Carrington Clarke

I imagine Perth is rapidly heading the other way as its prices go through the roof.

That was the mining boom, you know, mark one, if you like, boom that WA had.

But, you know, what's really interesting in that Macquarie note as well is that jump between 2000 and 2003, 45% in just three years.

And they say, well, look, as economists say, correlation is not causation.

But to quote the Macquarie note, the large jump in real house prices in that period was

suggests the introduction of the capital gains tax discount was a significant factor pushing prices higher.

Yes, interest rates had been on a bit of a structural decline, but that was already happening prior to 2000 because we'd been coming off very high interest rates, moved into inflation targeting, and the real juice to the market was that September 1999 change to the capital gains tax.

that introduced this 50% discount, which interacted with the negative gearing and suddenly made property investment a great tax minimization tool, which up to then it hadn't been as much.

And essentially what the government's trying to do is unpick that.

If that change contributed at least in some significant part to a 45% real increase in

home prices in three years, then one can only imagine that removing it might contribute something towards a decrease in real home prices over the years going forward.

And a question people need to ask themselves, is that a bad thing?

Because we have been moaning in this country about housing affordability for the better part of this century, basically since that 45% real jump in prices at the start of this century through housing affordability, way out of whack.

where we went from housing being three, maybe four times incomes to being eight in Sydney, 12 or 13 times incomes.

Now, the only way to make housing more affordable is for prices to either fall in absolute terms or at least rise more slowly than people's wages and household incomes are going up.

And that's a simple reality.

And it's also the major asset by far on the balance sheets.

of all of our banks, particularly the big four banks and Macquarie as well.

I mean, Macquarie is a bit more diversified, but all of these banks have literally trillions of dollars of housing assets underpinning the hundreds of billions of dollars of loans on their balance sheets.

And if those housing assets fall by a significant amount, and it would take a really significant fall, the bank regulator does regular stress tests on this.