The future of Australian property prices

[freddy2]

A % of what? Purchase price? Valuation? Who does the valuations? etc

Valuation done by an agency set up to do the job. Varibles such as market prices and rents could be used as inputs in determining values. Sure it wouldn't be a completely perfect system but what system is. The obstacles to a land tax are not practical but political.

 

[prawn_86]

Valuation done by an agency set up to do the job. Varibles such as market prices and rents could be used as inputs in determining values. Sure it wouldn't be a completely perfect system but what system is. The obstacles to a land tax are not practical but political.

You dont think this agency would have a vested interest to quote higher valuations to ensure that gov revenue was higher?

I dont trust current valuers let alone one set up by a government

 

[Tysonboss1]

Creative definitions Tyson but not applicable to common usage or correct by explicit definitions. Thorough analysis can never promise safety of principle or "adequate" return (I can provide examples). Yes, speculation is about taking considerable "calculated" risk for significant gain as opposed to gambling.


!

listen to the first 1 min of this video.

The definition comes from the Book "the intelligent Investor" by Benjiman Graham, Who is considered the father of value investing and was one of the most successful investors of his time.

The funny thing is in 1934 when Ben Graham first put the definition into writting he had to defend his policy against claims that it gave to much scope to what should be considered an investment, critics claimed that common stocks could not be called investments only bonds should be considered investment grade assets.

Now, critics claim the opposite, that the definition is to liniting to what should be considered an investment

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[drsmith]

My solution:
Remove stamp duty
Land tax on PPOR: 1% per year
Land tax on IP : 2% per year

Would remove many distortions in the property market but unfortunately a land tax is not even close to being politically feasable.

I disagree with asset taxes generally as assets are (or should be) purchased from after tax income.

As for stamp duty, all property transaction taxes should be removed, perhaps with the exception of GST from services in relation to buying/selling property.

On the investment side, deductions from non-property sourced income (spacifically wage income) should be abolished.

The capital gains tax discount on disposal should phase in over a longer period. Investors should also have the option of CPI indexation of the cost base so that, at worst, only the real capital gain is subject to GST.

The problem with residential property in general is that state governments inparticular are up to their necks in maintaining boom prices to maintain the revenue they receive from transaction taxes such as stamp duty.

 

[freddy2]

You dont think this agency would have a vested interest to quote higher valuations to ensure that gov revenue was higher?

I dont trust current valuers let alone one set up by a government

Of course you don't and Kerry Packer didn't like to pay tax because the government didn't the spend money well - in the end these are just self-serving rationalisations. Already many areas of Australia apply a land tax to non-PPOR. For example in NSW the valuations are done by the Valuer General (see http://www.osr.nsw.gov.au/taxes/land/). Although the technical analysis "head and shoulders" mumbo jumbo people here might think otherwise, valuation of assets (shares, property, etc) is a fairly straightforward process.

 

[trainspotter]

You dont think this agency would have a vested interest to quote higher valuations to ensure that gov revenue was higher?

I dont trust current valuers let alone one set up by a government

There already is the Valuers General Dept. in every state that sets the prices for GRV depending on usage of said property. The council uses this formula to set the rates applicable to the property.

There already is land tax in all states of Australia except for the Northern Territory

 

[FxTrader]

The definition comes from the Book "the intelligent Investor" by Benjiman Graham, Who is considered the father of value investing and was one of the most successful investors of his time.

Yep, thanks for the vid. I am familiar with Ben Graham's book and his influence on the likes of Warren Buffett and Roger Montgomery. However everything Graham said is not investment gospel. I say again...

Thorough analysis can never promise safety of principle or adequate" return (I can provide examples).

It can improve the probability of a successful outcome however. Graham's definitions are outdated and represent over reliance on his interpretation of "thorough analysis" as some kind of guarantee of safety and return, nonsense.

 

[bellenuit]

House price expectations turn negative

http://www.theaustralian.com.au/bus...ns-turn-negative/story-e6frg9gx-1225994177425

 

[FxTrader]

...Although the technical analysis "head and shoulders" mumbo jumbo people here might think otherwise, valuation of assets (shares, property, etc) is a fairly straightforward process.

Conflicting valuation models and methodologies are abundant across many asset classes. How in the world can you call valuation a "straightforward process"?

 

[Tysonboss1]

Thorough analysis can never promise safety of principle or adequate" return (I can provide examples).

.

For an individual security I aggree, But graham never said that thorough analysis of a single security and purchase there of was an example of sound investment policy, infact he says in the book that purchasing one or two stocks in isolation is speculating.

His definintion refered to the term "Investment Operation" eg. An Investment operation is one which upon thorough analysis promises safety of principle along with an adequte return.

By having a sound investment policy where your invested priciple is spread across shares, bonds, property and cash. with each individual security and property bought at a sound price with a margin of safty it is possible to build an investment operation that in it's entirety promises safety of principle and an adequte return.

 

[Tysonboss1]

. Graham's definitions are outdated and represent over reliance on his interpretation of "thorough analysis" as some kind of guarantee of safety and return, nonsense.

On this point I don't agree,

Sound investment policy does not change over time, Infact those that think it does are destined to get severely burnt (the are the ones saying "it's different this time") the most recent crash was yet another example of how even 30 years after his death grahams teaching would have saved millions of people from losing their life savings, if they had just put his teaching into practice.

Here is another great video, if you dont have time to listen to the whole thing listen from the 3.00 mark. Graham is actually talking about his own hedge fund, The "gramhan newman corparation"

 

[c-unit]

House price expectations turn negative

http://www.theaustralian.com.au/bus...ns-turn-negative/story-e6frg9gx-1225994177425

Big news, coming from NAB imo.

Reading a lot of the comments on various property articles lately suggests there is carnage out there, and it only hasn't been reflected in property indexes because sellers haven't adjusted expectations downwards yet. But the falling clearance rates since mid 2010 suggest buyers aren't willing to pay 7 - 8 times earnings for a home. Could more 'bearish' mainstream articles like these cause a flood of negative gearers rushing to the exit?

 

[Tysonboss1]

For an individual security I aggree, But graham never said that thorough analysis of a single security and purchase there of was an example of sound investment policy, infact he says in the book that purchasing one or two stocks in isolation is speculating.

His definintion refered to the term "Investment Operation" eg. An Investment operation is one which upon thorough analysis promises safety of principle along with an adequte return.

By having a sound investment policy where your invested priciple is spread across shares, bonds, property and cash. with each individual security and property bought at a sound price with a margin of safty it is possible to build an investment operation that in it's entirety promises safety of principle and an adequte return.

This video from the 5.20 mark explains the margin of safety,

.

 

[white_goodman]

A % of what? Purchase price? Valuation? Who does the valuations? etc

same person who does it atm, valuer general

 

[white_goodman]

Conflicting valuation models and methodologies are abundant across many asset classes. How in the world can you call valuation a "straightforward process"?

valuation of property isnt as hard as you think, but liek any valuation the data can be skewed to present what information (price) you want to.

I remember in commercial vals we'd often come up with the number prior then figure out a way to get there..

 

[Tysonboss1]

Can some body explain why they believe a tax based on asset value would be better than a tax based on earnings.

After all any tax must be paid from earnings, so shouldn't it be based on earnings?

I think focusing on negative gearing as the evil of all evil's in relation to property investing is a bit silly, after all it's only a temperary situation generally.

 

[freddy2]

Can some body explain why they believe a tax based on asset value would be better than a tax based on earnings.

From http://en.wikipedia.org/wiki/Land_value_tax

"Because the supply of land is inelastic, market land rents depend on what tenants are prepared to pay, rather than on the expenses of landlords, and so LVT cannot be directly passed on to tenants. The direct beneficiaries of incremental improvements to the surrounding neighborhood by others would be the land's occupants ..."

and

"LVT is also said to act as value capture tax. A new public works project may make adjacent land go up considerably in value, and thus, with a tax on land values, the tax on adjacent land goes up. Thus, the new public improvements would be paid for by those most benefited by the new public improvements ”” those whose land value went up most."

 

[Tysonboss1]

From http://en.wikipedia.org/wiki/Land_value_tax

"Because the supply of land is inelastic, market land rents depend on what tenants are prepared to pay, rather than on the expenses of landlords, and so LVT cannot be directly passed on to tenants. The direct beneficiaries of incremental improvements to the surrounding neighborhood by others would be the land's occupants ..."

and

"LVT is also said to act as value capture tax. A new public works project may make adjacent land go up considerably in value, and thus, with a tax on land values, the tax on adjacent land goes up. Thus, the new public improvements would be paid for by those most benefited by the new public improvements ”” those whose land value went up most."

I can't see any real benefits over the current system.

 

[robots]

Bring a new law in and remove FHOG.

When you buy your first house you pay no stamp duty, or when you only own 1 house, you pay no stamp duty on that house.

When you buy your second house (investment, holiday house whatever) you pay 15% stamp duty.

When you buy your third house etc you pay 25% stamp duty.

What does this do? It gives the FHO a chance to get into the market, they would effectively have 25% or cheaper cost to purchase a house if they were bidding against an investor. It makes it harder for an investor to get into the market place, forcing price to slow or go lower. Everyone wins.

Discuss.

hello,

FHO already have plenty of opportunity to get into the market, isnt that what they done just recently?

the grant offsets the ridiculous stamp duty tax states impose, people just dont get that

nothing broken except the record player from the socialist crew who want to take from the rich and give to the poor, the bludger, the one who goes out for fifty fags a day, or shuffles the paper at desk to make look like busy, or carry's 10 manilla folders around all day long

anyway, grreat report from demographia, of course suburbs in america are the most affordable because you have to pay for all the armoured gear just to get a sherbet bomb from the corner store

oh well, will keep all the sheeple going

thankyou
professor robots

 

[white_goodman]

who the hell still eats sherbert bombs?