of the Aussie market has seen is in gaming and hospitality.

We know that a significant part of the hospitality industry in Australia is driven by gaming revenues. And that both hospitality companies and gaming companies were decimated in the rout of mid-March.

Aristocrat Leisure Ltd [ASX:ALL], for example, was smashed from around $37 in February to just under $15 in March. They bounced a bit and closed on Thursday at $27.18. But that’s still 36% off from February.

Another one, Redcape Hotel Group Pty Ltd [ASX:RDC] was up around $1.13 in February. Come March and they were touching 42 cents. Again, a bounce, and trading Thursday saw them close at 83 cents. But again, still 36% off their February levels.

So, you’ve got to look at companies like these in hospitality and gaming and ask, in Australia where we’ve been shielded more than anywhere else (except maybe New Zealand) is the situation so dire that companies like Aristocrat and Redcape won’t press back to the kinds of values seen earlier this year?

Sure, you may have missed the March bottom. But that’s OK. I don’t think it means you’ve missed the boat. Not yet.


Sam Volkering,
Editor, Money Morning

PS: Gold, of course, features heavily in the history of money. But does bitcoin truly have the potential to be its future? Click here to claim your copy today.

About Sam Volkering

Sam Volkering is an Editor for Money Morning and is small-cap, cryptocurrency and technology expert.

He’s not interested in boring blue chip stocks. He’s after explosive investments; companies whose shares trade for cents on the dollar, cryptocurrencies that can deliver life-changing returns. He looks for the ‘edge of the bell curve’…

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