The future of Australian property prices

[KurwaJegoMac]

Been looking at the FHSA. Not sure if readers aware of legal "scam". Put in $5500 one day before end of financial year to get $935 govt bonus for that year. Next day, new financial year, stick in another $5500. So in one years time:

$5500 + $5500 + $935 = $11,935
5.5% interest for one year = $656.42
Minus 15% tax = $557.96
Second govt bonus (2012/13) = $935
TOTAL PROFIT = $2427.96

Basically a 22% profit on $11,000 in one year and one day, zero risk. Drops to something like 12% in second year and 9% in third. Great for me cos saving for three more years for home anyway, but check details for yourselves. Combined with a stagnant or dropping RE market, could work out very nice. Hence the confirmation bias

That's exactly what I'm doing Greebly24 Just signed up for the account - looking to have it up and running before end of June so I can pop in the $5500 and get $935 straight away.

Just FYI the account has to be set up outside of the bank branch system as the ATO has to confirm eligibility before it can be set up. So if you're hoping to get in before end of this month don't delay or it may not get set up in time!

 

[Androopy]

Just a quick find.

http://www.smartcompany.com.au/property/20110615-why-we-need-another-way-to-invest-in-housing.html

What do you guys think?

 

[Uncle Festivus]

The First Home Owners Grant (FHOG) and First Home Saver Account apply provided you have not lived in a property you own - so if none of your IPs were a residency at any point then you can claim the government subsidies. Although for the FHOG you cant have purchased Residential Property prior to 1990. You can purchase after 1990 but must not have lived in it.

Also note that this is for Victoria and eligibility may vary in other states.

Been looking at the FHSA. Not sure if readers aware of legal "scam". Put in $5500 one day before end of financial year to get $935 govt bonus for that year. Next day, new financial year, stick in another $5500. So in one years time:

$5500 + $5500 + $935 = $11,935
5.5% interest for one year = $656.42
Minus 15% tax = $557.96
Second govt bonus (2012/13) = $935
TOTAL PROFIT = $2427.96

Basically a 22% profit on $11,000 in one year and one day, zero risk. Drops to something like 12% in second year and 9% in third. Great for me cos saving for three more years for home anyway, but check details for yourselves. Combined with a stagnant or dropping RE market, could work out very nice. Hence the confirmation bias

Why am I not surprised that property spruikers need the continued 'support' of the taxpayer for the ponzi to perpetuate. Isn't there anyone with ethics and morals any more who can resist the temptation to once again scam the system? Just glad I'm not a Victorian taxpayer, although we probably have a similar taxpayer funded subsidy here in NSW that non genuine first home buyers can rort also?

 

[cynic]

Why am I not surprised that property spruikers need the continued 'support' of the taxpayer for the ponzi to perpetuate. Isn't there anyone with ethics and morals any more who can resist the temptation to once again scam the system? Just glad I'm not a Victorian taxpayer, although we probably have a similar taxpayer funded subsidy here in NSW that non genuine first home buyers can rort also?

Is it unethical for a person to take full advantage of a facility that is made legally available at all taxpayers expense?

Surely as a current or future taxpayer himself, he's entitled to avail himself of legally granted opportunities to recapture some of his lost wealth without being accused of wrongdoing.

Please also bear in mind the inordinately high stamp duty rates being charged in Victoria.

The taxpayers really can hardly be considered to be scammers for seeking an opportunity to get something back in return for their tax dollars/duties.

 

[KurwaJegoMac]

Why am I not surprised that property spruikers need the continued 'support' of the taxpayer for the ponzi to perpetuate. Isn't there anyone with ethics and morals any more who can resist the temptation to once again scam the system? Just glad I'm not a Victorian taxpayer, although we probably have a similar taxpayer funded subsidy here in NSW that non genuine first home buyers can rort also?

In addition to Cynics excellent response, why should I be penalised because I have chosen to derive an income from property? Should we start banning developers, flippers, renovaters, etc from receiving these benefits too? After all, they need to purchase property to derive their income.


Like you, i need somewhere to live and when I can afford it, i will purchase a PPOR. The scheme is available to all members of the public and comes out of the taxes i pay as well. Would you ban students from receiving government handouts? They too are investing (in themselves) in the hope that future returns will outweigh short term losses.

 

[trainspotter]

In addition to Cynics excellent response, why should I be penalised because I have chosen to derive an income from property? Should we start banning developers, flippers, renovaters, etc from receiving these benefits too? After all, they need to purchase property to derive their income.


Like you, i need somewhere to live and when I can afford it, i will purchase a PPOR. The scheme is available to all members of the public and comes out of the taxes i pay as well. Would you ban students from receiving government handouts? They too are investing (in themselves) in the hope that future returns will outweigh short term losses.

I should have been paying more attention to some of your previous posts. Did you say that you have received the FHOG to buy an IP? OR did you say that even though you have bought an IP that you will be eligible for the FHOG in the future if and when you buy your PPOR ?

 

[KurwaJegoMac]

I should have been paying more attention to some of your previous posts. Did you say that you have received the FHOG to buy an IP? OR did you say that even though you have bought an IP that you will be eligible for the FHOG in the future if and when you buy your PPOR ?

The latter: Even though I have bought an IP I am still eligible for the FHOG in the future if and when I buy a PPOR.

 

[maffu]

UncleFestivus, the First Home Owner Savings Account is a Federal Government initiative, not state based.
http://www.commbank.com.au/personal/accounts/firsthomesaver/default.aspx

I signed up for one a few weeks ago, my girlfriend and I will both put in $5,500 this financial year (2 weeks left!) and receive $1,870 from the government as a bonus.

Personally I think middle class welfare is disgusting policy, but its available to me, and I will make sure I use it.

 

[againsthegrain]

Was walking through my local shopping centre today and nearly every store had some kind of big upto 50% off sale, I guess it is end of financial year sales as usual.

What is not announced that quiet a few of these shops are having sales because they are closing, alot of owners are saying rents are too high and there is hardly any profits due to less and less consumer spending.

Angus and Robertson and most of borders stores are liquidating this month 4000 jobs Aus wide have been wiped out.

Not a doom prophecyst but general public and consumer confidence is taking a beating, I hear alot more people saying "hard times are coming"

There is so many 50% off sales you can have but when people just can't afford the luxuries the stock won't sellitself

Wonder what kind of effect this is having on RE, not a bear nor a bull just a curious observer.

Would rather not a big crash like some are hoping for, wish for a big crash and you might get just a little too much that you bargained for.

 

[trainspotter]

The latter: Even though I have bought an IP I am still eligible for the FHOG in the future if and when I buy a PPOR.

OH really? Which state do you live in ? In WA the moment your name hits the title of the property the FHOG goes with this purchase. As in you cannot buy an IP then buy a PPOR and claim FHOG. I might have to buy some property in your state??? In QLD it is the same. (only commercial stuff there)

You and your spouse have:

never been paid the first home owner grant
before 1 July 2000, not owned residential property in Australia
from 1 July 2000, not lived in residential property (in Australia) you have owned.

http://www.osr.qld.gov.au/first-home-owner-grant/eligibility-fhog/index.shtml

I was of the understanding that once your name is on ANY title you have ruled yourself ineligible?

 

[KurwaJegoMac]

OH really? Which state do you live in ? In WA the moment your name hits the title of the property the FHOG goes with this purchase. As in you cannot buy an IP then buy a PPOR and claim FHOG. I might have to buy some property in your state??? In QLD it is the same. (only commercial stuff there)



http://www.osr.qld.gov.au/first-home-owner-grant/eligibility-fhog/index.shtml

I was of the understanding that once your name is on ANY title you have ruled yourself ineligible?

For the most part you are correct, you are ineligible if your name is on a title - however this applies only if the purchase was prior to 1 July 2000.

You and your spouse have:

1) never been paid the first home owner grant
2) before 1 July 2000, not owned residential property in Australia
3) from 1 July 2000, not lived in residential property (in Australia) you have owned.

So in my case, regarding the conditions above:

1) I've never claimed a grant
2) I have never owned property prior to 1 July 2000
3) Provided I don't live in the property, I will satisfy this requirement as the IP was pruchased after 1 July 2000

Hope that clarifies things. I imagine you purchased your IPs prior to 1 July 2000? Unfortunately you won't be eligible. However you can still go for the FHSA:

Requirements for the RHSA don't contain the clause about owning a property before 1 July 2000

Eligibility to open an account

not have previously owned a home in Australia or Norfolk Island that has been your main residence

If you have already owned a home but you have never lived in it, for example you owned an investment property, you are still eligible to open an account.

Source: http://www.ato.gov.au/individuals/content.aspx?menuid=0&doc=/content/00250962.htm&page=4&H4

 

[Glen48]

Wait a few years and the First Home Owners bribe will pay for your house in total.

 

[cynic]

Wait a few years and the First Home Owners bribe will pay for your house in total.

I wonder what would happen if the Australian bank's got creative (like certain banks in US) and created a security based on bundled mortgages that could then be shorted?

 

[jbocker]

I wonder what would happen if the Australian bank's got creative (like certain banks in US) and created a security based on bundled mortgages that could then be shorted?

Well I would have thought that was well documented already with what happened in the US. I also recall NAB did cop a sting through some overseas involvement in the same.

 

[explod]

Well I would have thought that was well documented already with what happened in the US. I also recall NAB did cop a sting through some overseas involvement in the same.

And recently LG got out of home finance here recently and I think from memory onsold theirs to Westpac. It was in the beginning from Wizard who did see the writing on the wall early.

 

[trainspotter]

And recently LG got out of home finance here recently and I think from memory onsold theirs to Westpac. It was in the beginning from Wizard who did see the writing on the wall early.

Not quite there explod. It was GE Capital that sold their residential mortgage book in Austalia and New Zealand for 5 billion to Pepper Homeloans. Two years ago the majority was offloaded to CBA. GE Capital owned Wizard prior to CBA moving in.

GE is better at high interest rate personal loans, short term credit and credit cards. Home loans was never their core business.

Hope this clear it up.

 

[greebly24]

That's exactly what I'm doing Greebly24 Just signed up for the account - looking to have it up and running before end of June so I can pop in the $5500 and get $935 straight away.

Just FYI the account has to be set up outside of the bank branch system as the ATO has to confirm eligibility before it can be set up. So if you're hoping to get in before end of this month don't delay or it may not get set up in time!

Thanks very much for the info. Didn't realise that. First thing Monday.

Isn't there anyone with ethics and morals any more who can resist the temptation to once again scam the system? Just glad I'm not a Victorian taxpayer, although we probably have a similar taxpayer funded subsidy here in NSW that non genuine first home buyers can rort also?

But UncleFestivus, I am a FHB!?! And I still have to help pay for the tax revenue lost due to negative-gearing on IPs, not to mention the lack of CGT on PPOR, and I don't even own property yet!!! WTF!

 

[Aussiejeff]

Saturday 18th June 2011

The clearance from this weekends 598 auctions is 54 per cent. This shows that in all except a few circumstances buyers continue to be cautious when bidding and sellers are unlikely to have their price expectations exceeded, even when the home is sold.

Of the 598 auctions reported a total of 321 sold and 277 were passed in, 194 of those on a vendors bid.

This weekend last year saw a clearance rate of 68 per cent.

Next weekend another 670 auctions are expected.

Enzo Raimondo
CEO REIV

Only 321 sold so far out of 700 "expected" auctions this weekend (102 auctions "not reported" - we know what that means). So, I make that a dismal 45% success rate.

Question is, how low will the clearance rate go - especially after the next couple of rate increases?

 

[KurwaJegoMac]

Only 321 sold so far out of 700 "expected" auctions this weekend (102 auctions "not reported" - we know what that means). So, I make that a dismal 45% success rate.

Question is, how low will the clearance rate go - especially after the next couple of rate increases?

Judging by bond yield curves and the state of the economy in general i dont think we will be seeing rate rises anytime soon. In fact the likelihood of them going down is greater.

 

[Glen48]

Saw one house listed at 700 and didn't get bid at 400, Rates will have to go up The OZ economy has nothing to do with rates they are all governed by over seas.