House prices to keep rising for years

[satanoperca]

Property analysts Residex reported last month that Sydney prices were rising at an annualised rate of 28.9 per cent, fuelled by government grants and low interest rates and, if prices continue rising at such a rate, aggressive rate hikes are inevitable.

What a joke, annualised figures based on one quarters growth. We have discussed Sydney before, it has hardly shown any growth over the last 6 years.

Anyone up for a sizable bet that Sydney median prices will not increase more than 20% in the next year.

Kincella, where is all this super money current held, if it is in the banks don't you think a run into property would greatly effect the banks capital if this new super property boom was to proceed.

Don't you think investors may get concerned with the crappy returns they would recieve if the market increased anymore. Current what around 4.0% gross return. Cannot see rents going up to meet this burst of property price increases.

 

[kincella]

instead of looking at crappy 4% annual returns, some of us just focus on the non crappy 20% plus capital growth returns....a return is the same....regardless if its on an annual basis, or on pay day a few years down the track...
I say there are enough houses at reasonable prices for everyone....seems to be the low income earners expect to live in the most expensive suburbs, with no competition from high income earners.....hence the constant talk of 600 ks cost for a fhb...
I am an active investor, in a passive investment....I put in a large amount of time, research, and active time and expense in looking after my investments.....its not as simple as some make out.....sometimes its really hard work, but then I am expecting a big reward in the end....

oh and on another forum...Karrutha in WA is going skywards, due to the big gas ??? or whatever deal is going on over there....massive rents and returns, due to all the big companies involved in the deal...and not enough houses to support the increased population of workers....

and todays news Vic govt reducing the number of houses they planned to build for public housing by about 700 houses....another broken promise...another reason for the shortage....

building committments at an 18 year low....and no reduction in the immigration...
maybe we will become more like Europe, where its predominately renters...not owners...

 

[Mofra]

I get the maximum amount of A and B due to estimated family income below $45k. I have THREE kids. Total assistance from FTB A and FTB B is about $18k a year

You're right, my bad. I had the fortightly calculations wrong.

In any case, $13k makes a definate difference to a single-income family on $60k pa and does change the original scenario satanoperca described.

 

[gooner]

You're right, my bad. I had the fortightly calculations wrong.

In any case, $13k makes a definate difference to a single-income family on $60k pa and does change the original scenario satanoperca described.

$13k does but they only get $7.5k if 2 kids, not sure where you get the $13k from

 

[Mofra]

$13k does but they only get $7.5k if 2 kids, not sure where you get the $13k from

I'll have another crack from the website.

According to:
http://www.centrelink.gov.au/internet/internet.nsf/payments/ftb_a.htm

Assuming lowest rates of pay per age for each child.

Part A: $3,167 is the penalty, total ($4803 X 2) - $3167 = $6,439
Part B: $2,774 x 2 = $5,548

Total $11,987 if the children are aged between 5 & 13 (total increases if one or more are outside this range).

 

[gfresh]

instead of looking at crappy 4% annual returns, some of us just focus on the non crappy 20% plus capital growth returns....

Ask yourself why there has been 20% capital growth returns.. It's not rocket science.. It is DISTORTIONS caused by inept government policy and politicians protecting their own little nest eggs for short-term gain, at the long-term detriment of the entire country and it's future prosperity. Just as distortions in credit supply caused the pre-sub prime bubble in the US and UK and it's eventual bust, we have many distortions in our market (in different forms) which should be a concern to anybody with a truly objective viewpoint on what is the best for everybody over the longer term. Without major reform, we're going to run straight into a brick wall at some point, it's just a matter of when.

 

[gooner]

I'll have another crack from the website.

According to:
http://www.centrelink.gov.au/internet/internet.nsf/payments/ftb_a.htm

Assuming lowest rates of pay per age for each child.

Part A: $3,167 is the penalty, total ($4803 X 2) - $3167 = $6,439
Part B: $2,774 x 2 = $5,548

Total $11,987 if the children are aged between 5 & 13 (total increases if one or more are outside this range).

Still too high by $2,774 - the FTB B is payable per family not per child, whilst FTB A is payable per child

 

[MACCA350]

Yes there would still be a shortage if you are talking about a house and land package.

Because lowering the price doesn't create more land.

I'm not saying the govt don't have something to answer for in all this due to their lack of planning and release of land. Though it's the developers who lock up what is released and release it in dribs and drabs to try and keep prices creeping higher and higher. But really there is land around and it's not that hard to find a decent block.

There are properties avaiable even in sydney for $250,000. Offcourse alot of people set their sights on properites that are way above their means, and then complain when they can't afford it.

You make me laugh..........I was talking about median price(ie a reduced overall market pricing)...........not the cheapest you can possibly find

$250k would have to he about the minimum in most city outskirts for new homes.
The cheapest blocks of land in Melb N and W outskirts start around $170k.............
Houses start at $100k for most modest 14sqm........add in stamp duties, site costs, carpets/tiles and other costs not included, and you'll get bugger all change for $300k.

cheers

 

[satanoperca]

Gfresh, I totally agree with what you have stated but

which should be a concern to anybody with a truly objective viewpoint on what is the best for everybody over the longer term. QUOTE]

There would be very few people who meet this criteria. The vast majority of people are only concerned with what is best for them, both short term and long term. Unfortunate as this is, this is the society will live in.

 

[Tysonboss1]

Don't you think investors may get concerned with the crappy returns they would recieve if the market increased anymore. Current what around 4.0% gross return. Cannot see rents going up to meet this burst of property price increases.

a 4% Income paid weekly that will rise with inflation year by year, While your capital also rises with inflation sounds ok to me.

Compare it to a term deposit where neither your cashflow or capital increases with inflation, it doesn't take to many years for the property to start smashing the term deposit.

when my Grandfather died in 1975, my grandmother sold his investment property for $4000 and put the money in a term deposit thinking it was an alright cashflow.

30 years later she still has that $4000 termdeposit paying 4.5% interest. mean while the house would have grown in value to $300,000 paying 4% based on the $300,000 rather than the piddly some of $4000.00.

Property is a great inflation hedge.

 

[Beej]

The point of NG is pure & simple a tax payer funded rort!

....

If the government scrapped the NG rort then from the above figures it would have aprox $12B to spend on public housing or whatever, not that it probably would though?

There are between 2.5M and 3M renting households in Australia. So $12B/year means that on average landlord costs are subsidised by $4k-$5k per year per rental (ie $75-$100/week). That's really not very much at all, and FAR LESS than it would cost the government to attempt to provide that housing itself if negative gearing were scrapped and 90% of private property investors exited the market.

Further to looking at these NG figures, after reading this articel: http://www.news.com.au/business/money/story/0,28323,26029676-5017313,00.html I realised the the "subsidy" is even less than worked out in my post above.

Firstly, the $11.7B figure is for the DEDUCTIONS claimed, not the tax refund provided, to property investors. So the government only misses out on the tax that would have other-wise been paid on that income. Let's call that half the figure, (it's probably less as few would be on the highest marginal rate), = $5.8B.

Now in addition, the referenced article states that in the same year $5.2B in capital gains were declared related to residential property investment. Again, let's say half of that get's paid in tax = $2.6B in REVENUE in for the government.

So the net result = an effective "subsidy" of $3.2B, = $25/week ($1300/year) per rental property in the country (based on 2.5M rentals). Peanuts! And in return the government get's to pretty much divest itself of 90% of the responsibility for the provision of public housing.

And, now that interest rates have halved (in FY 08/09) I bet that the IP deduction numbers for this year will be more like $6B-$7B, and that the capital gains tax take would just about fund that cost in full.

QED.

Cheers,

Beej

 

[Tysonboss1]

$250k would have to he about the minimum in most city outskirts for new homes.
The cheapest blocks of land in Melb N and W outskirts start around $170k.............
Houses start at $100k for most modest 14sqm........add in stamp duties, site costs, carpets/tiles and other costs not included, and you'll get bugger all change for $300k.

Again you keep quoting this house and land garbage as if it should be possible for everyone to afford a large house on a block of land.


http://www.realestate.com.au/cgi-bi...r=&cc=&c=76500627&s=nsw&snf=rbs&tm=1252300695

The above is a nice little 2 bed unit for $235,000, easily affordable for a young couple,

http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=105892423&f=40&p=10&t=res&ty=&fmt=& header=&cc=&c=76500627&s=nsw&snf=rbs&tm=1252300695

 

[kincella]

know someone who just bought a run down little house for about one third of the costs for comparable houses in the area......why was it so cheap....for a start its not zoned residential.....its not surrounded by houses....it has a semi commercial zoning....which suits them, they intend to turn it into a B & B, after they have done the reno's.....
its not everyones cup of tea, nor suitable....lots of hard yakka to get this one going.....but I just know they will turn this ugly duckling into something beautiful, and should make a motza if they want to...
in the meantime its cheap living....but they will have their hands full with all the work required...

 

[Beej]

Again you keep quoting this house and land garbage as if it should be possible for everyone to afford a large house on a block of land.

http://www.realestate.com.au/cgi-bi...r=&cc=&c=76500627&s=nsw&snf=rbs&tm=1252300695

The above is a nice little 2 bed unit for $235,000, easily affordable for a young couple.

That's actually a fairly decent looking place - close to the station/shops etc, Merrylands is a fairly decent area as well, with Parramatta only just down the road. Good example of an affordable starter in Sydney. Plus with similar places renting there for $260-$300/week, owning costs almost the same as renting at the moment.....

Cheers,

Beej

 

[MACCA350]

Again you keep quoting this house and land garbage as if it should be possible for everyone to afford a large house on a block of land.


http://www.realestate.com.au/cgi-bi...r=&cc=&c=76500627&s=nsw&snf=rbs&tm=1252300695

The above is a nice little 2 bed unit for $235,000, easily affordable for a young couple,

http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=105892423&f=40&p=10&t=res&ty=&fmt=& header=&cc=&c=76500627&s=nsw&snf=rbs&tm=1252300695

Once again............I'm talking about median prices and affordable new home for the average Aussie family.............not the cheapest POS unit you can find

Average included 2 kids last I checked, and those prices I quoted are about the CHEAPEST you can build on the OUTSKIRTS of Melb North and West...........how on earth can you come to the conclusion that should not be possible for an average family

Cheapest house and land packages I've seen around are in the region of $250k..........add in stamp duty(and other costs) site costs, tiling and carpets, and any other not included costs and even these packages will be pushing $300k...........And once again these are the CHEAP end of the market..........for an average package you'd be looking in the $400k region

cheers

 

[Tysonboss1]

Once again............I'm talking about median prices and affordable new home for the average Aussie family.............not the cheapest POS unit you can find

Average included 2 kids last I checked, and those prices I quoted are about the CHEAPEST you can build on the OUTSKIRTS of Melb North and West...........how on earth can you come to the conclusion that should not be possible for an average family

Cheapest house and land packages I've seen around are in the region of $250k..........add in stamp duty(and other costs) site costs, tiling and carpets, and any other not included costs and even these packages will be pushing $300k...........And once again these are the CHEAP end of the market..........for an average package you'd be looking in the $400k region

cheers

That wasn't the cheapest POS I could find, It's a good qualty starter home Ideal for a young couple, If you want more bedrooms there are larger units for a bit more.

What I am saying is that it is not logical these days to expect a family should automatically be able to afford a house and land close to the city. on a single wage.

There is just not enough land, So regardless of what happens a certain % of the population in the capital cities will have to live in higher density (town houses and flats). so the demand for the house and land style homes, is going to grow and yes Average Joe probally can't buy one without a few years of planning.

I recommend starting early on somthing small and trading up as you go through life,

Trouble is most people want to start where their parents have finished and rather than save and plan to get into somthing small, They rent over their budject and complain about the market.

 

[Tysonboss1]

how on earth can you come to the conclusion that should not be possible for an average family

Homes in some form will always be affordable for the average family,

It's just that as cities grow these homes are not going to be 3 bedroom houses,.. more likly 3 bedroom Units.

Offcourse there will still be 3 bedroom houses, however the number of houses will be steadily reducing as they are bulldozed. So the suburbs that remain intact will have increasing prices that are out of reach for the average joe.

As I said earlier though, you want land, move out of the city,.. Australia is huge plenty of land out there.

 

[satanoperca]

Homes in some form will always be affordable for the average family,

You must be referring to a tent or even better a caravan.

 

[kincella]

you are kidding macca.....here is just one example with about 20 or more homes...house and land packages...no added stamp duty for fHB's...everything is included....
this ones at Wallan, just north of Melbourne, stacks at Craigeburn, etc
249 k's....about 40 mins to the middle of the city
I have seen them at Melton for 209 k's....
and would probably find better deals if I knew which suburbs to look for....
pffft to 300k's...
I picked Wallan as it was close to the Freeway, but there's stacks of them, each builder shows the suburbs they will build them on...
there are suburbs closer to Melb in that price range......

an article I posted at the weekend suggested ....there might be suburb snobbery......behind some of the choices people make....
ps most of us have tried to show you, how to be smart with a property, and not pay top dollar....

and I use this site as a guide to travel times....its usually spot on...
here...Melb to Epping 31 minutes
http://www.nowwhereroute.com/tourismvic/RoutePlanner/default.aspx

have a look at this one 229 k's and a big choice of suburbs....

http://www.arbgroup.com.au/form/?ref=4

http://www.realestate.com.au/cgi-bin/rsearch?a=
d&t=hnl&ty=&f=10&p=10&rs=0&fmt=&header=&c=70294873&s=vic&tm=1252309098

 

[Tysonboss1]

You must be referring to a tent or even better a caravan.

Homes in some form will always be affordable for the average family,

It's just that as cities grow these homes are not going to be 3 bedroom houses,.. more likly 3 bedroom Units.

No I am refering to higher density dwellings as I mentioned above.

Town Houses and units etc.