The future of Australian property prices

[satanoperca]

That's the whole point - it's not a free market. If it truly were a free market we wouldn't have the gov continually propping it up through tax incentives, subsidies, grants and rest, and it would find a natural price level.

A price level that would hopefully remove it as some kind of growth asset for baby boomer retirement funds and make it just another basic necessity that the population can afford without paying an arm & a leg for?

Agree.

An intersting article on NG

http://www.abc.net.au/news/stories/2010/04/13/2871852.htm?section=justin

Top economists want tax loopholes closed

Cheers

 

[kincella]

regardless of negative gearing....which was basically introduced when the state govts stopped building more public housing for the poor....
but look, Nsw and Qld are both rushing through new public housing, for the first time since about 1970.....think there is one place near Cairns...the locals are up in arms about....putting poorly built public housing, high rise units, right next to an elite estate... miles away from schools and shopping centres....
just rushing this through...to appear to be doing something

which would you rather have....great big ugly boxes, of substandard housing provided by the fed govt....or ordinary houses, built by the average builder
the govt do not have a good record of financial management with any thing they do
so either pay higher taxes and allow the govt to provide the housing...or give a tax incentive for the better manager...as in a taxpayer..

do you recall the riots at Meadow Heights in SW Sydney....whole suburbs of public housing....the suburbs turn into ghettos.....
most people would not want to live in such a suburb...I know of people who had a temp public house in SW Sydney....it was a nightmare....all the neighbours were from overseas.....they threw the rubbish out the kitchen window....dirty nappies included...
have a look at the ghettos of high rise public housing in Prahran...just behind Chapel St....or Carlton...
if you care to do a study of house prices as far back as you like to go...before negative gearing came in....you will see house prices were still rising on the average trend..
I dont believe the govt should give fhb any incentives....nor baby bonus handouts, nor family tax benefit cash handouts...nor maternity leave...

 

[robots]

hello,

good afternoon brothers, some more research:

http://www.theage.com.au/business/rent-rises-accelerate-nationwide-20100414-scjm.html

oh yeah, free market at work, dont like the increase then move on

still plenty of scope for rent increases in my opinion, especially Melbourne the most liveable place on the planet

why should housing be dirt cheap, only have to look at housing commission areas to see what happens when people get stuff for nothing

thankyou
robots

 

[UBIQUITOUS]

Thanks Robots for the research. Hope you don''t mind me quoting the highlights. It validates what most of us on here are saying - Property is due for a major correction.

However, the March quarter data shows rent yields falling in three of the eight capital cities, according to APM, making the prospect of investing less attractive to landlords.

Investment in real estate has been slumping, most recently by 1.1 per cent in February, the last month for which data is available.

And rental yields have been lacklustre over the past year

Quite right buddy. If property investors don't like it, best to move on to a country where yields are better.

 

[robots]

Yeah, sorry Robots, dropped the ball on that one...........been busy. I'm chuffed you think I'm still a school goer must be young at heart

Here it is again
REIV

One can flick through different suburbs.

I should correct you on one point though............it was an almost 14% drop from the peak in Dec 07 to the low in Mar 09.

Since then there's been a 33% increase in just 9 months and an increase of almost 15% over the 07 peak............I don't know but that just seems like bubble territory to me.

cheers

hello,

i guess it should be read in conjunction with this graph, rent looks like a little bit of extra froth

thankyou
robots

 

[TOBAB]

That's the whole point - it's not a free market. If it truly were a free market we wouldn't have the gov continually propping it up through tax incentives, subsidies, grants and rest, and it would find a natural price level.

A price level that would hopefully remove it as some kind of growth asset for baby boomer retirement funds and make it just another basic necessity that the population can afford without paying an arm & a leg for?

OK fair call. Agree with you on the grants and like but if you remove the tax incentive (as you call it) on this asset class then it must apply across the board for all investments, otherwise you are infact creating distortions. Why use leverage to invest in property when you can gain the tax benefits from deductions if investing in shares. If this situation developed then nobody in their right mind would invest in property and then vis-a-vie supply of housing would fall. Remove it from shares and developement in infrastructure would slow to a trickle (unless we allow further foreign investment) = OMG this is doing my head in.

Not 100% that you realise the can of worms that could be opened by removing NG. Far better to increase CGT to a balanced level. ATM it is far better to achieve Capital Growth than generate income (25% Vs 48%) no brainer really - IMHO you are looking at it the wrong way around. Whilst I'm at it the Baby Boomers are investing in property through SMSF's (not just NG) and paying no tax on the rent - similarly with shares.

Personally I can't see NG being the "cure all" there are far too many other lurks and tax avoidance methods that warrant investigation.

 

[satanoperca]

why should housing be dirt cheap, only have to look at housing commission areas to see what happens when people get stuff for nothing

thankyou
robots

It shouldn't be, it should be affordable.

Cheers

 

[UBIQUITOUS]

Bro, as we're not interested in the past but in the future, I've continued the graph to help you out. Don't mention it. Happy to give a fellow ASFer a hand.

 

[TOBAB]

Agree.

An intersting article on NG

http://www.abc.net.au/news/stories/2010/04/13/2871852.htm?section=justin



Cheers

Good article. Let's really remove distortions and not mess about. A true free market would either have interest payments IN or OUT as a deduction - unilateral across the board (blind freddy can see the distortions start if asset classes are somehow differentiated in this regard). This includes the purchase of any asset - family home, car, shares, investment property. Then ALL GAINS AND INCOME taxed at a prevailing rate. No GST, no tax brackets, no tax on cigs or booze - nothing. A flat rate. Would be interesting - no so good for the poor though.

Chance of removing distortions = zero

This guy seems to want to create distortions and remove distortions - quite strange really.

 

[-Bevo-]

why should housing be dirt cheap, only have to look at housing commission areas to see what happens when people get stuff for nothing

Why should borrowing money be dirt cheap, only have to look at the bubbles
that happen when people get money for nothing.

 

[UBIQUITOUS]

The research is coming thick and fast. Thanks to the Age newspaper. I wonder what Melburnians will make of this?

http://www.theage.com.au/business/w...es-surge-fuel-bubble-fears-20100414-sd25.html

China's property market in is in a bubble that may burst by as early as this year, hedge fund manager James Chanos said in an interview last week.

The country is "on a treadmill to hell," according to Chanos, who said in January the nation is Dubai times a thousand. "They can't afford to get off this heroin of property development. It is the only thing keeping the economic growth numbers growing."

 

[TOBAB]

The research is coming thick and fast. Thanks to the Age newspaper. I wonder what Melburnians will make of this?

http://www.theage.com.au/business/w...es-surge-fuel-bubble-fears-20100414-sd25.html

I'm from Melbourne and as usual I have no idea about anything coming out of China. Their figures whether good or bad are dubious at best, at worst completely distorted to what suits their needs at a particular point in time. Never forget they are a dictatorship that can issue whatever data they want.

Infomation from China lol.

 

[satanoperca]

Never forget they are a dictatorship that can issue whatever data they want.

And they are buying up our resources and land at an ever increasing rate.

But obviously no concern to many in Australia.

Hope you all have enrolled in Mandarin as it will become the second language in Oz very soon.

Yes, I am learning Mandarin both written and spoken.

 

[MR.]

http://www.theaustralian.com.au/bus...sh-down-property/story-e6frgac6-1225853330816

"What goes up could crash down"

Hmmm, that title is a bit like Steve Keen's latest claim (after property didn't crash within the year) "property is to crash by 40% sometime in the next 15 years!" Fifteen years!!!! I'm sure people are kicking his **** all the way to the top of that mountain!

Robots "media digging in again" but up she still goes!

From the link above:

In the US, the average home is now worth less than it was in 1980.

Japan has 128 million people to squeeze into a land area half the size of NSW, " says Hoffman. But fall they did: Organisation for Economic Co-operation and Development data shows real Japanese property prices are more than 40 per cent lower than their 1992 peak.

German property prices falling since 1991. Again, it's a country where mortgage rates are lower than rental yields, but past experience is scaring off investors.

The Swiss endured 11 straight years of falling property prices through the 90s and into this decade. There has been some relief in recent years, but those who bought in 1990 are still a long way under water.

Australians need to be wary of the most dangerous thought in investing: that property prices cannot fall.

and ya gota luv dis:

Australian house prices rose 13.6 per cent last year ....... That's even stronger than in China where house prices are up 10.7 per cent during the past year.

and

Australian housing is expensive but points out that it is supported by an undersupply....... Worsening affordability is likely to constrain average house price growth to around 5 per cent over the year ........ the absence of higher unemployment, much higher interest rates or a big supply increase, a US-style collapse in Australian house prices is unlikely. None of these seem likely in the short term. In fact, none of these seem likely any time soon."

Now, Shane Oliver knows his property!

 

[Uncle Festivus]

OK fair call. Agree with you on the grants and like but if you remove the tax incentive (as you call it) on this asset class then it must apply across the board for all investments, otherwise you are infact creating distortions. Why use leverage to invest in property when you can gain the tax benefits from deductions if investing in shares. If this situation developed then nobody in their right mind would invest in property and then vis-a-vie supply of housing would fall. Remove it from shares and developement in infrastructure would slow to a trickle (unless we allow further foreign investment) = OMG this is doing my head in.

I'm not sure we can compare NG with other investments as it is a unique beast. It's fairly easy for the average person to have several million dollars in NG RE loans on which they can immediatly reduce their weekly tax ie taxpayer subsidised, to practically zero. While it's possible and does happen, I can't see banks lending out several million dollars to someone to margin into equities in the same numbers as RE loans - there just aren't that many sophisticated equity investors out there? Whereas generally any numbskull who can fill out a loan application can get a loan to buy RE - a no brainer is an apt term for it .

I'm from Melbourne and as usual I have no idea about anything coming out of China. Their figures whether good or bad are dubious at best, at worst completely distorted to what suits their needs at a particular point in time. Never forget they are a dictatorship that can issue whatever data they want.

Infomation from China lol.

And this is what the future prosperity of Australia is reliant apon unfortunatly

 

[robots]

REIV

hello,

its not that easy Uncle Fest,

tough man, filling in the forms, speaking to the bank on the phone, going to the open for inspections, driving around

exhausting

thankyou
robots

 

[MR.]

hello,

its not that easy,

tough man, filling in the forms, getting them the right way up, looking to the future and not the past!

exhausting

 

[robots]

hello,

top effort MR, its a pity they wont allow access to my posts in 2005 on the king of all property threads

all about the future

still here helping out at ASF,

thankyou
robots

 

[Uncle Festivus]

REIV
hello,

its not that easy Uncle Fest,

tough man, filling in the forms, speaking to the bank on the phone, going to the open for inspections, driving around

exhausting

thankyou
robots

I think we sort of get the idea with the chart. No doubt there is some sort of tax deduction for each of your burdens also?

 

[timeout]

hi

anyone know when reiv trend chart update to march will be
on line......