The future of Australian property prices

[SirRumpole]

Right, so if James Packer builds a $10m house and Murdoch builds a $10m house, then lease them to each other and claim a $9m loss that's fine?

No it isn't fine.

Limiting the number of ng properties per taxpayer would be better, don't know if Labor thought of that though.

 

[sptrawler]

No it isn't fine.

Limiting the number of ng properties per taxpayer would be better, don't know if Labor thought of that though.

Just about anything would have been better, than what they came up with.IMO
Limit NG of established homes, to a maximum of $400k and a gross income of less than $150k.
People on over $150k can only NG new builds, to a maximum of $750k in total.
It isn't rocket science.
At least that would allow the low value rental market to survive, and let low income workers build a small asset base, for their retirement.
Even the franking credit changes, only really effects the little person.
The big issue is why labor is hitting the little man? while leaving the big end of town alone.
I guess it is because they can.

 

[luutzu]

I was expanding a bit on your comment that housing is for shelter and the nation needs to look to other things as a means of wealth creation.

I think it's a point that hasn't been well grasped at the political or general public level that simply funneling more and more money into things which already exist isn't going to make the nation prosper.

On the question of negative gearing and so on, my main concern is that property prices are now so far out of alignment with anything else that the primary focus needs to be on bringing about an orderly fix rather than an abrupt one which would have broader economic effects. So my thought is that policy change should be done with a firm eye on the market rather than for purely ideological reasons. A sudden crash won't help first home buyers if it takes the broader economy with it and puts them out of a job.

The housing bubble has grown so large that fixing it is going to take years. Either prices slowly dropping over years or an abrupt fall and then we spend years cleaning up the economic mess that results. There's no good answer but the former sounds better to to me than the latter. Either way it's going to take years though.

If it's anything like the US post-GFC, a lot of rich people will clean up alright.

Some ten million families lost their homes and life's savings. BlackStone/Rock [?] and entrepreneurs loads up hundreds of millions of properties; smarter ones like Mnuchin buy a bank or two... then go to work owning the properties to rent the new landless peasants.

In nicer places, closer to the city etc., they gentrify the heck out of it. In everyday poor neighbourhood, hike up and invented new fees for every freakin thing.

Change's coming to Australia. And it ain't good.

 

[satanoperca]

From the AFR - interesting. https://www.afr.com/real-estate/mal...pc-default-rate-on-apartments-20181218-h199jj

"In all, 97 per cent of the apartments have already sold off the plan, with about 70 per cent of those selling to offshore buyers. Prices ranged from $485,000 for a one-bed apartment to $875,00 for a two-bed, two-bath unit."

So the truth is 85% of apartments selling to offshore buyers.
And they are cheap at nearly $900K for a 2 bedroom apartment. If you want a 5% gross yield, only $865 per week, a bargain, teachers, nurses and 75% of the average wage earners can afford that. NOT

"Home prices have dropped 7 per cent in Melbourne in the last year and new apartments, which fell up to 20 per cent in value upon settlement in 2018, "

Don't see that in the papers, so the developer is saying from purchase of the plan to settlement, on a 2 bedder, I have just lost a small $175K, based on Joe - the best treasurer in the world that is only 1 years salary for the average worker.

"One of the biggest apartment developers in Melbourne – Malaysia's UEM Sunrise – is prepared for as much as a 10 per cent default rate on the settlement of apartments in its $330 million CBD tower"

That is good to hear, only 10% - bull****

But this to me shows the height of the bubble that has been created :

"Mayfair comprises 158 residences of one- to five-bedrooms, ranging in size from 70 square metres to 556 square metres. Prices start at $823,000. The penthouses are listed for up to $13.1 million."

F--k me, luxury one bedroom for $823K, would want a blow j-b every day for that price. Again 5% gross yield, over $850 per week, sounds like a bargain to me.

 

[satanoperca]

Just about anything would have been better, than what they came up with.IMO
Limit NG of established homes, to a maximum of $400k and a gross income of less than $150k.
People on over $150k can only NG new builds, to a maximum of $750k in total.
It isn't rocket science.

Yes it is rocket science, or it would have been solved decades ago.

Great idea, just one question, how do you police your policy.
Secondly, not to much to buy at under $400K, and what happens when a property goes from 300K to 410K, I can no longer NG it. Stupid arse policy.

KISS theory always applies.
NG on new builds only and/or you can clam expenses on established property against the same asset class.

 

[luutzu]

From the AFR - interesting. https://www.afr.com/real-estate/mal...pc-default-rate-on-apartments-20181218-h199jj

"In all, 97 per cent of the apartments have already sold off the plan, with about 70 per cent of those selling to offshore buyers. Prices ranged from $485,000 for a one-bed apartment to $875,00 for a two-bed, two-bath unit."

So the truth is 85% of apartments selling to offshore buyers.
And they are cheap at nearly $900K for a 2 bedroom apartment. If you want a 5% gross yield, only $865 per week, a bargain, teachers, nurses and 75% of the average wage earners can afford that. NOT

"Home prices have dropped 7 per cent in Melbourne in the last year and new apartments, which fell up to 20 per cent in value upon settlement in 2018, "

Don't see that in the papers, so the developer is saying from purchase of the plan to settlement, on a 2 bedder, I have just lost a small $175K, based on Joe - the best treasurer in the world that is only 1 years salary for the average worker.

"One of the biggest apartment developers in Melbourne – Malaysia's UEM Sunrise – is prepared for as much as a 10 per cent default rate on the settlement of apartments in its $330 million CBD tower"

That is good to hear, only 10% - bull****

But this to me shows the height of the bubble that has been created :

"Mayfair comprises 158 residences of one- to five-bedrooms, ranging in size from 70 square metres to 556 square metres. Prices start at $823,000. The penthouses are listed for up to $13.1 million."

F--k me, luxury one bedroom for $823K, would want a blow j-b every day for that price. Again 5% gross yield, over $850 per week, sounds like a bargain to me.

I like both the facts and the illustration.

 

[sptrawler]

NG on new builds only and/or you can clam expenses on established property against the same asset class.

So it stays as a tax dodge for the rich at the expense of the poor.
By the way are we going to reduce the debate to a slanging match?

 

[sptrawler]

Great idea, just one question, how do you police your policy.

The ATO can police anything they wish, just check out how they police super and its changes.
When you report on an investment property at year end, there is a section for maint/repairs, statutory costs and loan interest.
So if a maximum that a person can borrow is known and the current interest rate is known, it isn't rocket science to work out the maximum allowable deduction. FFS


Secondly, not to much to buy at under $400K, and what happens when a property goes from 300K to 410K, I can no longer NG it.[/QUOTE]

I live in Perth, I'm quoting what I'm familiar with, of course.

Secondly, what happens when the property goes from $300k to $400k, well as you would say F*** all, because the loan against the property hasn't changed.
It still cost $300 and that is the loan that is geared, obviously for some it will be rocket science and possibly beyond their mental ability.

Just because you think it is a stupid arsed idea, doesn't in itself make you correct.

 

[satanoperca]

Sorry Sptrawler, I failed to understand your discussion.

Funny how you slang Labor for their policy, but if someone questions your idea, you are upset, weird world we live in.

"So it stays as a tax dodge for the rich at the expense of the poor." The rich will find another asset class to invest in, allowing your moms and dads a chance at a much reduced price.

 

[sptrawler]

Sorry Sptrawler, I failed to understand your discussion.

Funny how you slang Labor for their policy, but if someone questions your idea, you are upset, weird world we live in.

"So it stays as a tax dodge for the rich at the expense of the poor." The rich will find another asset class to invest in, allowing your moms and dads a chance at a much reduced price.

Mate you are the one who started the personal abuse.

I will slag off against a Government policy if I think it is stupid, I wouldn't slag off against another poster, unless they start the practice.
You didn't question my idea, you said it was stupid, there is a difference.

The rich will always find ways to minimise tax, because it is worth their effort.
What annoys me, is when Labor who profess to look after the interests of the 'average working man', is doing something that hurts them in a big way.
While protecting the scam for the wealthy.

 

[Darc Knight]

The ATO can police anything they wish, .

Say what??? How much tax has your Mate Rupert paid? Wasn't it something like 2% or thereabouts!

 

[satanoperca]

"What annoys me, is when Labor who profess to look after the interests of the 'average working man', is doing something that hurts them in a big way."

Please explain how, removing NG on established homes, hurts the average working man. The average working man just tries to survive, doesn't have the capacity to buy IP's.

Regardless, remove NG, the average joe can invest in shares, or blow me dead, could try and setup a business or at least save and put the money into term deposits.

Property is for shelter first and foremost.

 

[sptrawler]

Say what??? How much tax has your Mate Rupert paid? Wasn't it something like 2% or thereabouts!

Rupert is a small bear at the end of my bed, he pays no tax.

 

[sptrawler]

Please explain how, removing NG on established homes, hurts the average working man. The average working man just tries to survive, doesn't have the capacity to buy IP's.

From what I have read, nearly 80% of investment properties, are owned by families earning less than $150k.
I know when I was working as an electrician, in a Power company, a lot of the guys had a rental property.
All of them where established homes, not one built to rent, it was too expensive and took too long before it could earn an income.
As for buying shares, not many blue collar workers are comfortable buying shares, they feel much more comfortable with bricks and mortar.

Property is for shelter, first and foremost.
Agreed, but someone has to provide shelter for those who are on welfare and can't afford it. It has to be really low cost shelter, some don't have much, to pay rent.
But hey, you would expect Labor to know that.

 

[satanoperca]

From what I have read, nearly 80% of investment properties, are owned by families earning less than $150k.
I know when I was working as an electrician, in a Power company, a lot of the guys had a rental property.

These not get stats in the way :
Well, the median gross household income was $1616 a week for 2015-2016, the most recent figures available from the Australian Bureau of Statistics. That equates to $84,032 a year.
So your so called battlers are hardly average on $150K.

Lets keep it simple, as you stated it is not rocket science.

There are 2 island on the planet earth, each island has 100 families.

Island 1 called : I believe I should have more at the cost of society
50 Families own PPOR
50 Families rent - the IP's are owned by the first 50 families
1 Family kids grow up and want to move into their own home.
1 IP comes up for sale, as it is established home as their are no tax incentives to build new.

What happens on the sale?
1. The renters of the property have to find somewhere to live
2. The investors on Island 1 have a tax incentive regardless of income or cost of the housing that gives them a financial benefit over the renters and the grown up kids.

Outcome : investors purchases and 1 group has no where to live.

Island 2 called : Housing is for shelter, and wealth is built through services and innovation
Same population, demographics as Island 1, with the exception, the govnuts of Island 2 change the tax laws so that only NG gearing applies to new homes.

What happens on the sale?
1. Investors have no financial advantage in purchasing the existing home
2. Investors see a tax advantage in building a new home.

Outcome : while there is a few possible outcomes, one is the renters purchase the home and the investors decide that is it financially beneficial to build new giving the tax advantage, upon building the kids more out and into the new rental property.
Or the renters of the established property move into the new property and the kids move into the new home.

Either way, by removing NG on established properties you are promoting the addition of new stock into the rental market.

 

[Junior]

I support removal of NG on established homes. As others have said, this should hurt the supply of new housing stock, as tax breaks will remain for buyers of new homes.

People will still purchase existing properties and rent them out, it just means the investment will actually have to stack up in terms of rental yield, rather than relying on a tax cut as a key reason to invest.

 

[SirRumpole]

I support removal of NG on established homes. As others have said, this should hurt the supply of new housing stock, as tax breaks will remain for buyers of new homes.

People will still purchase existing properties and rent them out, it just means the investment will actually have to stack up in terms of rental yield, rather than relying on a tax cut as a key reason to invest.

Do you mean "this should not hurt the supply of new housing stock" ?

 

[sptrawler]

Well there is one thing for sure, we will find out, one way or another. Everyone has an opinion, time will tell, which proves correct, if any.
It appears to me many are making the assumption, that demand exceeds supply, as it does in Sydney and Melbourne, shame that isn't the whole of Australia.
Oh well, that could be just collateral damage, if there is any.

 

[luutzu]

Rupert is a small bear at the end of my bed, he pays no tax.

THe old Grizzly don't pay any tax either.

 

[luutzu]

Say what??? How much tax has your Mate Rupert paid? Wasn't it something like 2% or thereabouts!

"job creators" don't pay tax Batman.

You really got to admire capitalists... or any douche that run the place really.

So profit from capital investment isn't really earnings, it's some kind of magic that earns money except it isn't really earnings... and if you tax it the same as those from sweat and tears, it'll not work as hard.

But if you want plebs to work harder, you obviously got to tax them. Both on the income they earn, and on every damn thing they consume... except those rare few occasions they take a holiday and goes through the duty-free shop for a box of chocolate or something.

Then there's the investment losses being carried forward to reduce later year's earnings.

It's kinda like you were having it good and earn $200k a year, then lost your job for an entire year where you make no money... next year you got a job and so can deduct it against the losses... like that, except it isn't 'cause labourers can't have it.