The future of Australian property prices

[wayneL]

Drsmith's property tax reforms for private owners/investors.

1) All state based property taxes (stamp duties, land taxes etc) should be abolished.
2) Deduction of expenses against unrelated income (negative gearing) should be abolished.
3) The current 50% capital gains discount should be reduced to 1/3 (the current difference between the top marginal rate of income tax and the corporate rate) and the option of CPI cost base indexation restored.
4) Building depreciation should be abolished.

1/ Agree

2/ Disagree, if there is a reasonable expectation of a trading profit within a period of time (e.g 5 years). Agree if there is no expectation of profit within a set time frame. This would bring it into line with Aus law in other industries.

3/ CGT should only be levied if an asset is converted to cash. If an asset is sold in order to finance the purchase of some other asset, there should be no CGT.

4/ Disagree, but it should be radically overhauled to reflect true depreciation, if any.

FWIW

 

[baby_swallow]

First-home buyers in severe mortgage stress

"ALMOST a fifth of first-home buyers are facing the prospect of losing their homes within months, according to an alarming new survey.
The Australian Mortgage Stress Analysis of 26,000 households found the number of young people in severe mortgage stress is set to escalate, with countless families at risk of being driven by lenders to sell their homes."

Read more: http://www.news.com.au/realestate/i...ss/story-fndbarft-1226477993222#ixzz26z8yyCPG

 

[satanoperca]

First-home buyers in severe mortgage stress

"ALMOST a fifth of first-home buyers are facing the prospect of losing their homes within months, according to an alarming new survey.
The Australian Mortgage Stress Analysis of 26,000 households found the number of young people in severe mortgage stress is set to escalate, with countless families at risk of being driven by lenders to sell their homes."

Read more: http://www.news.com.au/realestate/i...ss/story-fndbarft-1226477993222#ixzz26z8yyCPG

Firstly, no mention that the increased FHBG may have contributed to this mess and allowed those that had little savings to get themselves a huge amount of debt on the back of the Aussie slogan of "don't worry, be happy, house prices always go up in the banana republic of Oz".

The figures come as banks are under increasing pressure to find more home loan customers, with bureau of statistics figures showing 35 per cent of all housing loans written in the past 12 months were borrowers refinancing their existing mortgages with another lender.

Read more: http://www.news.com.au/realestate/i...ss/story-fndbarft-1226477993222#ixzz26zDNCJdG

Does anyone have a chart of the last 10 years showing new loans against refinancing. Bit had to know if the above stat is a concern or just normal business.

Cheers

 

[drsmith]

1/ Agree

2/ Disagree, if there is a reasonable expectation of a trading profit within a period of time (e.g 5 years). Agree if there is no expectation of profit within a set time frame. This would bring it into line with Aus law in other industries.

3/ CGT should only be levied if an asset is converted to cash. If an asset is sold in order to finance the purchase of some other asset, there should be no CGT.

4/ Disagree, but it should be radically overhauled to reflect true depreciation, if any.

FWIW

With negative gearing I was thinking along the lines that it should only be available within a corporate structure, not as an individual. Perhaps in conjunction with that, Capital gains tax should be abolished altogether for individuals, such that,

State based property taxes (stamp duties, land taxes etc), deduction of expenses against unrelated income (negative gearing), capital gains tax and building depreciation should all be abolished for individuals.

That, if nothing else would significantly simplify non corporate tax and shift individual investment decisions from tax and more towards underlying merit.

 

[numbercruncher]

First-home buyers in severe mortgage stress

"ALMOST a fifth of first-home buyers are facing the prospect of losing their homes within months, according to an alarming new survey.
The Australian Mortgage Stress Analysis of 26,000 households found the number of young people in severe mortgage stress is set to escalate, with countless families at risk of being driven by lenders to sell their homes."

Read more: http://www.news.com.au/realestate/i...ss/story-fndbarft-1226477993222#ixzz26z8yyCPG

Fantastic news - these young tackers will find a whole new life of freedom once they default and begin the process and get a life free of the debt noose - let those pesky bankers cop a few on the chin

Thousands more properties to market = rapidly tumbling prices !

 

[moXJO]

Thousands more properties to market = rapidly tumbling prices !

Yeah still waiting

 

[white_goodman]

Firstly, no mention that the increased FHBG may have contributed to this mess and allowed those that had little savings to get themselves a huge amount of debt on the back of the Aussie slogan of "don't worry, be happy, house prices always go up in the banana republic of Oz".



Does anyone have a chart of the last 10 years showing new loans against refinancing. Bit had to know if the above stat is a concern or just normal business.

Cheers

you can get all those figures from the ABS, from memory the figures for that go back to 91/92 or even earlier... its in an easy spreadsheet format..

 

[young-gun]

Yeah still waiting

are you still not familiar with the term asset bubble yet?

 

[moXJO]

are you still not familiar with the term asset bubble yet?

yeah a title given by those with an opposing view.

 

[young-gun]

yeah a title given by those with an opposing view.

Perhaps, or.....a fact.

asset bubble - When the prices of securities or other assets rise so sharply and at such a sustained rate that they exceed valuations justified by fundamentals, making a sudden collapse likely - at which point the bubble "bursts".

Sounds like just about everything in the australian economy over the past decade.

Move along, nothing to see here.

 

[moXJO]

Perhaps, or.....a fact.

asset bubble - When the prices of securities or other assets rise so sharply and at such a sustained rate that they exceed valuations justified by fundamentals, making a sudden collapse likely - at which point the bubble "bursts".

Sounds like just about everything in the australian economy over the past decade.

Move along, nothing to see here.

Hope you didn't wait that last decade on the sidelines waiting for everything to crash. IMO it burst a while back. But there are booms within the property market and good areas for profit I'm seeing now.

I will update on that duplex I mentioned previously as it will be interesting to see if and how fast it sells. Still a couple of weeks off completion.

 

[young-gun]

Hope you didn't wait that last decade on the sidelines waiting for everything to crash. IMO it burst a while back. But there are booms within the property market and good areas for profit I'm seeing now.

I will update on that duplex I mentioned previously as it will be interesting to see if and how fast it sells. Still a couple of weeks off completion.

I'm not old enough to have been able to invest the whole previous decade

Not sitting on the sidelines, plenty of investment opportunities, jsut don't think there's great ones in RE atm, then again I'm not looking.

 

[white_goodman]

I'm not old enough to have been able to invest the whole previous decade

Not sitting on the sidelines, plenty of investment opportunities, jsut don't think there's great ones in RE atm, then again I'm not looking.

there are good opportunities in real estate if not aware of risk and/or probability

 

[moXJO]

there are good opportunities in real estate if not aware of risk and/or probability

Thats the going advice of the thread, and then you think those that are in property don't stick around because they went broke.

 

[white_goodman]

Thats the going advice of the thread, and then you think those that are in property don't stick around because they went broke.

point to a post where i said that, theres plenty of money to be made in a bubble, i can buy property knowing full well there is a bubble as long as I expect it to continue further. So it can become two different debates, is there a bubble? Should i speculate on real estate prices(ie whats my timeline)?... Me and young gun are of a generation where it might not be wise, where it might be different for older people with a portfolio... Regardless of that based on most measures we are in a credit driven bubble, property prices are essentially a function of housing finance ex refi's... my view on housing finance into the near future is cloudy at best, but I firmly believe worldwide we are in a state of private deleveraging, balance sheet recession, and we are all mini Japans

 

[Knobby22]

point to a post where i said that, theres plenty of money to be made in a bubble, i can buy property knowing full well there is a bubble as long as I expect it to continue further. So it can become two different debates, is there a bubble? Should i speculate on real estate prices(ie whats my timeline)?... Me and young gun are of a generation where it might not be wise, where it might be different for older people with a portfolio... Regardless of that based on most measures we are in a credit driven bubble, property prices are essentially a function of housing finance ex refi's... my view on housing finance into the near future is cloudy at best, but I firmly believe worldwide we are in a state of private deleveraging, balance sheet recession, and we are all mini Japans

Good point. And we haven't had a real recession for 22 years and am possibly looking at one in the face now.
I hope we aren't a mini Japan though. I agree many other countries look like Japan these days.

 

[young-gun]

point to a post where i said that, theres plenty of money to be made in a bubble, i can buy property knowing full well there is a bubble as long as I expect it to continue further. So it can become two different debates, is there a bubble? Should i speculate on real estate prices(ie whats my timeline)?... Me and young gun are of a generation where it might not be wise, where it might be different for older people with a portfolio... Regardless of that based on most measures we are in a credit driven bubble, property prices are essentially a function of housing finance ex refi's... my view on housing finance into the near future is cloudy at best, but I firmly believe worldwide we are in a state of private deleveraging, balance sheet recession, and we are all mini Japans

Absolutely. Investing in property can be a fantastic investment, and has been for many. Fact is you have to pick your timing. Now is most certainly not the time. Sure you can get in, negative gear your way through, and eventually get your investment cashflow positive. In some cases do the research and you can even pick up something already cash flow positive Im sure. Why do this when the risk of your IP crashing in price is so high at the moment?

Identifying bubbles is key to making big money in RE(imo). I could buy now and set up a portfolio but there are far better opportunities, and yields will be far greater against capital outlay once it pops. The US rents are rising and prices have crashed(and will continue to).

 

[Mr Z]

Investments create income, personally I can't stick that word in the same sentence as the term "cash flow negative", that belongs with the word speculation. Investments should make sense on their current merit before any potential capital gain is considered. JMO

 

[wayneL]

Investments create income, personally I can't stick that word in the same sentence as the term "cash flow negative", that belongs with the word speculation. Investments should make sense on their current merit before any potential capital gain is considered. JMO

Well, RE is only cash flow negative due to gearing. RE bought with cash yields x% gross.

Once nett is calculated, the return is truly gross IMO. Where is risk premium?

That said, totally agree on the comment re speculation.

 

[explod]

Investments create income, personally I can't stick that word in the same sentence as the term "cash flow negative", that belongs with the word speculation. Investments should make sense on their current merit before any potential capital gain is considered. JMO

Wise words.

Making sense to oneself seems to be the problem.

The human tendency is to follow as sheep which we can equally akin to belief.