The future of Australian property prices

DB008 · 26 April 2011

If the Government axes Negative Gearing, where are the investors going to come from to keep up with demand to build properties. I think that Australia needs 150,000 new homes built each year. We are building around ~130,000 each year (short 20,000) and l would say that a fair chunk of them are investors. Axe Negative Gearing, that number would drop and prices would rise even further.
I can't see the government axing negative gearing myself.

Housing shortage to drive up rent in 2011

A lack of supply in the housing market is not only pushing property prices up, but rents too, and new research from RP Data says the situation will worsen over the next 12 months.

RP Data's December quarter Rental Review shows that rents in capital cities rose 4.2 per cent last year, compared with a 2.9 per cent rise nationally.

http://www.abc.net.au/news/stories/2011/01/27/3123022.htm

cutz · 26 April 2011

DB008 said:
If the Government axes Negative Gearing, where are the investors going to come from to keep up with demand to build properties.

It's really not that clear cut when making predictions if NG were to be axed.

An alternate scenario would be an axing could cause a rush for the exits as many run into cash flow problems, renters may turn into buyers.

The possibilities are endless.

white_goodman · 26 April 2011

DB008 said:
If the Government axes Negative Gearing, where are the investors going to come from to keep up with demand to build properties. I think that Australia needs 150,000 new homes built each year. We are building around ~130,000 each year (short 20,000) and l would say that a fair chunk of them are investors. Axe Negative Gearing, that number would drop and prices would rise even further.
I can't see the government axing negative gearing myself.

is there really a housing shortage though?

underlying demand is a fickle thing, especially considering house sizes (bedrooms, sqm etc) have only gotten larger and people per household has reduced. California were reporting a grossly under supplied market in 2006, its amazing how a downturn in economic activity can make people rethink their living situation and turn a market into under supplied to over supply (everyone moved back home and increased people per household)...

so dont bet the house(lol) on perceived pent up demand

explod · 26 April 2011

white_goodman said:
is there really a housing shortage though?

underlying demand is a fickle thing, especially considering house sizes (bedrooms, sqm etc) have only gotten larger and people per household has reduced. California were reporting a grossly under supplied market in 2006, its amazing how a downturn in economic activity can make people rethink their living situation and turn a market into under supplied to over supply (everyone moved back home and increased people per household)...

so dont bet the house(lol) on perceived pent up demand

Yep, and pleased to say that my ole pal Robots is onto that too. He's suggesting I move into a shed in my Son's backyard to make ends meet.

Interesting times we live in.

medicowallet · 26 April 2011

DB008 said:
If the Government axes Negative Gearing, where are the investors going to come from to keep up with demand to build properties. I think that Australia needs 150,000 new homes built each year. We are building around ~130,000 each year (short 20,000) and l would say that a fair chunk of them are investors. Axe Negative Gearing, that number would drop and prices would rise even further.
I can't see the government axing negative gearing myself.

Prices drop and demand recovers.

An alternate to your question is:

"where are the investors going to come from with housing in a bubble?"

I think it is a good thing to see builder, developer, sub-contractor, real estate and bank margins fall.

Because that is all the FHVB and housing bubble have been supporting, as clearly, 20000 shortage means that it hasn't been keeping supply up with demand.

moXJO · 26 April 2011

white_goodman said:
is there really a housing shortage though?

underlying demand is a fickle thing, especially considering house sizes (bedrooms, sqm etc) have only gotten larger and people per household has reduced. California were reporting a grossly under supplied market in 2006, its amazing how a downturn in economic activity can make people rethink their living situation and turn a market into under supplied to over supply (everyone moved back home and increased people per household)...

so dont bet the house(lol) on perceived pent up demand

Well something’s going on in NSW.
I've put a few bids on properties over the last few months and have been well outbid on 6. In fact a lot more then I would have been wiling to pay.
In construction there are guys coming in 5-9k over the top of my quotes instead of the expected undercutting. I've been flat out (commercial work has dried up though).
People are still buying here and they are buying absolute $hiteholes for top price. No sign of slow down.

If they are talking about axing negative gearing, then no doubt they are seeing house prices staying high well into the future without some kind of intervention.
While I think labor will run us into the ground with workplace laws and general mismanagement soon enough, I'm sure they can truely stuff the housing market by putting their grubby finger in that pie prematurely as well.

MACCA350 · 26 April 2011

moXJO said:
I'm sure they can truely stuff the housing market by putting their grubby finger in that pie prematurely as well.

Don't forget the grubby little fingers of investors in the pie of the tax payer.

Cheers

moXJO · 26 April 2011

MACCA350 said:
Don't forget the grubby little fingers of investors in the pie of the tax payer.

Cheers

You mean like all the pork barrelling and middleclass welfare as well. Personally I could care less about NG, there is greater taxation reform measures I'm sure need attention. And I doubt government wants to go back to the public housing debacle it brought on itself last time.

Bill M · 26 April 2011

MACCA350 said:
Don't forget the grubby little fingers of investors in the pie of the tax payer.

Cheers

Oh, you mean like all those people who borrow for shares? Ban it on investment housing then ban in on everything else (margin loans included), the economy will go backwards.

MACCA350 · 26 April 2011

Bill M said:
Oh, you mean like all those people who borrow for shares? Ban it on investment housing then ban in on everything else (margin loans included), the economy will go backwards.

You can't live in a share

Cheers

medicowallet · 26 April 2011

MACCA350 said:
You can't live in a share

Cheers

Your house doesn't employ you or anyone, or generate revenue.

Bill M · 26 April 2011

MACCA350 said:
You can't live in a share

Cheers

As I said INVESTMENT housing and INVESTMENT shares both right off the interest from the loans against the income they derive. If you want to cut one you have to cut the other. All investments are just that, investments, and should be treated the same tax wise.

moXJO · 26 April 2011

medicowallet said:
Your house doesn't employ you or anyone, or generate revenue.

council rates, renovations, realestate agents, pest/building inspectors, bank fees, and a host of taxes, its keeping someone employed and churning money to local and state coffers.

explod · 26 April 2011

Bill M said:
Oh, you mean like all those people who borrow for shares? Ban it on investment housing then ban in on everything else (margin loans included), the economy will go backwards.

The economy once it became used to it would not go backwards at all. The banks and their shareholders may not like it but sure there would be ways to cope with that.

Without large mortgages most pople would find themselves better off in the longer term.

Younger ones would put off marriages and children till they could afford it so we may even see some proper stabalisation of population to the betterment of the planet. (less baby bonus against taxpayers too)

However I just floated back from the last post to answer this one, which took my eye [/B]but none of them relate to the direction of property prices.[/B] , which is what I was orginally trying to find.

If you want to argue the merits of housing as an investment vehicle then start a thread on it.

robots · 26 April 2011

Hello,

yeah you tell them Explod, just like the old days in the uniform brother

MoXjo, yeah classic from MW and others who believe property generates nothing! just amazing, but i reckon he/her a chameleon as his/her mantra is straight of GPHC, Keen.com.NFI.au

NG is just another excuse put out from the likes of GetUp, Keen, Minnick, GPHC etc because the reality is they just truly cant afford RE because most are socialist bludgers

thankyou
professor robots

explod · 26 April 2011

robots said:
Hello,

yeah you tell them Explod, just like the old days in the uniform brother

MoXjo, yeah classic from MW and others who believe property generates nothing! just amazing, but i reckon he/her a chameleon as his/her mantra is straight of GPHC, Keen.com.NFI.au

NG is just another excuse put out from the likes of GetUp, Keen, Minnick, GPHC etc because the reality is they just truly cant afford RE because most are socialist bludgers

thankyou
professor robots

Great to get your response there Confessor and love to hear your story too. BUT

getting back to topic what about the direction of property prices

robots · 26 April 2011

hello,

wouldnt have a clue man, but make sure you own something cause wouldnt want to be in a neighbours garage

oh yeah, let us know how silver going brother, hehehehehehehe

thankyou
professor robots

cutz · 26 April 2011

Bill M said:
Ban it on investment housing then ban in on everything else

Agree,

Ban the whole stinking lot, the sooner we all pay our fair share (of tax) the better.

Actually a good middle ground may be to allow deductions only on the income generated by the investment in question.

explod · 26 April 2011

All discussions this evening have nothing to do with the direction of property prices.

If it is not going to stay on topic then the Mods need to get on it and if that fails the thread should be closed down.

I would like to know where property prices are headed because the Confessor is worried that I will not have a garage to live in.

Silver up over 200% for the year botty, so all very good man

robots · 26 April 2011

hello,

the same Tax laws/rules apply to everybody, if you dont like NG on investments then dont borrow to invest, do something else with your life

once again its the minority groups trying to get their own way, plenty of affordable homes around everywhere,

i cant understand, why didnt I grow up in Toorak or South Yarra, like 40yrs ago anybody could of bought a joint in that place right?

thankyou
professor robots

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