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That really is a small apartment, do you think they will be tommorrows slums?
The future of Australian property prices
- Thread starter Joe Blow
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That really is a small apartment, do you think they will be tommorrows slums?
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I can't really see it ending well. If the apartments beng built had a decent range from studios to 3BR then I could see things working out not too badly, especially as more and more people don't really want the hassle of looking after a garden.
Family sized apartments are quite rare and cost as much, if not more as a house, and with strata fees probably more than a house.
Too much product designed for investors and not enough for the people who will live in it.
YAY constipated housing supply.
Value Collector
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If you own shares in a bank, then you along with all the rest of the shareholders are owners of that bank. The management running it are employees, hired by the board of directors who were selected by the shareholders. Shareholders can fire the board and install new management or even shut the operation down if the wanted.
Ownership is not dependant on having control.
I think we are probably dealing with semantics here though,
Value Collector
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I was up there on the weekend looking at a few suburbs, It is certainly a lot cheaper than Sydney. Because I work from home now and I have family up there, I think its a real alternative to the Sydney rat race. Its an hour commute though if you have to work in Sydney.
No you said that a share holder was more a business owner when compared to someone that just sits on a block of land or a holding of gold. These were your words
I was thinking of a more general usage of the word business ie, business - the activity of making, buying, or selling goods or providing services in exchange for money.
At an individual level, owning shares does not make you a business owner in the way that you have decribed what constitutes a business. There is no control of assets, no input into how the business is run, no activity, just sitting doing nothing waiting for a return, the same as a land banker or gold holder, which is why ATO treats shareholders differently to business owners.
Value Collector
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exactly I said "more of a business owner" than someone holding land or gold.
Because when you own shares there is a real business in which you have an ownership interest in, compared with vacant land which there is not an underlying business.
Vacant land and gold just sit there, there is no activity or business going on.
when you own shares however there is a real business which you are part owner in, Making you a business owner. Now I am not saying that the shareholder plays an active part in the business other than voting in directors and other things, just saying that they are the owner, I really can't see why you don't think shareholders are owners.
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+1
"Land banking" is the thing I have an issue with from a broader perspective. It's buying up a finite resource and sitting on it for no reason other than to force prices up and eventually profit from doing so. It adds nothing of value to the economy, and simply diverts money from production into the non-productive hoarding of land.
In the case of gold etc it's somewhat different since gold isn't required in order to operate practically every business or to simply live. It has some uses for jewellery and in electronics, but jewellery is a luxury item (ie not essential) and it's a very minor part of the cost of electronics. In contrast, land is an essential component of practically all economic activity and is itself a major cost.
It does happen in other industries (including the power industry by the way) but not to the scale that seems to be happening with land.
It depends on your definitions of ownership and investing.
I see my local mechanic as a business owner. He has control, makes decisions, provides a service, puts in his time, employs people,...he runs the business. In a larger business the owners tell their managers what to do and set the direction of the company. In both cases they play an active role.
I see a shareholder the same as a land banker. Just a passive investor sitting there doing nothing hoping to be rewarded from the efforts of others.
CanOz
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Thats basically whats going here in China, rich folks buying up all the apartments, that are developed on land. They sit on them, meanwhile the apartments are empty and falling into disrepair in the harsh polluted climate. The buildings will be worthless soon and likely gone by the time the land lease expires...
StupidNo wonder why they're looking to Australia and the US!!
Value Collector
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I would say your mechanic is self employed or an owner operator.
Yes in a larger business the owners tell the managers what to do, and in an even larger business the owners elect a board of directors to instruct the management.
If the land banker is in the business of developing and selling their land in stages! that would be a business, if they are just sitting on their land then its not a business.
But we can agree to disagree, i am not interested in debating the differences between ownership and management, All i will say is that in my opinion if you own something you are an owner if you manage something on behalf of someone else you are a manager, shareholders are the owners of the underlying businesses, so they are business owners which as i said does not require them to be involved in management. You seem to want to not regard a share holder as an owner and thats fine, but you have to understand it goes against pretty much all definitions both practical and legal of the word.
Yeah right, tell that to the ATO. They too disagree with you on this one. They say that to be in business there must be some activity on your part.
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Why the semantic argument about what constitutes a business here? A business is a legal entity with shareholders as owners. The ATO may rule certain types of activity as conducting a business for tax purposes without the existence of a legal business entity and charge tax accordingly.
I don't know what number of land banking transactions over a given period the ATO would deem to be conducting a business but I would be surprised if no measure exists. Land banking does seem to be a significant factor influencing land prices here.
Good point. It got side tracked because of the suggestion that the tax deductions allowed to property investors is the reason why house prices have gone too far too quick, and then a parallel was drawn between shareholders in westfield and a person with a few IP's. Got off topic but was interesting to see different perspectives.
Back to topic I just heard the head of REIWA on the radio saying that its ok tp pay $50k more than you want because its insignificant over 20 years. A sure sign of a bubble when advice like that is being aired on the radio.
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Are you serious, sounds like good marketing to me. Also agree, if you are buying a home, what is another 10% more, you are going to be there for sometime. If it is an investment, well if you believe the hype - good luck.
But the statement does not constitute the definition of a bubble.
Anyway a bubble can form,grow and stretch to behind it normal physical parameters and still not pop, it just needs something a small prick to explode, then it was a bubble.
Off to buy some apartments, lucky I am Chinese.
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http://www.macrobusiness.com.au/2014/02/debunking-the-housing-banana/
The following are not cherry-picked; they are “representative”. Space prevents the provision of a full data set – for now.
Versus:
House price median multiples in my data set are from pre-crash (2007) data to avoid accusations that US house prices in the data are unrepresentative post-crash lows.
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I'm trying to imagine what a city is like with house prices averaging 3 times median income (which is even better than 3 times average pay). maybe less Uk approach and more of the better planned US cities could help us.
The following are not cherry-picked; they are “representative”. Space prevents the provision of a full data set – for now.
- Manchester UK: Population 2.2 million; population density 4,000 per sq km; INRIX congestion score 25.3; House price Median Multiple (M.M.) 5.2
- Nottingham UK: Pop. 660,000; density 4,200 per sq. km; INRIX congestion score 21.9; House price M.M. 5.4
- Liverpool UK: Pop. 820,000; density 4,400 per sq. km; INRIX congestion score 21.5; House price M.M. 5.2
- Birmingham UK: Pop. 2.3 million; density 3,800 per sq. km; INRIX congestion score 20.5 ; House price M.M. 5.3
Versus:
- Indianapolis: Pop. 1.5 million; density 800 per sq. km; INRIX congestion score 5.0; House price M.M. 2.3
- Salt Lake City: Pop. 1 million; density 1,500 per sq. km; INRIX congestion score 3.1; House price M.M. 3.8
- Oklahoma City: Pop. 900,000; density 800 per sq. km; INRIX congestion score 3.1; House price M.M. 2.9
- Kansas City: Pop. 1.5 million; density 900 per sq. km; INRIX congestion score 2.8; House price M.M. 2.7
- Omaha: Pop. 730,000; density 1,000 per sq. km; INRIX congestion score 1.0; House price M.M. 2.5
House price median multiples in my data set are from pre-crash (2007) data to avoid accusations that US house prices in the data are unrepresentative post-crash lows.
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I'm trying to imagine what a city is like with house prices averaging 3 times median income (which is even better than 3 times average pay). maybe less Uk approach and more of the better planned US cities could help us.
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I repeat ... We are NOT the U.K. nor the U.S.A. (or Portugal or Spain or Ireland or Greece) Our system of financing property and governance as well as employment history, manufacturing, tourism, export (mining) blah fricking BLAH is TOTALLY different from their working models as an economy
Even down to our style of housing and lending criteria is TOTALLY different and the risk taken by the bank is minimal exposure as LMI and government guarantees protecting the big 4 banks are in place.
http://en.wikipedia.org/wiki/List_of_countries_by_unemployment_rate
UNEMPLOYMENT is the key ...
Even down to our style of housing and lending criteria is TOTALLY different and the risk taken by the bank is minimal exposure as LMI and government guarantees protecting the big 4 banks are in place.
http://en.wikipedia.org/wiki/List_of_countries_by_unemployment_rate
UNEMPLOYMENT is the key ...
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What are the property taxes like in those cities? A quick look and Indianapolis is 3%. Median house price in 2006 was $120k and median household income was $40k. 3% property tax means your still handing over 10% of your pre-tax income every year. Certainly changes things a bit.
prawn_86
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Yeh i have been looking at buying a property over here in the states and between taxes, insurance and HOA fees a 400k townhouse has about 12-15k worth of costs each year. Obviously it varies state to state
Holden, Toyota, Forge and today another 1000 jobs gone
http://www.theaustralian.com.au/bus...1000-out-of-work/story-e6frg8zx-1226830195047
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