The future of Australian property prices

[sptrawler]

In history how was relaxing rent controls offset by things like state housing, Home Start Assistance Home grants etc? Nice summary of history but seems an incomplete view of rental housing.
Could we promote extensive State housing as competition against the landlords. If we have more state housing then everyone pays to create homes for those who choose to rent. And you have rent control. Could fight for that.

In reality the only reason we have negative gearing, is because the Government is bribing people to supply rentals, because they wanted to get out of supplying State Housing.
They know how much hard work it is with delinquent tenants, damage and maintenance.

 

[wayneL]

Difficult I know Anyle; It's a three minute read... It's history not propaganda.
Try, if possible to be enlightening, for once. Find me a potted history of rent control from any conservative view point.
There may be one but it was way too tempting to hit the buttons of the learn nothing know nothing brigade of reactionary conservatives that haunt these threads with their most feared boogie man....

And more pertinent son, it's very relavant to this thread, for those with any analytical capacity.

A short history of rent control in Australia
EDITOR, SEPTEMBER 24, 2018

Reading Time: 3 minutes


Lots of people have heard that rent control, or rent regulation, exists in some counties in Europe, or in some states in the US, but very few are aware that it has also existed at various times in Australia.

For the most part governments have been forced to reign in private landlords during times of economic and social crisis.

Rent control was first introduced in New South Wales during the First World War in 1916, as part of the Fair Rents Act. This Act was amended in 1928 to wind back rent controls, but during the Great Depression rent controls were reintroduced with the Reduction of Rent Act (1931). This resulted in a 23% reduction in rents and restrictions on evictions.

The powers-that-be once again ended rent control with the Landlords and Tenants (Amendment) Act in 1932. This chopping and changing mostly coincided with changes of government at the New South Wales state level.

At the beginning of World War Two, 50% of all households were tenants of private landlords. The Commonwealth, under its defence powers, introduced the National Security (Fair Rents) Regulations 1939. This gave the states the power to freeze rents and establish Fair Rent Boards.

A form of rent control existed in most states across Australia and continued until August 1948. At this point there was a constitutional challenge against the government’s right to continue wartime price controls.

These controls were kept in the context of social unrest, strikes, communist agitation and the recent experience of the Great Depression. The constitutional challenge led to an unsuccessful referendum, where the Chifley government attempted to gain back rent and other price control measures.

The Landlord and Tenants Act 1948 maintained rent control in New South Wales beyond this, in order to provide security of tenure to all tenants. This was because of the dire need for accommodation following the war.

In 1954 however, all newly constructed buildings were exempted from the Act, and by 1956 a premise could be ‘decontrolled’ when vacated if registered with the Fair Rent Board.

In 1960 there were still 207,000 controlled dwellings, which amounted to two thirds of all private rental properties. In 1968, ‘wealthy tenant provisions’ were introduced to bring rents up to market value, winding back rent control further.

By 1974 there were only 20,000 rent-controlled tenancies in New South Wales and by 1986 no new protected tenancies could be created. The exception to this was ‘inheritance’, where if tenant died then a spouse or dependent could continue the lease.

A similar story played out in Victoria, where the Landlord and Tenants Act 1958 restricted the application of rent control provisions to ‘prescribed premises’.

In 1956 there were 180,000 protected tenants, but this was slowly whittled away. The Residential Tenancy Act 1980 aimed to remove rent control on the remaining premises over a period of two years. It was estimated that up to 10,000 pensioners still had rent control at that stage, and this Act caused a massive increase in rents for those least able to afford it.

In place of rent control, a new system was established in Victoria where a tenant could complain to the Residential Tenancy Tribunal if an increase in their rent was considered excessive. This was nowhere near as effective as proper government regulation.

Western Australia commenced the decontrol of rent in 1951. In Tasmania, rent control ended in 1955. In Queensland, protected tenancies were abolished in 1970 and in South Australia in 1962.

Today renters face renewed financial pressures, with millions once again suffering from rent stress. This is a direct consequence of landlords, developers and speculators making billions of dollars from people’s intrinsic need for a place to live.

As it stands, the rights of renters in Australia have been severely curtailed. There is a desperate need to build a movement of renters to pressure governments to overhaul the laws and grant renters much improved rights.

Rent control and other reforms have been won in the past, they can be won again. Let’s renew the fight!

**

Great read, some proper input Mr Borre. That woulda been preferable to your verbal vomit previously.

 

[againsthegrain]

Great read, some proper input Mr Borre. That woulda been preferable to your verbal vomit previously.

Looks like the govt is feeling the hit from decreased stamp duty due to low sales

https://www.news.com.au/world/coron...c/news-story/abdc4b1c4dfb0aeb3fab225bb850dea8

 

[qldfrog]

Just a though coming from an exchange on another thread
10y ago 1 aud was getting 1.1 USD.
Now 1 AUD get 0.6 USD
For an international buyer in 2020, isn't Australian RE cheaper now than it was 10y ago in usd term,?
At worse similar
And could RE price not be symptomatic of our currency decline, an inflation stability process wo name?

 

[Bill M]

Just a though coming from an exchange on another thread
10y ago 1 aud was getting 1.1 USD.
Now 1 AUD get 0.6 USD
For an international buyer in 2020, isn't Australian RE cheaper now than it was 10y ago in usd term,?
At worse similar
And could RE price not be symptomatic of our currency decline, an inflation stability process wo name?

Yes you are right. At that time some Aussies were going over to the USA buying distressed residential units and they did alright out of it, except for a couple that were murdered by disgruntled tenants. Yep, so now those USA citizens can buy our real estate at a discount all these years later. Definitely has something to do with our currency going down.

 

[basilio]

On the bigger picture this analysis is unsettling. I think all the points are quite valid. Bringing them together on one list is daunting.
If correct collapsing property values will be just one outcome.

Ten reasons why a 'Greater Depression' for the 2020s is inevitable
Nouriel Roubini
Ominous and risky trends were around long before Covid-19, making an L-shaped depression very likely

After the 2007-09 financial crisis, the imbalances and risks pervading the global economy were exacerbated by policy mistakes. So, rather than address the structural problems that the financial collapse and ensuing recession revealed, governments mostly kicked the can down the road, creating major downside risks that made another crisis inevitable. And now that it has arrived, the risks are growing even more acute. Unfortunately, even if the Greater Recession leads to a lacklustre U-shaped recovery this year, an L-shaped “Greater Depression” will follow later in this decade, owing to 10 ominous and risky trends.

https://www.theguardian.com/busines...-depression-for-the-2020s-is-inevitable-covid

 

[satanoperca]

On the bigger picture this analysis is unsettling. I think all the points are quite valid. Bringing them together on one list is daunting.
If correct collapsing property values will be just one outcome.

Ten reasons why a 'Greater Depression' for the 2020s is inevitable
Nouriel Roubini
Ominous and risky trends were around long before Covid-19, making an L-shaped depression very likely

After the 2007-09 financial crisis, the imbalances and risks pervading the global economy were exacerbated by policy mistakes. So, rather than address the structural problems that the financial collapse and ensuing recession revealed, governments mostly kicked the can down the road, creating major downside risks that made another crisis inevitable. And now that it has arrived, the risks are growing even more acute. Unfortunately, even if the Greater Recession leads to a lacklustre U-shaped recovery this year, an L-shaped “Greater Depression” will follow later in this decade, owing to 10 ominous and risky trends.

https://www.theguardian.com/busines...-depression-for-the-2020s-is-inevitable-covid

So we all as Australian citizens need to answer the following questions:

• Is shelter a basic need?
• Should shelter be for Australians and not an investment vehicle for foreigners?
• Does having some of the highest property prices in the world benefit Australians?
• Having high property prices (with a large debts associated with) make for a better society?
• Do our politicians or better, our political parties produce policies that will provide the same or better standard of living for Australians.

So as I type, I reflect on one word that I have used, Australians.

Did our for fathers fights for being Australian, is it acceptable to be national.

I don't know. But everyone in this great country should be able to access one of the 4 basic needs to survive, shelter

Should we as a nation be more focused on innovation, productivity and well being (f--k we has some of the best beaches in the world, some of the most incredible landscapes in the world, we should appreciate them)?

If we as Australians want to be like the US, China and the rest of the world. I am moving to Tasmania.

 

[sptrawler]

So we all as Australian citizens need to answer the following questions:

• Is shelter a basic need?
• Should shelter be for Australians and not an investment vehicle for foreigners?
• Does having some of the highest property prices in the world benefit Australians?
• Having high property prices (with a large debts associated with) make for a better society?
• Do our politicians or better, our political parties produce policies that will provide the same or better standard of living for Australians.

.

Firstly I agree with your sentiments, however you have to remember the only place where prices are stupid are Melbourne, Sydney area.

Something has to be done about that, I think it needs more of a surgical approach, rather than a sledge hammer approach that hits areas that have been struggling for years.
The land tax rather than stamp duty may help, as the holding costs will be higher, also land banking by wealthy developers will be hammered.

There was a suggestion at the last election to remove negative gearing from established homes and only allow it on new builds, as this apparently would encourage new builds for rentals.
IMO I think that would hammer the rental market, as it would encourage the rich to buy cheap property and land bank until the vacancy rates fell to the point that building the rental would be attractive.

Why not remove negative gearing from new builds and allow first home buyers to claim a tax deduction on their mortgage interest? Then the first home buyers are getting the help, instead of the rich landlords, who can afford to build new properties to rent?

 

[macca]

The quickest way to ease pressure in the Capitals is to stop the flood of people into Oz

After CV19 that may well happen, surely we will close the borders until we work our way out of this mess

 

[satanoperca]

however you have to remember the only place where prices are stupid are Melbourne, Sydney area.

I agree Syd and Mel are stupid prices, but can you elaborate on other areas in Australia that are not?

Before you do, I ask you to look at the region and its ability to provide an income and not just comapre a one bedroom apartment in Sydney to a 3 bedroom house 3 hours drive away for the center.

 

[sptrawler]

The quickest way to ease pressure in the Capitals is to stop the flood of people into Oz

After CV19 that may well happen, surely we will close the borders until we work our way out of this mess

IMO it may well happen in the short term, but alas I think in the long term the immigration will continue.
Australia without immigration has a falling birth rate, everyone screams about immigration, but the fact is we enjoy our lifestyle and don't want it ruined by paying for kids.
The other fact is, in reality to support business and manufacturing growth and with it our lifestyle, we need a bigger market place at home.
So there is two options:
Option 1. Immigration.

Option 2. Encourage people in Australia to have more children. The problem with that is married couples lose a lot of money, when the wife stops work to have children, so they only have one or two kids.
The Government tried to overcome that to some degree by introducing child support, which encourages Australians to have children and lessens the financial impact.

The problem is the general public don't like it, as it is seen as middle class welfare, so the outcome is the only people who have extra children, are those on welfare who get extra for having them and the public like that.

So immigration is here to stay, until we have a self supporting population, at the moment the only 'Australians' with an increasing population is the aboriginals and migrants from memory.

 

[joeno]

If you bought property 3 years ago, it was clearly a dumb choice. Now i'd say it's reasonable considering how worthless the AUD is. A decent house in Sydney is $800,000AUD. This would've been $1mm+ in '17. $800k is about $500k USD. Not exactly expensive for a capital city.

It's obvious the govt has gone the route of saving housing (as well as boosting export industry) by devaluing the AUD to make it one of the WORST performing currencies in the developed world. I foresee an even greater rate of inflation in the next few years.

 

[sptrawler]

I agree Syd and Mel are stupid prices, but can you elaborate on other areas in Australia that are not?

Before you do, I ask you to look at the region and its ability to provide an income and not just comapre a one bedroom apartment in Sydney to a 3 bedroom house 3 hours drive away for the center.

Well in W.A prices are down a long way from the peak, I can give you an honest example close to home.
My son had two properties that he sold about 6 months ago, so that he could purchase a new PPR.
The first house was a duplex 10klm from Perth CBD he bought it 25years ago for $65k sold $200k, that isn't a lot of gain in 25 years. The second property was in the goldfields bought 15 years ago for $250k, sold $165k.
Most of W.A is in the doldrums and has been since the mining boom finished, I can't comment on Eastern States, but whatever Federal changes are made affect W.A as well.
I just quickly googled new appartments close to Perth, the Precinct starts at $478k in a very upmarket suburb and area.
http://saltproperty.com.au/project/precinct-mount-pleasant/

Here is a better link.
https://www.norupwilson.com/projects/current-projects/the-precinct-mount-pleasant

So you can imagine how much an older style apartment in the same area is valued at, imagine trying to sell it if investors can't negative gear yours, but can negative gear one of those new apartments?

 

[sptrawler]

If you bought property 3 years ago, it was clearly a dumb choice. Now i'd say it's reasonable considering how worthless the AUD is. A decent house in Sydney is $800,000AUD. This would've been $1mm+ in '17. $800k is about $500k USD. Not exactly expensive for a capital city.

That will get you on the river in Perth, about 10klm out, I would guess the same applies in Tassie and S.A.

It's obvious the govt has gone the route of saving housing (as well as boosting export industry) by devaluing the AUD to make it one of the WORST performing currencies in the developed world. I foresee an even greater rate of inflation in the next few years.

The Government hasn't devalued the dollar, our currency is floated and it is valued by the international money markets.
The RBA has been trying to drop the value of our currency for quite some time, by dropping interest rates, but it remained stubbornly high until very recently.
The reason ours is one of the worst performing currencies, is because it is one of the worst performing economies, we are basically a one trick pony 'mining'.
We are just lucky, we don't have a large population, so we can have a first World lifestyle with a third World economy.
It wont last IMO.

 

[sptrawler]

I agree Syd and Mel are stupid prices, but can you elaborate on other areas in Australia that are not?

Before you do, I ask you to look at the region and its ability to provide an income and not just comapre a one bedroom apartment in Sydney to a 3 bedroom house 3 hours drive away for the center.

Here is another example from Perth, in a cheaper area but just as close, $378k.
http://www.vantageperth.com.au/

https://offtheplan.com.au/properties/vantage-riversedge-apartment/

Again, like I said, you can imagine what prices out in the suburbs are like.

 

[joeno]

That will get you on the river in Perth, about 10klm out, I would guess the same applies in Tassie and S.A.


The Government hasn't devalued the dollar, our currency is floated and it is valued by the international money markets.
The RBA has been trying to drop the value of our currency for quite some time, by dropping interest rates, but it remained stubbornly high until very recently.
The reason ours is one of the worst performing currencies, is because it is one of the worst performing economies, we are basically a one trick pony 'mining'.
We are just lucky, we don't have a large population, so we can have a first World lifestyle with a third World economy.
It wont last IMO.

well Australia has a better case than many other "first world" countries. I'm in the UK now. it's propped up by some fragile financial services businesses that can be outsourced to India. it's Australia minus the land and resources.

US is even worse. He's the druggie thatowes everyone money to fuel his addiction. Home of propaganda, political espionage, and irony to call itself a "open market capitalist" society with all of the market manipulation lately.

Anyways Australia will likely not meet the same fate as Japan. we'll sacrifice savers and force people to spend their steadily worthless currency while assets like property keep rising (in terms of AUD that is).

 

[Dona Ferentes]

rental dynamics are changing

Realestate.com.au says rental listings on its platform were up 8 per cent across the country, compared to this time last year, with the biggest increase in listings in New South Wales, Victoria and Tasmania, while Western Australia had the largest decline in listings. Domain Group saw a 10 per cent rise nationally between March 30 and April 26, compared to a year ago, with Sydney and Melbourne listings up 19 per cent and Hobart listings up 24 per cent, while listings in Perth fell 10 per cent. Nationally, SQM Research said there were more than 105,000 properties listed for rent as of Saturday — up from around 84,000 in early March.

The increased supply of rental properties comes as demand decreases. "People who have lost jobs or income are trying to save money so are moving back in with parents, moving in with friends, dissolving share houses," Domain economist Trent Wiltshire said. "Net immigration has also fallen, there are fewer international students and workers … fewer young people looking to move out." [and t]here's another source of properties being put up for rent — holiday rentals that are sitting empty.

https://www.abc.net.au/news/2020-04...rge-prices-drop-airbnb-holiday-homes/12199262

 

[againsthegrain]

The freedom of Victorian tenants to choose where they live could be substantially restricted under new COVID-19 laws.

Legislation that cleared state parliament last week to combat effects of coronavirus on the state economy now requires renters on month-to-month leases to get a Victorian Civil and Administrative Tribunal order if they want to move out.

Id hate to have a empty rental on the market now, or moving from short stay to long stay rental, going to be sitting empty for a good 6 months.

Can't rent, nobody will buy

https://www.google.com/amp/s/amp.th...s/news-story/7b39053d950388d5acc73cf15c64d7fa

 

[orr]

? Nice summary of history but seems an incomplete view of rental housing.

Obviously a redux to a few hundred words 'incomplete'...
What gives more BIG picture detail is Picketty's 'Capital in The 21st Century'... see within these pg's the importance of the capital/income ratio... there is a limited elastisity to this ratio... And a $hit load of things that might help some contributers here...(from making fools of themselves)
DYOR

 

[moXJO]

Not much reduction in price round my area. Even the shitty areas seem to be higher priced.
Personally even if I saw a 30% reduction I'd be thinking the prices were a tad high. Perhaps my thinking is just stuck in the past.

Imo immigration is the reason for ever higher prices. Jamming millions more people into the country will keep the prices high. Be interesting to see the aftermath of COVID.