The future of Australian property prices

[DB008]

Australian Property is so far out of wack to wages it must crumble eventually , if the government was serious they would remove negative gearing, problem solved, housing now affordable, supply increases due to the exit of the rich no longer having a tax dodge & gen x onwards could afford to buy rather than pay astronomical rents.

Plus it would remove the banks from supplying money to a loss making enterprise funded by the taxpayer, than people could buy a home, less demand lower interest rates

in review get rid of tax breaks, stop funding loss making enterprises at the expense of the tax payer, property prices drop everyone can afford a home, my property can halve in value i don't care its my home .

i invest i things that are real & have a value, property does not

Sorry, l disagree with the above statement. Removing negative gearing will have investors (developers) drop out of the market and future property developments will slow down, thus pushing property prices higher while the population increases.

 

[Mrmagoo]

A property price crash would be TERRIFIC !

Hopefully they crash soon

 

[medicowallet]

Sorry, l disagree with the above statement. Removing negative gearing will have investors (developers) drop out of the market and future property developments will slow down, thus pushing property prices higher while the population increases.

Phase the change over 10 years with staggering amounts.

This would allow transition, and prevent crashes, give tradies time to adjust to more appropriate wages (compared to the rest of society) and builders and developers to return to historical margins, and councils to allow inflation to return land valuations to normal.

More affordable and transparent real estate for all... oh, plus legislate that RE must report de-identified statistics to improve it as well, then we won't have pathetic, tainted REIV results.. could you imagine if BHP could report only its highest 50% trades per week, and hide the true shareprice.

MW

 

[Mrmagoo]

Phase the change over 10 years with staggering amounts.

This would allow transition, and prevent crashes, give tradies time to adjust to more appropriate wages (compared to the rest of society) and builders and developers to return to historical margins, and councils to allow inflation to return land valuations to normal.

More affordable and transparent real estate for all... oh, plus legislate that RE must report de-identified statistics to improve it as well, then we won't have pathetic, tainted REIV results.. could you imagine if BHP could report only its highest 50% trades per week, and hide the true shareprice.

MW

Just remove negative gearing and CGT exemptions. Why should rich investors get tax exemptions ?

I mean this is just socialism for the rich. What next ? CEO tax exemption ? Earn more than 1 million dollars a year and pay only 5% marginal tax ?

The 6 billion pumped into negative gearing should be put into public housing for WORKING people. i.e you don't get a place for being a drug addict. You get offered a place because you're next on the waiting list, earn less than a certain amount and you agree to pay 85% of market rent.

Would do wonders for the economy in general

Also sell them as PPOR ONLY !

 

[medicowallet]

Just remove negative gearing and CGT exemptions. Why should rich investors get tax exemptions ?

I mean this is just socialism for the rich. What next ? CEO tax exemption ? Earn more than 1 million dollars a year and pay only 5% marginal tax ?

The 6 billion pumped into negative gearing should be put into public housing for WORKING people. i.e you don't get a place for being a drug addict. You get offered a place because you're next on the waiting list, earn less than a certain amount and you agree to pay 85% of market rent.

Would do wonders for the economy in general

Also sell them as PPOR ONLY !

I can't argue with this (nor removal of negative gearing for all investments).

But no government would ever survive an election with either of our proposals, hence the problem with the way our govt system operates, and how China can move appropriately and we cannot.

 

[Mrmagoo]

I can't argue with this (nor removal of negative gearing for all investments).

But no government would ever survive an election with either of our proposals, hence the problem with the way our govt system operates, and how China can move appropriately and we cannot.

If the ALP did this it would be about the only chance they would have of winning the next election in a landslide victory.

Think about it, lovers of negative gearing and tax breaks for the rich, well they vote liberal anyway...

If nothing else they'd win back thousands of disillusioned youth and younger people and alienate only the far right voter.

 

[medicowallet]

If the ALP did this it would be about the only chance they would have of winning the next election in a landslide victory.

Think about it, lovers of negative gearing and tax breaks for the rich, well they vote liberal anyway...

If nothing else they'd win back thousands of disillusioned youth and younger people and alienate only the far right voter.

Even I would vote Labor if they did this.... except then the $6 billion saved would go to subsidise earwax potato farming to solve the global food crisis, or some other stupid idea.

 

[Mrmagoo]

Even I would vote Labor if they did this.... except then the $6 billion saved would go to subsidise earwax potato farming to solve the global food crisis, or some other stupid idea.

Yeah because scientists just made global warming up to get extra funding right ?

 

[medicowallet]

Yeah because scientists just made global warming up to get extra funding right ?

nope, because they think they know the exact cause, and that it is with our powers to change it...

 

[sptrawler]

If the ALP did this it would be about the only chance they would have of winning the next election in a landslide victory.

Think about it, lovers of negative gearing and tax breaks for the rich, well they vote liberal anyway...

If nothing else they'd win back thousands of disillusioned youth and younger people and alienate only the far right voter.

You have a better chance of the crack in you backside healing up.
How many Union reps,organisers,secretaries, labour party members with houses in Canberra do you think are negative gearing. They just got a 50k pay rise, Jeez wake up.

Do you really think these dudes are in this for your betterment, oh to be young again.

 

[Smurf1976]

Yeah because scientists just made global warming up to get extra funding right ?

I've long suspected that it has more to do with fossil fuel depletion than any sort of funding conspiracy or new world order type stuff.

Tell the average person that oil is running out and they immediately go into denial despite overwhelming evidence that there is indeed a problem. Nearly half a century of declining discovery rates tells the story as does the fact that we've gone from simple wells onshore to offshore to now drilling in ridiculously deep water and still the stuff costs $100 a barrel whilst the wheels fall off the economy. But even with all of that plus a few wars as well, few are willing to move beyond denial on this one.

Likewise coal, until very recently generally accepted as being plentiful, is rapidly going the same way now that China is burning as much as the rest of the world combined an India wants to follow suit. That India apparently wants to buy poor quality coal from Australia that even 5 years ago would have been considered non-exportable says all you need to know really. They wouldn't want the rubbish if there was plenty of good stuff easily available.

But as I said, few are willing to face up to the situation we have with energy supply so telling them that getting off coal and oil is helping the environment, putting a positive spin on a disastrous situation, would seem the most practical way to gain the public's acceptance of what's about to happen.

 

[drsmith]

When I think of removing negative gearing cold turkey and without other complimentary tax reforms, I think of Paul Keating.

 

[wayneL]

I've long suspected that it has more to do with fossil fuel depletion than any sort of funding conspiracy or new world order type stuff.

I've always suspected this too, without discounting the other two on an "and/or" basis.

 

[greebly24]

"China's housing bubble is losing air" Los Angeles Times 13 December 2011
Home prices nationwide declined in November for the third straight month.
Surely prices didn't decline by very much?
Average prices in the Shanghai area are down about 40% from their peak in mid-2009.
Bugger. That's Steve Keen bad!
Sales have plummeted. In Beijing, nearly two years' worth of inventory is clogging the market, and more than 1,000 real estate agencies have closed this year.
But aren't hundreds of millions of country peasants moving to the cities? Two years inventory? How many did they build in the first place? An extra hundred million?
Developers who once pre-sold housing projects within hours are growing desperate. A real estate company in the eastern city of Wenzhou is offering to throw in a new BMW with a home purchase.
A free BMW? Why not just sell the homes for $80 grand less? Weird.
The swift turnaround has stunned buyers.. who thought prices had nowhere to go but up.
Because thats what the RE agents told them. Morons.
Li, a software engineer, closed on a $250,000, three-bedroom apartment in August, only to watch weeks later as the developer slashed prices 25% on identical units to attract buyers in a slowing market. Outraged, Li and hundreds of others who paid full price trashed the sales office, scuffled with employees and protested for three days before police broke up the demonstration. Walking away now would mean losing the $75,000 down payment that he borrowed from his working-class parents.
"I still haven't told them," Li, 29, said of his home's plummeting value. "It will just make them worry, and it's already too late.
"The sales agent told me prices wouldn't go down, that I was getting the best deal," he said. Li plans on marrying his girlfriend this time next year, when the apartment is scheduled to be finished. He'll have to devote half of his $1,500 monthly salary to pay the mortgage.
Li said he hasn't worked up the nerve to tell his parents how much his apartment has fallen in value ”” not after they lent him their life savings for the down payment. His father, an electrician, and his mother, a middle school teacher, live in Jiangxi, a poor province southwest of Shanghai. Frugal savers, they insist on walking wherever they can to save on bus fare when they visit their son in the city.
"I really thought I could save enough for a house," Li said. "But over the years, property prices grew so much faster than my salary. I couldn't play this catch-up game. I had to ask my parents for help or I'd never settle down."
So you've lost your "working-class" parents life savings by "investing" in real estate. Property prices growing faster than salaries should have been the give-away, dude. Its called "unsustainable" in English. You invested in a bubble. 50% of your income for 30 years? Wonder what "mortgage stress" is in Chinese?
That's news to millions of Chinese for whom real estate ownership has become an obsession. The mania has cemented itself into the national zeitgeist, inspiring a wildly popular soap opera, songs and even new slang. Debt-strapped home buyers have been dubbed fang nu, or house slaves.
Right. So the Li is now "fang nu", a house slave. And even a soap opera about RE? Genius.
It's all eerily similar to the early stages of the U.S. housing crash. The big difference is that the Chinese government intentionally slammed on the brakes.
Over the last year it has tightened lending... Chinese authorities say they're trying to tame inflation and defuse public anger over housing costs, the fallout from the government's efforts to stimulate the economy with easy credit during the global financial crisis.
So despite an economy growing at over 8% and hundreds of millions of immigrants (from the countryside) house prices are dropping? Simply because of less easy credit?
The protesters have garnered little sympathy on China's microblogs, a Twitter-like national nerve center with 300 million users. Many bloggers have denounced the home buyers as speculators hoping to make a quick buck by flipping units.
"You deserve this!" read one comment on the most heavily used service, Sina Weibo.
Such criticism isn't fair, wrote homeowner Wang Zeyi, who bought a unit in the same complex as Li in Shanghai.
"Most of us home buyers really just bought for ourselves to live in," Wang posted on her Sina microblog. "And overnight, the assets just evaporated."
Wow. Didn't know China had forums like this one. But why does Wang care if the value dropped, if they only "bought for ourselves to live in"? You can still live in it, Wang, so what's your problem? Unless you thought you were going to get rich buying a PPOR? Unless you thought you were going to be better off than everyone who didn't buy now?

So it sounds like the China property bubble has popped. Property in China is 20% of their economy, and the largest user of our resources.
That just leaves Australia and Canada property bubbles left. Wonder if our resources will save us?

 

[Tysonboss1]

Li, a software engineer, closed on a $250,000, three-bedroom apartment in August, only to watch weeks later as the developer slashed prices 25% on identical units to attract buyers in a slowing market. Outraged, Li and hundreds of others who paid full price trashed the sales office, scuffled with employees and protested for three days before police broke up the demonstration. Walking away now would mean losing the $75,000 down payment that he borrowed from his working-class parents.
"I still haven't told them," Li, 29, said of his home's plummeting value. "It will just make them worry, and it's already too late.
"The sales agent told me prices wouldn't go down, that I was getting the best deal," he said. Li plans on marrying his girlfriend this time next year, when the apartment is scheduled to be finished. He'll have to devote half of his $1,500 monthly salary to pay the mortgage.
Li said he hasn't worked up the nerve to tell his parents how much his apartment has fallen in value ”” not after they lent him their life savings for the down payment.

Here's the part I don't get with these situations.

One day he felt good about the purchase and his future getting married to his girlfriend and moving into the house, life's good.

Then when he gets told the value of the home has dropped by 25%, he freaks out and acts like the world is ending,

He should just contiune on with his plans, buy the house work and pay back his parents and enjoy life.

 

[Whiskers]

Here's the part I don't get with these situations.

One day he felt good about the purchase and his future getting married to his girlfriend and moving into the house, life's good.

Then when he gets told the value of the home has dropped by 25%, he freaks out and acts like the world is ending,

He should just contiune on with his plans, buy the house work and pay back his parents and enjoy life.

It's one thing for the open/auction market to fall, but quite another for the developer to give assurances that the sale price would not go lower... and weeks later lower it by 25%.

I don't know what the law is, or more importantly what laws are actually enforced in China, but there are clear laws in the west (Aus at least) that would give him a case for suing the developer to recover the subsequent 25% discount.

That's a very substantial discount and utterences like that, if not kept, are a clear breech of contract in Aus.

 

[explod]

It's one thing for the open/auction market to fall, but quite another for the developer to give assurances that the sale price would not go lower... and weeks later lower it by 25%.

I don't know what the law is, or more importantly what laws are actually enforced in China, but there are clear laws in the west (Aus at least) that would give him a case for suing the developer to recover the subsequent 25% discount.

That's a very substantial discount and utterences like that, if not kept, are a clear breech of contract in Aus.

As well he would lack the licence/credentials to make any indication at all. You can bet that litigation will occur in this case when it sinks in.

But just the normal disgrace of the property industry.

"Its a buyers market" remember.

 

[young-gun]

for all of you spruikers read below:

http://www.moneymorning.com.au/2011...tralia-the-last-of-the-bubbles.html#more-6962

we are not special, china is not special. and the simple fact that we have had such a good run over the past few decades will most probably only lead to us falling harder and faster. our prices are going to crash.

 

[Tysonboss1]

It's one thing for the open/auction market to fall, but quite another for the developer to give assurances that the sale price would not go lower... and weeks later lower it by 25%.

I don't know what the law is, or more importantly what laws are actually enforced in China, but there are clear laws in the west (Aus at least) that would give him a case for suing the developer to recover the subsequent 25% discount.

That's a very substantial discount and utterences like that, if not kept, are a clear breech of contract in Aus.

True, the developer should not have made such assurances, I don't care what the product is no one can guarantee the price will stay at any level.

The chinese will slowly work things out as their system continues to evolve.

 

[young-gun]

Here's the part I don't get with these situations.

One day he felt good about the purchase and his future getting married to his girlfriend and moving into the house, life's good.

Then when he gets told the value of the home has dropped by 25%, he freaks out and acts like the world is ending,

He should just contiune on with his plans, buy the house work and pay back his parents and enjoy life.

are you saying you would be happy with an 'investment' of 250k that lost 25% in a few weeks? if hes coming from a working class background money is most likely scarce, and the extra repayments he would have saved would most likely have gone a long way.