The future of Australian property prices

[sptrawler]

However we are in this situation now where we have a housing/renting crisis and any drastic changes but at this point in time will have a profoundly negative effect

The other way of looking at it is, what happens if they don't stop the ponzi, everyone in Australia buys an investment property because it is a sure fired winner and even if it isn't, it is a really cheap loan that the taxpayer takes half the loss.
It has become Flckn stupid, it's a safer bet than the pokies, so it wont be long before everyone is on it.

 

[farmerge]

The other way of looking at it is, what happens if they don't stop the ponzi, everyone in Australia buys an investment property because it is a sure fired winner and even if it isn't, it is a really cheap loan that the taxpayer takes half the loss.
It has become Flckn stupid, it's a safer bet than the pokies, so it wont be long before everyone is on it.

And then the landlord gets stung by the renter who usually knows the renting laws better than most legal eagles

 

[divs4ever]

And then the landlord gets stung by the renter who usually knows the renting laws better than most legal eagles

nah , looking for an exit on the last non PPOR property

too much red-tape/Green-tape/tax gouges and other fees for me , am almost tempted to deem it a wild-life reserve ( because it has feral red deer, foxes , and other feral criminals ) and really screw up the highway expansion ( they have planned since 1972 )

 

[qldfrog]

The other way of looking at it is, what happens if they don't stop the ponzi, everyone in Australia buys an investment property because it is a sure fired winner and even if it isn't, it is a really cheap loan that the taxpayer takes half the loss.
It has become Flckn stupid, it's a safer bet than the pokies, so it wont be long before everyone is on it.

If it is just such a great scheme, get on it.and if you have moral issues, just give the profits to kids or charities.
I am happily out of RE investment properties but am very happy to see investors getting neg gearing and providing their own subsidies to renters..
Not for me

 

[farmerge]

If it is just such a great scheme, get on it.and if you have moral issues, just give the profits to kids or charities.
I am happily out of RE investment properties but am very happy to see investors getting neg gearing and providing their own subsidies to renters..
Not for me

Had our share of it also, not to be re-visited again.

 

[JohnDe]

If it is just such a great scheme, get on it.and if you have moral issues, just give the profits to kids or charities.
I am happily out of RE investment properties but am very happy to see investors getting neg gearing and providing their own subsidies to renters..
Not for me

It has helped a lot of young people build some decent wealth; it allowed savings instead of spending.

My wife and i purchased our first investment property in our early 20's. It taught us a lot, and if we didn't have it we would not be in the healthy financial and family situation that we are now.

The negative gearing was essential, especially with the low rents we were getting back in the day, and some of the morally corrupt tenants that thought that everyone and the world owed them something.

 

[houtman]

From BKW’s recent presentation.

Not the response required to the housing shortage.
Hopeless.

 

[JohnDe]

From BKW’s recent presentation.

Not the response required to the housing shortage.
Hopeless.
View attachment 184932

It's a perfect storm at the moment, with inflation, labour shortage's, interest rates, etc. And governments are not helping.

We are in a new mind think - stop urban sprawl, high density living, return lands back to the Aboriginal communities.

Brickworks has slumped to a large loss as property and building sectors suffer

The boss of the nation’s largest brickmaker, Brickworks, believes the sclerotic housing sector is in the depths of its worst slowdown in decades but can climb out of the hole it is in if governments free up land to stimulate construction and slash costs to alleviate the cost of buying a home.
Recently appointed Brickworks chief executive Mark Ellenor said the housing construction sector was “at the bottom”, with some early signs of recovery in Queensland but “absolutely no sign of things improving” in the company’s core markets of NSW and Victoria.

“I think it’s going to be subdued for some time,” he said. “I really think the next calendar year will be tough.”

Mr Ellenor, who replaced former long-serving CEO Lindsay Partridge as boss of the $4.36bn bricks, building materials and diversified investor, said housing was a key election issue and to kickstart housing more land had to be opened up to development.

“I just think there is not enough land on the market, we need to release 40,000, 50,000 blocks of land, but then you have tax on the land as well,” he told The Australian after Brickworks reported it had slumped to a full-year net loss of $118.9m as massive impairments to its property portfolio and the impact of the slow housing market plunged the company’s bottom line deep into the red.

“And then in southwest Sydney a house-and-land package is between $850,000 and $1m for a first-home buyer, and they need a $200,000 deposit, combined income and seven years to save up for it, and it is just unaffordable.”

Australia’s sharp slowdown in building activity, combined with intense competition in the US where it is one of the region’s fourth-largest brick maker, has forced hundreds of millions of dollars of impairments on to the 94-year-old Brickworks.

Despite this – and bolstered by its large investment portfolio – Brickworks still managed to up its final dividend.

Brickworks’s net loss of $118.9m for the financial year to July 31 is its first loss in decades, and a swing from a profit of $394.7m in 2023.

Revenue for the period fell 7.8 per cent to $1.1bn.

The company hopes, however, that its diversification into industrial property and listed investments will bolster its returns in the next few years as it awaits a rebound in the construction sector.

A stablemate of investment group Washington H Soul Pattinson with a stake of 25.7 per cent, Brickworks has decided to temporarily shut some of its building materials plants amid the downturn, but is hopeful that the boom in e-commerce will continue to drive demand for its industrial property assets which service the digital economy.

The outlook for its building materials arms – in Australia and the US – was more bearish due to subdued building activity across key markets, with Brickworks deciding to temporarily close some of its plants through 2025.

Despite the loss, it was better than the market expected, and shares in Brickworks rallied 7.2 per cent to close at $28.52 on Thursday.


Brickworks is Australia’s biggest brickmaker and one of the largest in North America.

The company lifted its final dividend to 43c per share, up from 42c, payable on November 27.

Brickworks said its 2024 earnings were hit by property sales and non-cash property revaluations, with a loss of $231m in 2024 compared to a profit of $381m in 2023, and impairments to its building products arm of $135m.

Two weeks ago, Brickworks warned it would need to book a pre-tax impairment of $172.4m against its masonry and North American bricks businesses due to a slowdown in building activity, delays in the realisation of increased investments in its Austral Masonry arm, higher costs and strong competition in the US bricks market.

It pointed to accelerated deterioration in multi-residential building activity in the second half of fiscal 2024, with June commencements across Australia forecast to be at the lowest level for more than a decade.

The decline has been particularly severe in the high-rise segment (four-plus storeys) in Sydney and Brisbane, key markets for Austral Masonry.

Earnings for its Australian building products arm in fiscal 2024 rose 2 per cent to $102m, while its North American bricks company saw its earnings rise 9 per cent to $43m.

A diversified investor with equity holdings in other companies, mainly a large stake in Washington H Soul Pattinson, Brickworks said the market value of its listed investments increased by $263m during the year, to $3.4bn.

At its property arm, dominated by industrial property holdings and excluding revaluations and land sales, earnings were $121m, down 3 per cent.

Net rental income was broadly steady, with an increase in like-for-like gross rent and the completion of new developments at Oakdale West offset by higher borrowing costs in the Property Trust and the impact of the M7 Hub Estate sale.

“Within property, significant growth in rental income is forecast from the property trusts over the coming years, as we continue to develop existing estates,” said Mr Ellenor.

“We expect structural trends towards e-commerce and the digital economy will continue to drive demand for prime industrial facilities for many years to come. We are focused on identifying opportunities across the group’s vast land holdings to meet this demand and expand our development pipeline.

“Our building products businesses in Australia and North America are facing challenges over the next 12 months, with subdued building activity across many of our key markets.

“As such, we are planning temporary plant closures throughout 2025 to undertake maintenance and control inventory.”

Mr Ellenor said its investment in Soul Patts was expected to continue to deliver a stable and growing stream of earnings and dividends over the long term.

​

 

[JohnDe]

The other way of looking at it is, what happens if they don't stop the ponzi, everyone in Australia buys an investment property because it is a sure fired winner and even if it isn't, it is a really cheap loan that the taxpayer takes half the loss.
It has become Flckn stupid, it's a safer bet than the pokies, so it wont be long before everyone is on it.

Kerry Pack explained it well. Watch the full 8 minutes, a nice finish to Friday afternoon

 

[sptrawler]

Interesting article.

How the most affluent Australians disproportionately benefit from negative gearing | Housing | The Guardian

amp-theguardian-com.cdn.ampproject.org

 

[JohnDe]

Interesting article.

How the most affluent Australians disproportionately benefit from negative gearing | Housing | The Guardian

amp-theguardian-com.cdn.ampproject.org

Looks like click bait to me.

people who earn more than $180,000 were able to lower their collective tax bill by $1.3bn in 2021-2022 through negative gearing​

Here is an example, they give us a figure for an individual and then another figure after combining them all, so that the reader thinks ‘ oh my gosh’.

I’m sure that there are individuals that have worked out a way to make immense benefits from negative gearing, but for the majority it’s a different story.

I speak from experience. Owning two rental properties I had good years and I had bad years, I also had horrendous experiences. However, in the end it worked out well for me and others, including tenets and governments.

Not all would take the risks involved, and if none did is like to know government would house all the people that are not able to or want to purchase a home.

Most people jump on the bandwagon and abuse landlords when they make a decent profit, but no one says a thing when the landlord is struggling to find a tenant or make a decent return on their investment and risk.

Prior to the current rental shortage we went through many years of oversupply of rental properties. I can’t recall a single compassionate argument for the landlord.

 

[farmerge]

Looks like click bait to me.

people who earn more than $180,000 were able to lower their collective tax bill by $1.3bn in 2021-2022 through negative gearing​

Here is an example, they give us a figure for an individual and then another figure after combining them all, so that the reader thinks ‘ oh my gosh’.

I’m sure that there are individuals that have worked out a way to make immense benefits from negative gearing, but for the majority it’s a different story.

I speak from experience. Owning two rental properties I had good years and I had bad years, I also had horrendous experiences. However, in the end it worked out well for me and others, including tenets and governments.

Not all would take the risks involved, and if none did is like to know government would house all the people that are not able to or want to purchase a home.

Most people jump on the bandwagon and abuse landlords when they make a decent profit, but no one says a thing when the landlord is struggling to find a tenant or make a decent return on their investment and risk.

Prior to the current rental shortage we went through many years of oversupply of rental properties. I can’t recall a single compassionate argument for the landlord.

I think when the oversupply was in, we were landlords then also, termed very greedy by some.

 

[TimeISmoney]

Looks like click bait to me.

people who earn more than $180,000 were able to lower their collective tax bill by $1.3bn in 2021-2022 through negative gearing​

Here is an example, they give us a figure for an individual and then another figure after combining them all, so that the reader thinks ‘ oh my gosh’.

I’m sure that there are individuals that have worked out a way to make immense benefits from negative gearing, but for the majority it’s a different story.

I speak from experience. Owning two rental properties I had good years and I had bad years, I also had horrendous experiences. However, in the end it worked out well for me and others, including tenets and governments.

Not all would take the risks involved, and if none did is like to know government would house all the people that are not able to or want to purchase a home.

Most people jump on the bandwagon and abuse landlords when they make a decent profit, but no one says a thing when the landlord is struggling to find a tenant or make a decent return on their investment and risk.

Prior to the current rental shortage we went through many years of oversupply of rental properties. I can’t recall a single compassionate argument for the landlord.

Heap of disasters that no one talks about like failed businesses. My brother just got rid of a tenant, when the tenant knew they were getting evicted they played it for all it was worth. You're only supposed to give 2 months notice in Qld but my brother gave 6 months and even then they extended the stay by another 3 months and left everything behind as instructed by the rotten tenancy advocacy groups.

They left clothes, furniture, food, poop, and filth behind. House was a mess, carpets all pissed in, walls damaged, and shower bases had leaked and damaged everything.

Seriously I have no idea why anyone would bother, your days are numbered as a landlord, it's only a matter of time before you find a POS.

 

[mullokintyre]

One of the odd things about the debate over negative gearing, is the statement that if negative gearing is scrapped, then landlords will have to raise rents to cover costs.
If the property is negatively geared, then the landlord is already not covering costs.
Weird.
Mick

 

[JohnDe]

One of the odd things about the debate over negative gearing, is the statement that if negative gearing is scrapped, then landlords will have to raise rents to cover costs.
If the property is negatively geared, then the landlord is already not covering costs.
Weird.
Mick

That is correct, except for the weird part.

Negative gearing gives workers on a low fixed income an entry into the investment market, allowing them an opportunity to build wealth for their future.

Once the property is paid off and if they decide to sell, the Capital Gains Tax that will be paid contributes back into the economy and the taxation pool.

I know this from experience. My wife and I purchased an investment property in our early 20's, we were both on a basic wage. If it were not for Negative Gearing, we would not have been able to get into the market. In our 40's we developed that property and built two modern homes, sold one and paid a hefty CGT. We later sold two more properties, one to each of our children at a discounted priced, and again paid a hefty CGT but at market value.

Some people have worked hard and sacrificed personal luxuries while young to build a property portfolio, using negative gearing. Now they are being rewarded by the high property prices and rental incomes. And suddenly there are people being fed misinformation and negativity from political classes and media, causing jealousy and anger at those people that that sacrificed early on and did what others did not.

However, like all things, eventually changes must be made.

It is time for negative Gearing tax laws to be changed, but it must be done so that people on low incomes can access it to help build their own wealth.

 

[mullokintyre]

That is correct, except for the weird part.

Negative gearing gives workers on a low fixed income an entry into the investment market, allowing them an opportunity to build wealth for their future.

Once the property is paid off and if they decide to sell, the Capital Gains Tax that will be paid contributes back into the economy and the taxation pool.

I know this from experience. My wife and I purchased an investment property in our early 20's, we were both on a basic wage. If it were not for Negative Gearing, we would not have been able to get into the market. In our 40's we developed that property and built two modern homes, sold one and paid a hefty CGT. We later sold two more properties, one to each of our children at a discounted priced, and again paid a hefty CGT but at market value.

Some people have worked hard and sacrificed personal luxuries while young to build a property portfolio, using negative gearing. Now they are being rewarded by the high property prices and rental incomes. And suddenly there are people being fed misinformation and negativity from political classes and media, causing jealousy and anger at those people that that sacrificed early on and did what others did not.

However, like all things, eventually changes must be made.

It is time for negative Gearing tax laws to be changed, but it must be done so that people on low incomes can access it to help build their own wealth.

Firstly, you missed the irony in the statement, but I cannot help that.
Secondly, housing should not be treated as a wealth creation vehicle.
Houses are for people to live in.
Because some people have been able to treat housing as a wealth creator is why we have ridiculously overpriced houses in the first place.
And to add to that, I doubt that people on low fixed income are going to be in a position to negatively gear property.
The median income in Australia is $67,000 p.a.
50% of the workers earn an income below that figure.
On that a single person with no deductions pays 13,580 Tax including medicare levy.
They have less than zero chance of getting a home loan on those figures, much less negatively gear one.
Even if its a couple with both on the median income, they already be forking out heaps for rent.
No bank is going to lend them enough to buy a block of land much less a house.
When I bought my first house in Croydon in Melbournes outer eastern suburbs, it cost me $17,000 when my annual salary was about $11,000 p.a. which was above the median at that time of around $8,100.
So my first house purchase was about 150% of my annual salary.
To buy that same house now would set me back somewhere between $700,000 and $800,000 which is about 1100% of the median salary.
Its unrealistic to compare what happened when people bought houses in the past to the current situation.
Mick

 

[JohnDe]

Firstly, you missed the irony in the statement, but I cannot help that.
Secondly, housing should not be treated as a wealth creation vehicle.
Houses are for people to live in.
Because some people have been able to treat housing as a wealth creator is why we have ridiculously overpriced houses in the first place.
And to add to that, I doubt that people on low fixed income are going to be in a position to negatively gear property.
The median income in Australia is $67,000 p.a.
50% of the workers earn an income below that figure.
On that a single person with no deductions pays 13,580 Tax including medicare levy.
They have less than zero chance of getting a home loan on those figures, much less negatively gear one.
Even if its a couple with both on the median income, they already be forking out heaps for rent.
No bank is going to lend them enough to buy a block of land much less a house.
When I bought my first house in Croydon in Melbournes outer eastern suburbs, it cost me $17,000 when my annual salary was about $11,000 p.a. which was above the median at that time of around $8,100.
So my first house purchase was about 150% of my annual salary.
To buy that same house now would set me back somewhere between $700,000 and $800,000 which is about 1100% of the median salary.
Its unrealistic to compare what happened when people bought houses in the past to the current situation.
Mick

Umm, where do I start? Food, water, electricity, fuel, clothing, education, transport?

We live in a country with a Capitalist system.

Capitalism is often thought of as an economic system in which private actors own and control property in accord with their interests, and demand and supply freely set prices in markets in a way that can serve the best interests of society. The essential feature of capitalism is the motive to make a profit.​

If you are hinting that we should follow the communist/socialist theory, well that is a different discussion. However, I see that the Labor party and the Greens party are leading us down that track.

 

[TimeISmoney]

Firstly, you missed the irony in the statement, but I cannot help that.
Secondly, housing should not be treated as a wealth creation vehicle.
Houses are for people to live in.
Because some people have been able to treat housing as a wealth creator is why we have ridiculously overpriced houses in the first place.
And to add to that, I doubt that people on low fixed income are going to be in a position to negatively gear property.
The median income in Australia is $67,000 p.a.
50% of the workers earn an income below that figure.
On that a single person with no deductions pays 13,580 Tax including medicare levy.
They have less than zero chance of getting a home loan on those figures, much less negatively gear one.
Even if its a couple with both on the median income, they already be forking out heaps for rent.
No bank is going to lend them enough to buy a block of land much less a house.
When I bought my first house in Croydon in Melbournes outer eastern suburbs, it cost me $17,000 when my annual salary was about $11,000 p.a. which was above the median at that time of around $8,100.
So my first house purchase was about 150% of my annual salary.
To buy that same house now would set me back somewhere between $700,000 and $800,000 which is about 1100% of the median salary.
Its unrealistic to compare what happened when people bought houses in the past to the current situation.
Mick

You've been listening to the rubbish that the greens have been sprouting for too long.

30% of Australia rents and of that 30% about 5% is public housing a few % charity homes, another few % are granny flats or rooms attached to personal residences, and another few % are people who have left to work interstate or overseas.

I can't see how people continue to blame investors for house prices going up when there are more than 70% of homes that have nothing to do with investors where people have profited from one way or another.

If you want to argue that houses shouldn't be profitable, well workplaces shouldn't be profitable either because food is a human right and that's how most people put food on the table. See how silly that argument is?

Maybe the Govt should get off their backsides and build more homes to accommodate the population increase that they've known about for the past 20 years and done absolutely nothing about it.

Everything the govt has done has made rents go higher, don't you stop and think about why the Govt hasn't done anything and kicked the can down the road?

 

[IFocus]

I have previously invested in property and achieved great returns, none of my investments ever relied on negative gearing.... none.

The investment had to stand on its own two feet only mugs rely on neg gearing as a reason to invest in property sadly that's mostly the case these days.

 

[Knobby22]

Fun fact.

Only 1% of Australian taxpayers own nearly a quarter of all property investments across the country, amid concerns over escalating rates of wealth concentration.

Data provided by the Australian Taxation Office has revealed the extent of that concentration, with more than 7% of property investors – or 215,321 people – accounting for 25% of all property investments.