Housing plan to tackle affordability

[DTM]

Actually, Gittens has been saying that scrapping the vendor tax will have a negative affect on sydney house prices as it will improve liquidity.

Yes, it will result in more of a move in the supply/demand curve to the oversupply area and will result in a drop in prices.

Good article I might add.

 

[Rafa]

Well, the next great infrastructure project planned for Adelaide is the extension of the highway from south road to Gawler... cutting the time to get to Gawler considerably!

But Gawler doesn't really classify as the next 'sea change' destination! But, it could well develop into a fine satellite city, doorstep to the Barossa, etc, etc!

Still, one thing about Adelaide that has always concerned me is the fundamentals... and that is population and population growth. As a result I have never looked north or south of the city... (and been proved spectacularly wrong!). I have felt the the east west corridor around the city is the long term growth area, because it is a fixed area, unable to expand... i.e. sea on one side and hills on the other!

Any thoughts?

Also... what are your thoughts on the share market now... i.e. how much higher can it go... having got a property now, i am torn between trying to repay the loan as quickly as possible, or continue to look at shares and then use gains from the share market to pay the loan off!

Any thoughts on this?

 

[krisbarry]

Wage price index up... you know what that means, more pressure on interest rates... Bring it on I say! UP GO THOSE RATES!!!

17aug05
THE wage price index increased 1.1 per cent in the last quarter, the Australian Bureau of Statistics said today.

Releasing figures which give some indication of possible inflationary pressures, the bureau said the index rose 1.1 per cent in the June quarter, to be up 4 per cent in the past 12 months.

The index shows private sector wages (excluding bonuses) were up 1.1 per cent for the quarter, to be up 3.8 per cent over the past year.

Public sector wages (excluding bonuses) rose one per cent for the quarter to be up 4.7 per cent over the year.

The quarterly increase in June matched the March quarter increase.

The biggest increase was recorded for the education sector, up 5.7 per cent for the year. HECS UP 25%!, also factor in Teacher wage claims!

Other industries with strong increases included government administration and defence (4.9 per cent), construction (4.9 per cent) and mining (4.8 per cent).

The bureau said there appeared to be strong demand for skilled labour in both the construction and mining sectors, with many respondents saying they were paying additional wage increases to retain quality staff.


source : http://www.theadvertiser.news.com.au/common/story_page/0,5936,16290641%5E1702,00.html

 

[tech/a]

... Bring it on I say! UP GO THOSE RATES!!!

WHY?

 

[Smurf1976]

WHY?

Rates will go up at some point. I think most would agree with that.

But the last thing you want is to be heavily in debt when it happens. House prices at the moment are basically a function of "how much can we borrow at PRESENT interest rates if we stretch everything to the limit?". Most people do just that and then spend as much as they can get on buying a house. So no surprise that house prices have been bid up way beyond any official measure of inflation.

I am bearish in my view on real estate prices for this reason. I acknowledge that the bulls could be right but I am more convinced by the bear case at the present time.

Now, when interest rates go up the amount that can be borrowed for a given income level goes DOWN. This means less to spend on houses, A LOT LESS.

Now, if it were me I would rather have prices fall / rates rise BEFORE I buy, not after. The last thing anyone wants is a mortgage worth more than the house at rates considerably higher than they budgeted for (remembering that in many cases they budgeted on the basis that rates would steadily FALL and they are in big trouble if they don't).

I assume this to be the reason why some would like to see higher rates. Personally, I gave up "wanting" things economic quite some time ago. But I do believe housing to be a bubble. I am not "wanting" any specific outcome but I believe that we are at the top of the market cycle for real estate right now and am acting accordingly. Others disagree. They could be right. Time will tell.

 

[krisbarry]

Wage growth highest in 8yrs, that is the key ingredient for inflationary pressure. The RBA is relaxed for the moment, but hold onto your hats for rapid rate rises in early 2006!

Bring em' on!

 

[tech/a]

No No Smurfy.

... Bring it on I say! UP GO THOSE RATES!!!

Why the hell is this statement being made? I'm afraid I'm missing the benefit of why someone would be cheering on an interest rate increase.

Locking in interest rates and decreasing gearing is the simple answer.
With the longterm veiw being (for me ) passive income---selling property and freeholding others is the long term goal (3 are on the market now--one sold on W/E and one almost cleaned out by theives on Sunday before the open--- caught with the kitchen half out by my wife as she went around to put the heater on!!!!!). Many others who invest in R/E have the same goal---if they dont then they should!.

Few Pro R/E investors will be hurt at all.
Its the younger ones who mortgaged themselves to the hilt in 2002 and after who have no equity,and are currently on maximum servicability that will be hurt.

RAFA.
We do a lot of work for LR&M from Gawler.Talking to their contracts manager they report that the area has more approved subdivisions than in the south.

SHIP CONTRACT
Should mean something to you.
I always look for a REASON why an area will go ahead.
I'd say you've found one.
You can certaintly make the numbers work out there.(Gawler etc).

You know if those who constantly whinge about how tough life is---spent as much time persuing opportunities and taking advantage of them----they'd find life is there for the taking.

Kris here is a great line for you.

"I started with nothing and still have most of it!!"

Couldnt resist!

 

[krisbarry]

Kris here is a great line for you.

"I started with nothing and still have most of it!!"

Couldnt resist!

That is very same pig-headed attitude that you constantly display on this board and for that very same reason many people simply ignore replying to your posts!

I feel sorry for your children as you are robbing them of a chance to enter the housing market

Time you give a little of it up and let others have their turn too!

The question I pose to you is...."Do you ever feel guitly about the amount of wealth that you own?"

How do sleep at night, while others are homeless, geeezzz I ain't homeless, but I always think about those who cannot even put a roof over their heads.

Remember your children mate and their friends, while you beat your chest and proclaim that you still own all that wealth! To own that amount of wealth you must have robbed many others!

Who said greed ain't evil !!

 

[Smurf1976]

I think we're talking about different things here.

Tech/a seems to be focusing on investing in real estate in up and coming areas if I have understood correctly.

I and it appears krisbarry are thinking in terms of buying an established property, in an established area TO LIVE IN.

Totally different things IMO.

I can see the logic of investing in an up an coming area. It's an investment like any other. As long as you've got it right you ought to do fairly well. Get it wrong and you'll lose. No problem with that.

What I DO have a problem with is the notion that an ordinary working person pays far more in interest payments than they could rent the same type of property for. Where is the sense in paying over $30,000 in interest (not repayments, they're extra, that's just for the interest) plus maintenance, rates and insurance for a property that is FALLING in market value when you could rent the same place for less than $20,000 and in many cases around $15,000. Why pay double?

OK, you could pay less than this if you buy a cheaper property. You would pay less rent for one of those too.

As I said, investment in up and coming areas is one thing. Buying in a falling market, which is the situation for most, is entirely different in my opinion.

Good that we have some disagreement though. Democracy still seems to be working here.

 

[wayneL]

WHY?

There are many, who have much to gain from rising interest rates...including some members of my family.

I personally would like to see them up too. I have several reasons for this, some financial, some sociological.

Up about 2-4% from here will do nicely.

Cheers

 

[RodC]

What I DO have a problem with is the notion that an ordinary working person pays far more in interest payments than they could rent the same type of property for.

This is nothing new, when we bought our first house in 1987 the repayments were higher than we could have rented for (interest rate was around 14%).

I don't know about the other cities, but this has been the reality in Sydney and Melbourne for at least the last 20 years. Plenty still seem to be able to buy a house.

The one thing that has changed is that many first home owners are no longer content with a modest first house. They all seem to think they need something new and huge.

Rod.

 

[tech/a]

Kris.

You have no idea where I put funds to work and the benefit people recieve from their application.
Guilty--No--We are all very fortunate to live in a country where these opportunities are available to all of us.
I've also been fortunate enough to travel most of the world---and if you think there is poverty here then get off your butt and travel to India or Malaysia---or Mexico where $50AUS can keep 10 people alive for a month.

If you think we are Rich or I am for that matter go to Palm Beach Florida where my nett worth is someones 50th Birthday bash---or a Packer wedding.

"To own that amount of wealth you must have robbed many others"

Thats an amazing statement---rather than understand that you can create your own wealth and do with it what you wish---you and people like you believe that those who make an effort to be self sustainable must do it at the expense of others!---amazing. In retirement I wont be a cost to the general populace
95% will----Do you hear me whinging about the tax I pay??

I ask what your doing here ---a stock trading forum where most are looking for ways to increase their lot----your not?

What you see as chest beating Kris is encouragement to anyone who has a go. If I can help and people ask then I'm genuinely happy to lend a hand.
Even to you.

There will be plenty of housing for my kids and yours---and they will all be able to own their own home.
One of my daughters friends who is 22 owns 3 properties (Along with the bank) in Adelaide and she is a hostie---she rents to other hosties--by the room (Bedroom) $120/room she has 4 bedroomed properties.--returns 50% more than normal renting and the girls dont mind as they are transient.

Think out side of the square and you'll find yourself outside of the rat race.


Wayne
Seriously I would like to know of some of the reasons (Specific) you and others lookforward to a rate rise?---I'm not beyond learning myself despite popular opinion.

Smurf

"What I DO have a problem with is the notion that an ordinary working person pays far more in interest payments than they could rent the same type of property for. Where is the sense in paying over $30,000 in interest (not repayments, they're extra, that's just for the interest) plus maintenance, rates and insurance for a property that is FALLING in market value when you could rent the same place for less than $20,000 and in many cases around $15,000. Why pay double?"

Smurf simply they would be crazy.
But whats wrong with making this situation work for you?????

Sure rent the property--- and save your butt off.
In 5 yrs when you have a 100k and the markets dropped to 1997 prices (Thats simply not going to happen) put $100k down sit on the rent roll---keep renting if you wish and wait for the next BOOM.
Do you honestly also believe that buying when interest rates are at their highest is smart?-----To me thats a time to sit out!

 

[krisbarry]

I guess the question you have to ask yourself is...is it moral?

Tech/a you have in-directly pushed up the price of housing and now the government have to find ways to make it affordable again.

You question the amount of tax you pay and the opportunities that you give others, REALLY?

I believe that you have been greedy and given people less opportunities.

That very same tax that you are paying to the government is now funding 10 other people to find them affordable housing and paying them rental assistantce, which at the end of the day goes back into your pocket. So really mate, you are not doing the community any favours.

Governments should be applying the rule of thumb, One property and one investment property, per family unit. That would spread the wealth a little more evenly. Just like the 1 child policy that was introduced in China.

You say that you will be a self funded retiree, and that will save the government lots of money, REALLY?

But you have done this at the cost of 10 other people that could have been self funded retirees too. Now you see my point!

Tech/a you have bought up lots of properties, and hence it has made Smurf76 have to pay way more for his house too, same can be said about petrol prices. We pay more now because PING PONG POO in China now wants to live like his western folk and drive a car too.

I am not questioning investment in property, more so the greed that some have and fail to see what their actions are doing to the rest ... BUTTERFLY EFFECT!

Yes I have travelled right throughout North America too and I see the wealth of Australia heading that way too. A few with all the wealth, and most with very little at all.

 

[doctorj]

I guess the question you have to ask yourself is...is it moral?

In theory, any money made is at the expense of somebody else. Whether it be a wage slave or property investor. Money in itself is not moral, I certainly don't feel bad making money. In fact, it could be argued that without self-interest the market economy as we know it, the one that puts food on our tables, would simply not function.

To get a bigger picture, this is a function of human nature. Look at communism for example - absolutely fantastic in theory, but it fell apart because it was at ends with basic human behaviours and motivators.

Tech/a you have in-directly pushed up the price of housing and now the government have to find ways to make it affordable again.

The market will do this. It always has. There's no reason to believe it won't in the future.

That very same tax that you are paying to the government is now funding 10 other people to find them affordable housing and paying them rental assistantce, which at the end of the day goes back into your pocket. So really mate, you are not doing the community any favours.

It also could be argued that the government has created this situation through tax breaks for investing in property (which on its own is unsustainable en masse as its a non-productive investment) and subsidies for rent. These have certainly only contributed to the boom, not aided the populace looking for a roof and a place to put their bed.

Governments should be applying the rule of thumb, One property and one investment property, per family unit. That would spread the wealth a little more evenly. Just like the 1 child policy that was introduced in China.

Eeek. What's next? Investment in mining tenenants makes it unaffordable for the populace, people and companies limited to 10km² to make it affordable for everyone? Government intervention is not the answer. It never has been and whatever they do will only ever make something else worse.

But you have done this at the cost of 10 other people that could have been self funded retirees too. Now you see my point!

Chances are, if they have not sought to be self-funded in the current market, they would not have in your utopia. Tech has not consigned these people to be pensioners for forever and a day, its either been through their own action, inaction or unfortunate circumstance.

 

[Happy]

Not every person is rich by depravation of wealth to others.

Tech/a’s story is different, it is hard yakka, long days of work, long years of sacrifices.
All in the name of FUTURE FINANCIAL SECURITY.

And actually the Government advocates SAVING.

If anything, Tech/s should get the citizen of the year award, not this.

 

[tech/a]

Kris.

I think a Communist country would suit you best.

Your view is I'm afraid narrow minded and naive.
In a democratic society its natural for economies to seek expansion and betterment as it is for all participants in that community.

Without people like myself who take the risks needed to grow financially many would be without work. Like Geoff the handyman repairing the house damage.

House prices rose due to demand and affordability.Thats now peaked and the cycle will come around again when you'll hear whingers saying how impossible buying a house for 700k is.

If people like us did disappear Kris you would have poverty.
Your perception of greed is your perception--you've quantified it.
To someone like Packer I'm not even player.

I have a strong feeling you'll always hold your views and remain bitter and twisted throughout your life---pity---but your choice.

 

[krisbarry]

Sorry, but I am not going to sit here and praise Tech/a for his achievements like others do on this board.

I am here to question his ethics and morals.

DO TECH/A'S ACTIONS BENEFIT OR INHIBIT OTHERS....THAT IS THE QUESTION UP FOR DEBATE!

 

[doctorj]

And I have debated. I sit here awaiting your response.

It's unfortunate this country has such a culture of cutting down the tall poppies.

 

[krisbarry]

So you are quite happy to pay 1.30 a litre for fuel? Same principle right! Supply and demand!

The Tech/a's of this world are like (OPEC) governing the price at which housing should be paid and the average Fred and Freda Nerk have no choice but to pay it because of the greed that has been forced upon them by the top.

Well don't bitch when petrol hits 1.50 by Xmas!

 

[Knobby22]

I can see where krisbarry is coming from.

The Me generation (or baby boomers) have had a pretty easy run and the tax system has supported them.

The next generation has unfortunately had to pay for their Uni and live with the effects of negative gearing. The rules have changed for them also, we know we won't get a lump sum when we retire and will have to carry the bulk of the me generation on pensions which we will not receive.

But things are changing!
The baby boomers are starting to retire and job opportunities are finally opening up. Some will start selling their properties for lifestyle. The Y generation will start supporting the X generation to even the playing field a bit. State taxes are higher which disadvantages investors. Conversely, investing in the sharemarket has never been cheaper.

Our time is coming! Carefully considered decisions now will pay dividends in the future. It was never easy to buy a home but it will probably not get much easier. There is the new reality. It is also the new reality that people who have their investments in real estate are in for a long period of little capital gain which will hurt.

We should be sending letters to politicians whenever the Me generation creates another break and support politicians who remove distortions from the market that advantage investors.

Personally I am awaiting higher interest rates so I can upsize my home.