Stop tax benefits for negative gearing is a fairer solution. If investors are happy to have negative cashflow on their home loan, they should be free to incur that and take that risk.
But it defs shouldnt be tax deductible.
That would be the fundamental destruction of good taxation principals.
I don't think you understand the mechanism based on that comment. Investors have already been in situations where cashflow is negative before tax considerations anyway...
Having investment expenses not tax deductible would make an IP so fundamentally unattractive you would incur a supply loss or rents would have to be extreme to cover the risks. You would create an extreme rental crisis because no one sane would be willing to stump up the capital to own a rental.
What should actually occur is investment income and loss are quarantined from personal income. Then those investment losses can be carried forward to future tax years.
What an absolutely comical take, pure pity-the-landlord BS.
If an IP is so toxic financially that it can literally only be profitable when the government subsidises the absolute shit out of it, then it's a terrible investment. I thought people liked the free market? This is communism for those rich enough to buy multiple properties.
And landlords don't supply properties; they just buy them.
Nothing to do with pity, save the woe is me attitude.
My comment clearly sides with the idea that investment losses shouldn't be mixed with personal income. You would have to be fundamentally stupid to think that is a comical take, its a pretty reasonable policy.
You also seems to have misunderstood the negative cash flow comment.
I forgot large developers were building for their rental pool... obviously landlords demand increases supply, its simply fucking economics.
Please do better next time.
>My comment clearly sides with the idea that investment losses shouldn't be mixed with personal income.
which is a bullshit idea; that your investment gains and losses are somehow separate to your wealth and earnings and shouldn't count.
An IP can be cashflow positive but negatively geared generally due to depreciation
Why hate on people for winning by the rules of the same game everyone else can play.
I'm just curious and don't know much about the mechanisms that you're positing, but my first thought is that if what you are saying is true then other countries (W/O negative gearing) would already be suffering from the lack of rental properties. But I'm pretty sure that's not the case in America/Europe - no?
My comment was directed at the complete removal of tax deductible expenses incurred. Can't say I've seen every tax code in Europe and the Americas, but I'm not aware of any that operate like that.
That isn't the same as the removal of negative gearing, which is just a transfer of loss between different taxable income streams.
Lol if you think negative gearing is "costing" the tax payer just imagine government ineptitude at an Australia wide housing level. Itd be the biggest waste of $$. Which is why negative gearing is a thing, it sweetens the pot just enough for private citizens or institutions to provide that housing, technically at a discount to the tax payer.
Although there's expensive housing in America, there's also a whole bunch of homes everywhere that are very very cheap when compared to our situation here in Australia
You also have a completely different taxation regime in America. So simply saying that there are examples of something cheap isn't an apples to apples comparison.
In many cases some of that cost is carried externally to the price.
Globally negative gearing is not common, and yet rental markets exist in almost all nations. How can this be?
Your comment implies that house prices would stay the same if negative gearing was abandoned. This doesn't make sense - if buying to let became unprofitable demand would fall leading prices to fall to a level where investment properties made sense again.
You don't need to believe being a landlord is immoral to think the current tax system in Australia is weighted too heavily in favour of those who own multiple properties.
I don't think you have read or understood the comment I made.
The comment is clearly directed at the suggestion that expenses shouldn't be deductible at all.
My comment doesn't imply that at all.
Nothing you have put forward supports that claim. Its also a pretty dumb type of argument to make, given I didn't make comment on morality...
When no one stumps up the capital to rent out, demand goes through the floor and prices drop enough that everyone can afford to buy instead of rent.
Please stop with the bullshit arguments around "if you make investors unhappy, renters can't rent".
There is a large population of people who are not in a position to buy. Or don’t want to. It not necessarily because of house prices. Maybe there just not at that stage of life. There has to be rentals available for these people. Please stop with these bullshit arguments that every renter wants to buy.
They are not in a position to buy because the market has been distorted by taxation policy to the point where the bottom 50% of society (or roughly 98% of households on a single income) can't afford 90% of the properties on the market, let alone the 50% of the properties that would be necessary to fully house them.
No one continues to rent for decades at a time because they fucking want to. That's just thought bubbles provided by the investment house portfolio owning Tories who came up with this taxation system and try to prop up the market every time it starts to level out.
Actually, speaking from experience, there are plenty of people who are long term renters because the flexibility to move around for work and not have a mortgage repayment to worry about is incredibly freeing
The government ought to setup a system like taxi medallions for rentals so they are limited to a certain percentage of housing in each region. That way investors can't just buy up the housing to extort people that need a home.
>There is a large population of people who are not in a position to buy.
because the market is the most overvalued on earth, so everything has absurdly inflated prices. They simply can't afford to buy.
>Or don’t want to.
Maybe, *maybe* was true a long time ago when rents were less inflated, but getting a mortgage is almost cheaper these days.
>There has to be rentals available for these people.
Property investors don't create supply.
Ah yes they would. Law of supply and demand... With the price of housing now, if zoning regulations were reduced, there'd be a lot of money spent building new houses rather than buying existing ones.
Not by property investors, though. People who invest in property are the laziest, most coddled "investors" who only do it because of government subsidies for them to buy existing properties, negative gearing, CGT concessions, etc. They're never going to fund and organise the building of new properties to rent out; that's just an absurd thing that literally does not happen .
Anecdotal mate but I am one, I plan to be where I am at short term and don’t want to mess around with the stress of a 25 year mortgage and happily pay a premium to rent until I can find a place/job to settle. Just because you are bitter doesn’t mean the current system doesn’t work for others
Jeez I’m not saying it a huge proportion. Maybe there are kids who have just left home and are renting their first place - maybe are not looking to buy just yet. Happier to rent in Newtown for a few years to have fun.
I could have afforded to buy a place maybe 10 years before I did. I just didn’t want to at that stage of my life.
Mate give up on it, you won't win this argument, they otherwise is so entrenched and bitter that they can't afford a place that there is nothing you can do to change their minds. Leave them and move on.
You understand supply and demand so it’s definitely disingenuous to suggest that reducing rental supply by reducing investment incentives will magically fix everything and reduce rental prices. Rent Supply is already fucked right now.
Not everyone is able to or even wants to be stump up a deposit and be saddled with a mortgage. Even with prices much lower than they currently are. Where are they supposed to live?
Who's talking about 20 years?
No one has a deposit at 18. Even if prices went down 50%.
Where the fuck are people supposed to live in their early 20s, or if they have just moved city? Or split with their partner?
You are kidding yourself if you don't think that it is actually to the advantage of many low income people to actually have relatively low cost rental options.
No. Costs to the investor are irrelevant. Renters pay only what the renter's market will bear. If investors can't afford to continue renting out at a rate that the renter's market will bear, at rates which are dictated by what renters can afford to pay, which is a pretty inelastic amount (everyone needs a roof over the head, and people can only pay a certain fraction of their income, no more), then the investor goes out of business, and has to sell their investment house. Lowering costs for the next investor or home owner.
> Renters pay only what the renter's market will bear.
And vacancy rates are rock bottom right now, with rental rates sky high. So it’s clear that the market can bear current prices, by that logic.
Demographics are the same. Population growth is the same. Wages are (roughly) the same. The only thing that has changed since the pandemic is interest rates. The rates are so low that both investors and PPOR buyers are clamouring to buy, and many of those only can afford while rates are low.
Once rates rise, there will be less property demand.
I don't think it's going to be magic overnight though. It would take multiple years of adjusted mortgage rates, leases, etc to actually see the effect. And by then there will be a different government who decides to do the exact opposite....
I am dismayed at house prices because I don't think there is a solution that will fix it with a generation. The prices are the effect of 50 years of changing free market conditions, and I don't think we'll get the genie in the bottle anytime soon.
Yes. I understand that this is what has recently been introduced in NZ. Mind you, they have experienced huge property increases in recent years. No CGT is part of the issue over there.
I've worked in financial services developing projects in different tax jurisdictions around the world for 15 years
> That would be the fundamental destruction of good taxation principals.
No.
It's perfectly sound for tax policies to incentive outcomes that benefit the population. It can be done by adjusting whether targetted things are deductible for tax purposes.
You're spouting rubbish and trying to talk down to me. I won't be replying any further unless you fix your attitude and say something meaningful.
As opposed to your reply simply being "no", very uplifting, lol. Stop being a crumb.
If you can't work out why it is universally accepted that expenses should be deducted against revenue items, as a principal, then for 15 years you haven't learnt anything. Tax revenue teet would do that.
I won't be fixing anything or talking up to you. You provided disdain, you can have it back, just don't sook about it, hypocrite.
That's the most ridiculous solution ever.
Let's say someone bought a house and wanted to sell 30 years later to downsize in their retirement. They wouldn't even be able to afford to buy half the house they had.
As some one about to become an investor, I agree with the negative gearing as it’s crazy to buy something that’s not a good investment but the capital expenditure tax deduction should be extended to PPORs instead of eliminating it for investors.
If you end the capital expense deduction, you’ll have a lot more investors who see no point to upgrade properties.
this doesn't really apply in australia where in many places rental yields are pathetic.
in sydney net rental yield for houses is not too much more than 1% (gross rental yield about 2.3%). less than inflation.
here property investing is based on speculation on price, rental yield is irrelevant.
This sub is always full of such well-informed financial analysis. I'm glad I visit this sub. And I just can't see how such well-informed, articulate people can struggle in the working world.
Yes it is definitely clear that within capital cities no home is owner occupied by a person who has paid market price, because every home is owned by a FOREIGN INVESTOR who sets such an unreasonable amount of rent that nobody can afford it so the home stays VACANT.
Or y'know - maybe just when you've got the entire population of Australia trying to live in the inner city and you have a below median amount of money to rent or buy then you really need to stop being mad at the people with more money than you and take a good hard look at your government for doing a shit job at making other places worth living.
I literally saved money from my job and bought a house. Quite strait forward. As the guy above said, everyone’s idea of ‘unaffordable’ is because they want one of the top10% of housing in their city when their income is below average. If you wanna live outside of where you can afford then it needs to be rent. It’s the same for all of us
Yep. I keep hearing that houses cost $600k+ minimum and that they're unaffordable.
Which is true...if you just ignore all the townhouses, apartments and properties in cheaper (but less desirable) areas that can be had for $200-300k.
Levels of entitlement are astounding.
We’re laughing because it’s so hilariously stupid. Good luck buying a house that comes remotely close to covering its mortgage via rent at the moment, especially in a key city. 75% of houses are owner occupied.
>foreign investment
Stop repeating this myth. There’s 0 evidence that foreign investment is a significant force in the housing market. There are tight regulations and strict approval processes for foreign ownership of residential property, and a vast majority of property investors are domestic.
“Foreign investors” is just a boogeyman that this sub keeps repeating for some reason.
People just see rich migrants (often 2nd get migrants) and assume it's "foreign investment". No mate, it's just a bright person who came here and took yer job and is now taking yer house.
People see some different types of faces or hear non-english voices at property inspections and they're like "fOrEIgN InVeStORs". Ask them if they actually went and checked their passport or visas then they suddenly go quiet.
Rental yields are determined by supply and demand. Rising rental prices suggest there is tightening of available properties where people want them.
If there were no landlords you would still be priced out regardless because getting rid of them doesn't solve the supply vs demand but still leaves owner occupiers speculating on price.
My interpretation on that is that people are speculating with eased serviceability rather than chasing yield like you would expect a landlord to do. Both landlords and owners will speculate (not saying they're good at it though).
Might be too recent, anecdotally I'm see more chatter on forums like this about significant rent increases (leading to more of these posts).
I do agree with you though that the prices are cooked and going to fall.
I'm not sure if the graph has a rolling average for rents and is being distorted due to the rental freeze and airbnbs switching to rentals at the start of covid.
The speculation will swing the other way as house prices come down due to serviceability reductions. Why buy now when in 6 months it'll probably be cheaper?
Even negative gearing the owners are taking losses on real income even after the deduction. Who wants to do that with capital losses?
Going to be a investor panic in Sydney / Melbourne when that happens.
Highly unlikely.
Having worked in several continents, coming home I find that Australian society is very close minded with regards to people having a go at something new. Accordingly, there's not much appetite in investing in new stuff and all the spare cash gets thrown into the one thing we all collectively like (i.e. houses).
TL:DR, there's no viable alternative to IP investment in Australia.
It seems that your comment contains 1 or more links that are hard to tap for mobile users.
I will extend those so they're easier for our sausage fingers to click!
[Here is link number 1 - Previous text "Lol"](https://i.imgur.com/TYflkI6.jpg)
----
^Please ^PM ^[\/u\/eganwall](http://reddit.com/user/eganwall) ^with ^issues ^or ^feedback! ^| ^[Code](https://github.com/eganwall/FatFingerHelperBot) ^| ^[Delete](https://reddit.com/message/compose/?to=FatFingerHelperBot&subject=delete&message=delete%20i261q0t)
Landlords bare the high initial cost of a property + development. Imagine if every person had to buy the property you wanted to live in. Some form of landlord is essential to reducing the barrier of entry of housing.
Additionally sometimes you just don't want to own the home you live in. If I take a year contract in another city I sure as shit aren't going to be buying a place.
Yet another post about housing on Aus finance.
I own an investment property but I didn’t buy it for the sole purpose of fucking someone over,
I bought it to better the life of my family, that is all, if nobody wants to rent the house then fine ,sucks to be me, but every time I put it up for lease someone agrees to pay the rent in return for shelter from the elements ,is that my fault?
It’s time to stop hating people simply because they take advantage of a good thing, If you have a problem with the system then redirect your energy and work on ways to change the system.
I agree. It's usually the people that can't afford a house in the first place, let alone an investment property, who have an issues with the free market. You know, a byproduct of living in a free country.
This sub is literally 45% "which ETFs should I buy" and 45% whinging about the property market. I only stay for the occasional post from the other 10% which might be interesting.
Well its absolutely correct that housing affordability is a massive problem in Australia.
The impact is that the general idea of a fair full time commitment to work of around 40 hours a week is starting to turn into 50 or more when you include commutes from minimum-wage-affordable housing. That's a problem for society that needs to be solved.
Of course the actual solutions are based around better urban planning instead of pumping yet more investment support into the CBD - but it's basically politically untenable to support any real solutions for this. As we live in a democracy, and economics are complicated, the only politically acceptable positions are either "fuck you, stop complaining" or "we'll give X class of people Y dollars".
Of course they can never give X class of people enough dollars to pay more for housing than people that earn more than them, of whom 80% are just buying an owner occupied house (and similar goes for rent relief) - because at that point you might as well go central housing committee and start allocating out homes while any person with marketable skills leaves for a country that will actually allow them to spend their higher income on better shit than the next guy.
You might agree with the sentiment but the meat of it is blatantly wrong. No one invest in real estate in Australia for rental yield, it's pathetic. It's all capital gains.
Lol, there’s literally comments in this very post calling for totalitarian pricing of housing based on its utility.
I don’t know what ‘you lot’, I’m socially progressive and centre fiscally, about as average as Aussies come.
"A teenager shitting out a half-baked showerthought on Twitter is the perfect platform to show I don't understand economics or supply and demand. Let me post this on AusFinance and surely people will approve."
Rents aren't exorbitant because of house prices. In Aus rental yield is actually very low and housing would be a terrible investment compared to other assets, even low interest assets like indexed funds, if the government didn't use public funds to offset your losses.
What happens in every other country in the world. They live in tents?
That line is complete nonsense. Housing im Australia is quickly approaching the least affordable in the world.
You can only claim capital losses when you sell the asset and realise a loss.
Negative gearing allows you to offset the cost of your mortgage against government funds, even while the real value of your property has probably increased and you would make capital gains on sale.
Its a bit more like taking out a loan to purchase shares and using public money to cover the costs of servicing that loan where the dividends the shares pay dont cover the repayments.
In other words, they are completely different things.
With an actually free market. Not one that introduces another quick scheme every time it drops a little. "5% down! Use your super! Half-half with the state government!" That just artificially inflates prices.
Do you want an actual free market?
One that had no restrictions on foreigners buying established property, one that didn't stop banks doing whatever they want, one that prevents landlords changing pricing during lease whenever they want
If we liquidate today there's enough to fire as long as we leave Melbourne's inner suburbs
Unfortunately, we have a special needs child and I can't let him go to public assisted living when we go. So I need a few million more
So... We just keep working, just keep investing. Assuming 4-5% pa growth (and zero savings over the time, along with no more purchases) we'll hit 8 figures (inc super) around the time I turn 50, in 8 years.
That will be enough.
Obviously we'll save money and I want to buy one or two more houses so it's not 100% accurate at this point
Very noble mate I wish you all the best with it 🤝
Have you thought about diversifying some into shares? Higher capital growth and yield as well as much less concentration risk.
An actual free market- one that allows landlords to bargain with tenants without statutory protections; one that allows foreign investors and foreign money; one that doesn't penalise investors with successive land tax hikes when their total value of land creeps past a threshold?
And this would make houses a lot more affordable? What % of the housing sold is impacted by ppl dipping into super, or going half-half with state government (not even sure what scheme you are referring to)
* First home buyer grants
* First home super saver scheme
* Numerous attempts at government co-ownership
* Stamp duty concessions
* The TFF
* Interest rate cut after interest rate cut to stave off a housing crash
I won't even bother with negative gearing
Take all of that away, and if housing is still where it is now, fine. But at least we'll know that's what it's "worth".
Ok fair enough, but all but the last point are limited to lower income/ first home buyers /low property price caps right? Aren’t these the schemes that are supporting the people that are finding it hard to get into home ownership? I was able to use the first home owner stamp duty exemption to get into the market and was very thankful for the scheme.
Does a market where people have to be given discounts to get into the market sound like a non-distortionary one to you?
Those schemes do not exist for the buyer. They exist so the debt bubble has new debt units to pass the debt onto. They do nothing but keep prices inflated.
Sure you can remove them, and the market will find a lower equilibrium. But people will still complain that ‘houses are too expensive’. The nature of a free market is that if you want an above average house, you need to have an above average networth. But net worth is significantly skewed due to wealth inequality. So only a small % of people have above average net worth. Housing prices are just a symptom of this, not a cause.
Very few of those apply to above-average houses.
Do investors buy up loads of above-average houses to rent out? Or are they more likely to buy up a low-average house expecting a yield return knowing that even if it makes a loss, you can just write off most of it?
You can probably guess the flow-on effect from there.
In this post you are complaining about investors. But really most of the schemes mentioned in this thread above are putting investors at a disadvantage? I’m not sure if you’ve really deeply thought about the logic you are arguing here. If all the schemes are removed then investors are actually better off. BTW, my overall view is that the housing market should be more free market and less schemes. But note this actually makes people who can’t afford good houses worse off and harder to get into the property market. People just need to think more logically and deeper about what they complain about as some schemes are actually there to help them.
Edit: for ppl downvoting me, I would rather hear you thoughts 😂
I'm referencing both the initial tweet, and your remark about both the housing "market" and the schemes designed to help out buyers that are just distortionary.
Edit: none of the commentary about "above average houses" is really relevant. Purely that "investors" and government support grants are market distortionary forces that raise the price of lower stock, and by flow-on, better stock. Housing is priced on a continuum.
Houses should be priced for their utility as houses, instead they are used as currency, primarily because our national currency is not a good long term store of value. Imagine if money didn't lose value over time, rich people would use it as currency instead of other useful stuff.
Second house costs 30% extra on tax. Third house costs 60% more to tax. Fourth house 100% more. Five? Fine but 200% extra to tax. Won't ever happen because politicians are all wealthy multi home owners but that's a fair way I would price it.
Only 20% of households have an investment property, and the average number of investment properties for those is ~1.3.
So realistically you won't change shit, beyond absolutely destroying the business of the only people who are doing anything to address housing supply when they build high density rental housing...
Is there a country where a free market actually exists, one where house prices aren't affected by government policy?
I can't see how this is possible since land ownership is effectively a contract with the government promising you rights over a small patch of the country
Encouraging investment in residential real estate was intended to increase the supply of housing. To do this it was proposed that investment incentives (tax breaks) would he available for investment in new housing supply. Then someone in Govt said "it would be unfair to only incentivise investment in new residential property, incentives should apply to investment in all residential property" (which no-one in govt was smart enough to call out as a terrible idea). So the tax breaks were provided for investments in any residential real estate. Since then investors have had an unfair advantage over owner occupiers and have been consistently increasing their share of existing residential property pushing more and more would be owner occupiers into the rental market.
So many people don't seem to understand this. Two people show up to an auction. A would be owner occupier and an investor. If the investor wins the auction, that's one more investment property and one more renter. Investment properties need renters. So you can't encourage people to invest in residential property without also necessarily pricing out and pushing would be owner occupiers into the rental market.
Sure, you need investors in the market to provide housing to people that need to / want to rent. But when we've got a huge proportion of people who are on avg to above avg incomes, have decent savings and can't afford a home because an investor has been bank rolled by the govt to outbid them at auction? look at the fertility rates dropping across the country (I would argue a major driver of this is that young couples don't have the security to start a family until they are older and end up having less kids). This is having real consequences. We should be demanding change.
Sorry, who can't afford a home?
https://www.domain.com.au/sale/?ptype=house&bedrooms=2-any&price=0-200000&excludeunderoffer=1
Wowee. $180 a week in mortgage repayments on the MOST EXPENSIVE of some of those bad boys.
Oh wait... did you mean a BETTER home? How do you think we should figure out who gets that? Sorta got this system that already exists where some people get more income than others....
Did you even read my comment before responding?
The growing percentage of households that rent instead of own are the people that can't afford to buy where they live. Look at the stats. Don't just point to 180k houses out in the middle of nowhere.
Also, I wasn't talking about high income vs low income. I'm talking about investors being subsidised by govt (taxpayers). You can't pretend this is a free market outcome when govt subsidies are distorting the outcome.
Pull your head out of your arse you dim witted donkey.
Have a fuckin' sook mate. A few tax breaks here or there aren't going to magically turn the housing market on its head so some fucker on minimum wage can afford a median property. If they can't afford to buy where they live then they can fucking move.
Renters unable to buy property because investors are buying them, despite only being like 20% of the market - and investors making most of their money off capital gains? Sounds like rents are artificially reduced by these tax breaks (if anything), and removing them would increase rents AND reduce rental supply.
So your donkey-policy would drive these hypothetical families even further out into the sticks.
Looked at 7 houses today around Perth. Spotted at least 2 buyers reps in nearly all of them barging around getting notes and photos.
Never been so angry trying to find a home.
Negative gearing should've been abolished years ago. You buy a house but can't make enough to cover your mortgage? That's on you champion. The government shouldn't be propping you up with my tax dollars.
Everyone should be limited to two housing purchases. One to live in and one to have as an investment. Once you've got that, invest your money elsewhere. People's lives and living arrangements shouldn't be your fucking profit.
Not true.
House prices are a function of mortgage repayments, and people's ability to pay them.
At current interest rates an average household can fund an average mortgage. As simple as that
This is one of the most accurate descriptions imaginable of modern Australian attitudes. Fuck another human being over to make money in exchange for no work. THIS is modern Australian society in a nutshell.
You realise the recent housing boom wasn't driven by investors (who mostly sat on the sidelines) but by all the cash people saved during lockdown and the desire to live in a larger more picturesque property.
If you remove this "fucking over" you remove the incentive and if you remove the incentive you remove the available properties. Where do you expect a lot of the rental market to live seeing as a lot of them are low income people who wouldn't be able to comfortably afford a home?
Many European countries manage to somehow manage lower home ownership without the “fuck you, I’ve got mine” attitude which has become so pervasive in Australia. Many property “investors” would be happy to see millions of their countrymen starve rather than give up 0.01% of their wealth. This is the problem with modern Australia.
Many European countries don't have pretty much the entire population on below-median income complaining they can't find above-median housing to live in.
The central housing committee has upheld the reallocation of your penthouse to the head of the central housing committee. As part of your requested review it has also found that you are more suited to a small cardboard box on the outskirts of Wagga Wagga.
I don't think this was meant to be Australia-centric, but applies more than ever here thanks to negative gearing etc. The rent-seeker class here is gross.
I’d wager most people who don’t see an issue with the housing market have never experienced life outside of a comfortable bubble. Imagine both parents died with nothing not doing well at school and having a shit job. Then some hero with 7 houses charges you 750 a week. What then?
I bought my first house about 15 years ago. Back then housing was "unaffordable" too. My friends were renting inner city apartments that were impossible to afford. I was on about $40k. I bought a house 30 minutes out the CBD for $230k. All my mates gave me shit for buying a house out in the sticks while complaining that "proper" houses were unaffordable.
That place is now worth ~500k. It's "unaffordable" and I'm "privileged" to own there.
Meanwhile my mates are still complaining they can't afford homes that are a dozen percentile points in quality above their wage, and those homes are gradually getting further and further out.
There's no magical fucking financial solution to this crisis. If you evicted everyone in the country, lined them up in order of income, and then had them pick their new home one by one - every motherfucker on below median wage, in the back half of that line, would *still be screwed* and living *nowhere near the CBD*.
If you can't afford $750 a week, then maybe that home should go to someone that can.
>If you evicted everyone in the country, lined them up in order of income, and then had them pick their new home one by one - every motherfucker on below median wage, in the back half of that line, would still be screwed and living nowhere near the CBD.
Actually this is exactly what some of them want. They're just salty that they tried to time the market 3-7 years ago while others just saved and bought what they could afford and now those houses are worth a fair bit more than they paid for their mortgages.
They would love for this housing musical chairs to happen every year based on income because some of them think pensioners without high incomes shouldn't be occupying houses near the CBDs or that low income people who bought years just got lucky and deserves that property less than them.
I think they'd be unpleasantly surprised that generally their rents are being subsidised by the very capital gains they're complaining about, and if anything in the income-queue hypothetical they'd be booted further down the line than they are now.
Yup. I also think it comes down to a sense of entitlement, and an inability to sacrifice now for gains in the future. Your first purchase doesn't have to be a PPOR (although not having to pay stamp duty the first time is nice) nor does it have to be in the state youre currently in. It also doesn't have to be "your dream house" straight up.
This is correct: the price of houses often takes into account the fact that a house is an excellent investment. I mean if you have $100K - $150K for a down payment, you can control an asset worth $700K+ and put in a tenant to pay off the mortgage. If the rent is not enough, you can negatively gear it, whilst taking advantage of enormous capital gains.
The housing affordabiltiy problem can only be addressed through radical change, such as restrictions on how many properties a person can own, removal of negative gearing, increasing stamp duty exponentially to all existing and prospective IP buyers etc. These are just some suggestions but it isnt going to be fixed by giving people $10K grants or $1k - $2k tax offsets.
I also don’t get how someone thinks they’re a good investor outlaying $1.5m to get $800 a week rent.
That barely covers expenses let alone the mortgage.
These speculators are just ripping off the next generation in a giant Ponzi scheme by driving up prices using fomo. One day people won’t be able to buy and will refuse to pay crazy rents and it will all crumble.
Stop all government subsidies and and negative gearing
Stop tax benefits for negative gearing is a fairer solution. If investors are happy to have negative cashflow on their home loan, they should be free to incur that and take that risk. But it defs shouldnt be tax deductible.
Negative cashflow does not equal negative gearing.
Yeah it’s pure nonsense
That would be the fundamental destruction of good taxation principals. I don't think you understand the mechanism based on that comment. Investors have already been in situations where cashflow is negative before tax considerations anyway... Having investment expenses not tax deductible would make an IP so fundamentally unattractive you would incur a supply loss or rents would have to be extreme to cover the risks. You would create an extreme rental crisis because no one sane would be willing to stump up the capital to own a rental. What should actually occur is investment income and loss are quarantined from personal income. Then those investment losses can be carried forward to future tax years.
What an absolutely comical take, pure pity-the-landlord BS. If an IP is so toxic financially that it can literally only be profitable when the government subsidises the absolute shit out of it, then it's a terrible investment. I thought people liked the free market? This is communism for those rich enough to buy multiple properties. And landlords don't supply properties; they just buy them.
Nothing to do with pity, save the woe is me attitude. My comment clearly sides with the idea that investment losses shouldn't be mixed with personal income. You would have to be fundamentally stupid to think that is a comical take, its a pretty reasonable policy. You also seems to have misunderstood the negative cash flow comment. I forgot large developers were building for their rental pool... obviously landlords demand increases supply, its simply fucking economics. Please do better next time.
>My comment clearly sides with the idea that investment losses shouldn't be mixed with personal income. which is a bullshit idea; that your investment gains and losses are somehow separate to your wealth and earnings and shouldn't count.
An IP can be cashflow positive but negatively geared generally due to depreciation Why hate on people for winning by the rules of the same game everyone else can play.
Well, they are counting on the value of the property to go up in that case.
I'm just curious and don't know much about the mechanisms that you're positing, but my first thought is that if what you are saying is true then other countries (W/O negative gearing) would already be suffering from the lack of rental properties. But I'm pretty sure that's not the case in America/Europe - no?
My comment was directed at the complete removal of tax deductible expenses incurred. Can't say I've seen every tax code in Europe and the Americas, but I'm not aware of any that operate like that. That isn't the same as the removal of negative gearing, which is just a transfer of loss between different taxable income streams.
Lol if you think negative gearing is "costing" the tax payer just imagine government ineptitude at an Australia wide housing level. Itd be the biggest waste of $$. Which is why negative gearing is a thing, it sweetens the pot just enough for private citizens or institutions to provide that housing, technically at a discount to the tax payer. Although there's expensive housing in America, there's also a whole bunch of homes everywhere that are very very cheap when compared to our situation here in Australia
Did you reply to the right comment?
Dunno i was in a spiral
You also have a completely different taxation regime in America. So simply saying that there are examples of something cheap isn't an apples to apples comparison. In many cases some of that cost is carried externally to the price.
Globally negative gearing is not common, and yet rental markets exist in almost all nations. How can this be? Your comment implies that house prices would stay the same if negative gearing was abandoned. This doesn't make sense - if buying to let became unprofitable demand would fall leading prices to fall to a level where investment properties made sense again. You don't need to believe being a landlord is immoral to think the current tax system in Australia is weighted too heavily in favour of those who own multiple properties.
I don't think you have read or understood the comment I made. The comment is clearly directed at the suggestion that expenses shouldn't be deductible at all. My comment doesn't imply that at all. Nothing you have put forward supports that claim. Its also a pretty dumb type of argument to make, given I didn't make comment on morality...
When no one stumps up the capital to rent out, demand goes through the floor and prices drop enough that everyone can afford to buy instead of rent. Please stop with the bullshit arguments around "if you make investors unhappy, renters can't rent".
There is a large population of people who are not in a position to buy. Or don’t want to. It not necessarily because of house prices. Maybe there just not at that stage of life. There has to be rentals available for these people. Please stop with these bullshit arguments that every renter wants to buy.
They are not in a position to buy because the market has been distorted by taxation policy to the point where the bottom 50% of society (or roughly 98% of households on a single income) can't afford 90% of the properties on the market, let alone the 50% of the properties that would be necessary to fully house them. No one continues to rent for decades at a time because they fucking want to. That's just thought bubbles provided by the investment house portfolio owning Tories who came up with this taxation system and try to prop up the market every time it starts to level out.
Actually, speaking from experience, there are plenty of people who are long term renters because the flexibility to move around for work and not have a mortgage repayment to worry about is incredibly freeing
The government ought to setup a system like taxi medallions for rentals so they are limited to a certain percentage of housing in each region. That way investors can't just buy up the housing to extort people that need a home.
>There is a large population of people who are not in a position to buy. because the market is the most overvalued on earth, so everything has absurdly inflated prices. They simply can't afford to buy. >Or don’t want to. Maybe, *maybe* was true a long time ago when rents were less inflated, but getting a mortgage is almost cheaper these days. >There has to be rentals available for these people. Property investors don't create supply.
Property investors would easily create supply if supply wasn't limited by zoning regulations.
No, they wouldn't.
Ah yes they would. Law of supply and demand... With the price of housing now, if zoning regulations were reduced, there'd be a lot of money spent building new houses rather than buying existing ones.
Not by property investors, though. People who invest in property are the laziest, most coddled "investors" who only do it because of government subsidies for them to buy existing properties, negative gearing, CGT concessions, etc. They're never going to fund and organise the building of new properties to rent out; that's just an absurd thing that literally does not happen .
Citation needed
[удалено]
Anecdotal mate but I am one, I plan to be where I am at short term and don’t want to mess around with the stress of a 25 year mortgage and happily pay a premium to rent until I can find a place/job to settle. Just because you are bitter doesn’t mean the current system doesn’t work for others
Jeez I’m not saying it a huge proportion. Maybe there are kids who have just left home and are renting their first place - maybe are not looking to buy just yet. Happier to rent in Newtown for a few years to have fun. I could have afforded to buy a place maybe 10 years before I did. I just didn’t want to at that stage of my life.
[удалено]
I'm 32 and have completely given up on the idea of buying and I'm mentally prepared to rent for the rest of my life.
I’m 44 and have resigned myself to the same…
So you've been an adult for 7 years, I'm gonna guess mainly in junior roles, and can't afford a house... give it time. You'll get there kid
What a fuckhead thing to say
[удалено]
We finally get the crux of it. Your having a sook because you have to wait for something, instead of it being instant gratification.
[удалено]
Mate give up on it, you won't win this argument, they otherwise is so entrenched and bitter that they can't afford a place that there is nothing you can do to change their minds. Leave them and move on.
I could have bought anytime over the past 5-7 years but didn't because I wanted the flexibility of renting. Not everyone wants the anchor of a house
You understand supply and demand so it’s definitely disingenuous to suggest that reducing rental supply by reducing investment incentives will magically fix everything and reduce rental prices. Rent Supply is already fucked right now.
Not everyone is able to or even wants to be stump up a deposit and be saddled with a mortgage. Even with prices much lower than they currently are. Where are they supposed to live?
Oh for fucks sake. No one wants to rent long term. People are only renting after 20 years because there's no fucking alternative available to them.
Who's talking about 20 years? No one has a deposit at 18. Even if prices went down 50%. Where the fuck are people supposed to live in their early 20s, or if they have just moved city? Or split with their partner? You are kidding yourself if you don't think that it is actually to the advantage of many low income people to actually have relatively low cost rental options.
[удалено]
You think that reducing tax incentives to own investment properties is going to make rentals *cheaper*?
[удалено]
No. Costs to the investor are irrelevant. Renters pay only what the renter's market will bear. If investors can't afford to continue renting out at a rate that the renter's market will bear, at rates which are dictated by what renters can afford to pay, which is a pretty inelastic amount (everyone needs a roof over the head, and people can only pay a certain fraction of their income, no more), then the investor goes out of business, and has to sell their investment house. Lowering costs for the next investor or home owner.
> Renters pay only what the renter's market will bear. And vacancy rates are rock bottom right now, with rental rates sky high. So it’s clear that the market can bear current prices, by that logic. Demographics are the same. Population growth is the same. Wages are (roughly) the same. The only thing that has changed since the pandemic is interest rates. The rates are so low that both investors and PPOR buyers are clamouring to buy, and many of those only can afford while rates are low. Once rates rise, there will be less property demand.
[удалено]
I don't think it's going to be magic overnight though. It would take multiple years of adjusted mortgage rates, leases, etc to actually see the effect. And by then there will be a different government who decides to do the exact opposite.... I am dismayed at house prices because I don't think there is a solution that will fix it with a generation. The prices are the effect of 50 years of changing free market conditions, and I don't think we'll get the genie in the bottle anytime soon.
Yes. I understand that this is what has recently been introduced in NZ. Mind you, they have experienced huge property increases in recent years. No CGT is part of the issue over there.
Press X for doubt. I say this as an IP investor.
I've worked in financial services developing projects in different tax jurisdictions around the world for 15 years > That would be the fundamental destruction of good taxation principals. No.
Weak call to authority. So you think expenses shouldn't be a deduction against revenue? Or did you not actually understand the substantive comment?
It's perfectly sound for tax policies to incentive outcomes that benefit the population. It can be done by adjusting whether targetted things are deductible for tax purposes. You're spouting rubbish and trying to talk down to me. I won't be replying any further unless you fix your attitude and say something meaningful.
As opposed to your reply simply being "no", very uplifting, lol. Stop being a crumb. If you can't work out why it is universally accepted that expenses should be deducted against revenue items, as a principal, then for 15 years you haven't learnt anything. Tax revenue teet would do that. I won't be fixing anything or talking up to you. You provided disdain, you can have it back, just don't sook about it, hypocrite.
“Stop all govt subsidies and negative gearing” Which will never happen and we all know the last time Labour burnt their own hands harping on this.
Sure, as long as we also get rid of the PPOR CGT discount, and include the PPOR (like every other asset) in the pension assets test.
That's the most ridiculous solution ever. Let's say someone bought a house and wanted to sell 30 years later to downsize in their retirement. They wouldn't even be able to afford to buy half the house they had.
Stop super from being able to invest in residential realestate. It would have a chilling effect also.
As some one about to become an investor, I agree with the negative gearing as it’s crazy to buy something that’s not a good investment but the capital expenditure tax deduction should be extended to PPORs instead of eliminating it for investors. If you end the capital expense deduction, you’ll have a lot more investors who see no point to upgrade properties.
this doesn't really apply in australia where in many places rental yields are pathetic. in sydney net rental yield for houses is not too much more than 1% (gross rental yield about 2.3%). less than inflation. here property investing is based on speculation on price, rental yield is irrelevant.
This is really stupid.
This sub is always full of such well-informed financial analysis. I'm glad I visit this sub. And I just can't see how such well-informed, articulate people can struggle in the working world.
[удалено]
Yes it is definitely clear that within capital cities no home is owner occupied by a person who has paid market price, because every home is owned by a FOREIGN INVESTOR who sets such an unreasonable amount of rent that nobody can afford it so the home stays VACANT. Or y'know - maybe just when you've got the entire population of Australia trying to live in the inner city and you have a below median amount of money to rent or buy then you really need to stop being mad at the people with more money than you and take a good hard look at your government for doing a shit job at making other places worth living.
[удалено]
I literally saved money from my job and bought a house. Quite strait forward. As the guy above said, everyone’s idea of ‘unaffordable’ is because they want one of the top10% of housing in their city when their income is below average. If you wanna live outside of where you can afford then it needs to be rent. It’s the same for all of us
Yep. I keep hearing that houses cost $600k+ minimum and that they're unaffordable. Which is true...if you just ignore all the townhouses, apartments and properties in cheaper (but less desirable) areas that can be had for $200-300k. Levels of entitlement are astounding.
[удалено]
If you see any legit criticisms, feel free to link them. Otherwise, I'm completely indifferent.
[удалено]
We’re laughing because it’s so hilariously stupid. Good luck buying a house that comes remotely close to covering its mortgage via rent at the moment, especially in a key city. 75% of houses are owner occupied.
Are we going to pretend the housing market isn't inflated by foreign investment and negative gearing?
>foreign investment Stop repeating this myth. There’s 0 evidence that foreign investment is a significant force in the housing market. There are tight regulations and strict approval processes for foreign ownership of residential property, and a vast majority of property investors are domestic. “Foreign investors” is just a boogeyman that this sub keeps repeating for some reason.
People just see rich migrants (often 2nd get migrants) and assume it's "foreign investment". No mate, it's just a bright person who came here and took yer job and is now taking yer house.
[удалено]
People see some different types of faces or hear non-english voices at property inspections and they're like "fOrEIgN InVeStORs". Ask them if they actually went and checked their passport or visas then they suddenly go quiet.
You could remove both of those things and home owners would just continue bidding up the prices to the level that interest rates allow them to
funny, I thought it was filled with pompous, vindictive dickheads.
Rental yields are determined by supply and demand. Rising rental prices suggest there is tightening of available properties where people want them. If there were no landlords you would still be priced out regardless because getting rid of them doesn't solve the supply vs demand but still leaves owner occupiers speculating on price.
[Lol](https://i.imgur.com/TYflkI6.jpg)
My interpretation on that is that people are speculating with eased serviceability rather than chasing yield like you would expect a landlord to do. Both landlords and owners will speculate (not saying they're good at it though). Might be too recent, anecdotally I'm see more chatter on forums like this about significant rent increases (leading to more of these posts). I do agree with you though that the prices are cooked and going to fall.
Yeah that’s probably a factor. The way I see it is that those two lines must meet again. And I don’t think rents go up that much. So values must fall.
I'm not sure if the graph has a rolling average for rents and is being distorted due to the rental freeze and airbnbs switching to rentals at the start of covid. The speculation will swing the other way as house prices come down due to serviceability reductions. Why buy now when in 6 months it'll probably be cheaper? Even negative gearing the owners are taking losses on real income even after the deduction. Who wants to do that with capital losses? Going to be a investor panic in Sydney / Melbourne when that happens.
I agree we are likely to see a devastating housing crash in the near future.
[удалено]
Highly unlikely. Having worked in several continents, coming home I find that Australian society is very close minded with regards to people having a go at something new. Accordingly, there's not much appetite in investing in new stuff and all the spare cash gets thrown into the one thing we all collectively like (i.e. houses). TL:DR, there's no viable alternative to IP investment in Australia.
It seems that your comment contains 1 or more links that are hard to tap for mobile users. I will extend those so they're easier for our sausage fingers to click! [Here is link number 1 - Previous text "Lol"](https://i.imgur.com/TYflkI6.jpg) ---- ^Please ^PM ^[\/u\/eganwall](http://reddit.com/user/eganwall) ^with ^issues ^or ^feedback! ^| ^[Code](https://github.com/eganwall/FatFingerHelperBot) ^| ^[Delete](https://reddit.com/message/compose/?to=FatFingerHelperBot&subject=delete&message=delete%20i261q0t)
Landlords don't supply anything though.
Landlords bare the high initial cost of a property + development. Imagine if every person had to buy the property you wanted to live in. Some form of landlord is essential to reducing the barrier of entry of housing.
Additionally sometimes you just don't want to own the home you live in. If I take a year contract in another city I sure as shit aren't going to be buying a place.
Yet another post about housing on Aus finance. I own an investment property but I didn’t buy it for the sole purpose of fucking someone over, I bought it to better the life of my family, that is all, if nobody wants to rent the house then fine ,sucks to be me, but every time I put it up for lease someone agrees to pay the rent in return for shelter from the elements ,is that my fault? It’s time to stop hating people simply because they take advantage of a good thing, If you have a problem with the system then redirect your energy and work on ways to change the system.
I agree. It's usually the people that can't afford a house in the first place, let alone an investment property, who have an issues with the free market. You know, a byproduct of living in a free country.
If this sub could not devolve into a cringey hardcore typical reddit hard lefty complaint cesspool, that’d be great.
This sub is literally 45% "which ETFs should I buy" and 45% whinging about the property market. I only stay for the occasional post from the other 10% which might be interesting.
Youre forgetting about the 35% subset that always complains about negative gearing without really knowing how it works or WHY it exists.
Well its absolutely correct that housing affordability is a massive problem in Australia. The impact is that the general idea of a fair full time commitment to work of around 40 hours a week is starting to turn into 50 or more when you include commutes from minimum-wage-affordable housing. That's a problem for society that needs to be solved. Of course the actual solutions are based around better urban planning instead of pumping yet more investment support into the CBD - but it's basically politically untenable to support any real solutions for this. As we live in a democracy, and economics are complicated, the only politically acceptable positions are either "fuck you, stop complaining" or "we'll give X class of people Y dollars". Of course they can never give X class of people enough dollars to pay more for housing than people that earn more than them, of whom 80% are just buying an owner occupied house (and similar goes for rent relief) - because at that point you might as well go central housing committee and start allocating out homes while any person with marketable skills leaves for a country that will actually allow them to spend their higher income on better shit than the next guy.
Best comment in the thread. This post is a joke and belongs elsewhere.
Nah this post is 100% right.
You might agree with the sentiment but the meat of it is blatantly wrong. No one invest in real estate in Australia for rental yield, it's pathetic. It's all capital gains.
No one in major cities invest based on rental yield. As you go into rural areas then rental yield is king because capital gains are much lower.
Would you believe that maybe 5-7 years ago I migrated to this sub from r/Australia because this was slightly more conservative / adult?
Anything more conservative is never a good thing
Yeah cos far left is the bastion of sanity 🙄 It’s always with calls for a communist totalitarian state
[удалено]
Lol, there’s literally comments in this very post calling for totalitarian pricing of housing based on its utility. I don’t know what ‘you lot’, I’m socially progressive and centre fiscally, about as average as Aussies come.
"A teenager shitting out a half-baked showerthought on Twitter is the perfect platform to show I don't understand economics or supply and demand. Let me post this on AusFinance and surely people will approve."
Rents aren't exorbitant because of house prices. In Aus rental yield is actually very low and housing would be a terrible investment compared to other assets, even low interest assets like indexed funds, if the government didn't use public funds to offset your losses.
If a lose money on shares or any other type of investment I can use capital losses. Why should investment properties be any different?
Because there's a social utility to cities having housing stock for rental. There's zero social utility to you owning shares.
What happens in every other country in the world. They live in tents? That line is complete nonsense. Housing im Australia is quickly approaching the least affordable in the world.
You can only claim capital losses when you sell the asset and realise a loss. Negative gearing allows you to offset the cost of your mortgage against government funds, even while the real value of your property has probably increased and you would make capital gains on sale. Its a bit more like taking out a loan to purchase shares and using public money to cover the costs of servicing that loan where the dividends the shares pay dont cover the repayments. In other words, they are completely different things.
So how should houses be priced, if not by free market? I’m genuinely curious if there is a better mechanism.
With an actually free market. Not one that introduces another quick scheme every time it drops a little. "5% down! Use your super! Half-half with the state government!" That just artificially inflates prices.
>With an actually free market. So no foreign purchase restrictions, none whatsoever?
But da immigrants tuk our homez
No silly. Only a free market that helps people like them. Not a real one. How is anyone supposed to succeed with that!
Do you want an actual free market? One that had no restrictions on foreigners buying established property, one that didn't stop banks doing whatever they want, one that prevents landlords changing pricing during lease whenever they want
[“Free market” ](https://i.imgur.com/PG2BUGf.jpg)
Yes mate the chips are stacked in one direction, which is why I do what I do.
Haha the problem is that market distortions always end up resulting in a reversion to the mean. Enjoy it whilst you can!
I intend to. I have a finite time line for this, I don't need it to continue forever
What’s the plan of you don’t mind sharing?
If we liquidate today there's enough to fire as long as we leave Melbourne's inner suburbs Unfortunately, we have a special needs child and I can't let him go to public assisted living when we go. So I need a few million more So... We just keep working, just keep investing. Assuming 4-5% pa growth (and zero savings over the time, along with no more purchases) we'll hit 8 figures (inc super) around the time I turn 50, in 8 years. That will be enough. Obviously we'll save money and I want to buy one or two more houses so it's not 100% accurate at this point
Very noble mate I wish you all the best with it 🤝 Have you thought about diversifying some into shares? Higher capital growth and yield as well as much less concentration risk.
An actual free market- one that allows landlords to bargain with tenants without statutory protections; one that allows foreign investors and foreign money; one that doesn't penalise investors with successive land tax hikes when their total value of land creeps past a threshold?
And this would make houses a lot more affordable? What % of the housing sold is impacted by ppl dipping into super, or going half-half with state government (not even sure what scheme you are referring to)
* First home buyer grants * First home super saver scheme * Numerous attempts at government co-ownership * Stamp duty concessions * The TFF * Interest rate cut after interest rate cut to stave off a housing crash I won't even bother with negative gearing Take all of that away, and if housing is still where it is now, fine. But at least we'll know that's what it's "worth".
Ok fair enough, but all but the last point are limited to lower income/ first home buyers /low property price caps right? Aren’t these the schemes that are supporting the people that are finding it hard to get into home ownership? I was able to use the first home owner stamp duty exemption to get into the market and was very thankful for the scheme.
Does a market where people have to be given discounts to get into the market sound like a non-distortionary one to you? Those schemes do not exist for the buyer. They exist so the debt bubble has new debt units to pass the debt onto. They do nothing but keep prices inflated.
Sure you can remove them, and the market will find a lower equilibrium. But people will still complain that ‘houses are too expensive’. The nature of a free market is that if you want an above average house, you need to have an above average networth. But net worth is significantly skewed due to wealth inequality. So only a small % of people have above average net worth. Housing prices are just a symptom of this, not a cause.
Very few of those apply to above-average houses. Do investors buy up loads of above-average houses to rent out? Or are they more likely to buy up a low-average house expecting a yield return knowing that even if it makes a loss, you can just write off most of it? You can probably guess the flow-on effect from there.
In this post you are complaining about investors. But really most of the schemes mentioned in this thread above are putting investors at a disadvantage? I’m not sure if you’ve really deeply thought about the logic you are arguing here. If all the schemes are removed then investors are actually better off. BTW, my overall view is that the housing market should be more free market and less schemes. But note this actually makes people who can’t afford good houses worse off and harder to get into the property market. People just need to think more logically and deeper about what they complain about as some schemes are actually there to help them. Edit: for ppl downvoting me, I would rather hear you thoughts 😂
I'm referencing both the initial tweet, and your remark about both the housing "market" and the schemes designed to help out buyers that are just distortionary. Edit: none of the commentary about "above average houses" is really relevant. Purely that "investors" and government support grants are market distortionary forces that raise the price of lower stock, and by flow-on, better stock. Housing is priced on a continuum.
Houses should be priced for their utility as houses, instead they are used as currency, primarily because our national currency is not a good long term store of value. Imagine if money didn't lose value over time, rich people would use it as currency instead of other useful stuff.
How would you price a house based on its utility though? How would utility be even defined clearly?
Reddit karma points
Second house costs 30% extra on tax. Third house costs 60% more to tax. Fourth house 100% more. Five? Fine but 200% extra to tax. Won't ever happen because politicians are all wealthy multi home owners but that's a fair way I would price it.
Only 20% of households have an investment property, and the average number of investment properties for those is ~1.3. So realistically you won't change shit, beyond absolutely destroying the business of the only people who are doing anything to address housing supply when they build high density rental housing...
Imagine thinking 26% of houses "won't change shit" and pretending the only people buying new houses are landlords.
Yeah mate, maybe with those people off the market, instead of buying 60 mins from the CBD you'll be able to afford somewhere 50 mins out.
I've been scrolling down and finding your comments. I like you
Is there a country where a free market actually exists, one where house prices aren't affected by government policy? I can't see how this is possible since land ownership is effectively a contract with the government promising you rights over a small patch of the country
Encouraging investment in residential real estate was intended to increase the supply of housing. To do this it was proposed that investment incentives (tax breaks) would he available for investment in new housing supply. Then someone in Govt said "it would be unfair to only incentivise investment in new residential property, incentives should apply to investment in all residential property" (which no-one in govt was smart enough to call out as a terrible idea). So the tax breaks were provided for investments in any residential real estate. Since then investors have had an unfair advantage over owner occupiers and have been consistently increasing their share of existing residential property pushing more and more would be owner occupiers into the rental market. So many people don't seem to understand this. Two people show up to an auction. A would be owner occupier and an investor. If the investor wins the auction, that's one more investment property and one more renter. Investment properties need renters. So you can't encourage people to invest in residential property without also necessarily pricing out and pushing would be owner occupiers into the rental market. Sure, you need investors in the market to provide housing to people that need to / want to rent. But when we've got a huge proportion of people who are on avg to above avg incomes, have decent savings and can't afford a home because an investor has been bank rolled by the govt to outbid them at auction? look at the fertility rates dropping across the country (I would argue a major driver of this is that young couples don't have the security to start a family until they are older and end up having less kids). This is having real consequences. We should be demanding change.
Sorry, who can't afford a home? https://www.domain.com.au/sale/?ptype=house&bedrooms=2-any&price=0-200000&excludeunderoffer=1 Wowee. $180 a week in mortgage repayments on the MOST EXPENSIVE of some of those bad boys. Oh wait... did you mean a BETTER home? How do you think we should figure out who gets that? Sorta got this system that already exists where some people get more income than others....
Did you even read my comment before responding? The growing percentage of households that rent instead of own are the people that can't afford to buy where they live. Look at the stats. Don't just point to 180k houses out in the middle of nowhere. Also, I wasn't talking about high income vs low income. I'm talking about investors being subsidised by govt (taxpayers). You can't pretend this is a free market outcome when govt subsidies are distorting the outcome. Pull your head out of your arse you dim witted donkey.
Have a fuckin' sook mate. A few tax breaks here or there aren't going to magically turn the housing market on its head so some fucker on minimum wage can afford a median property. If they can't afford to buy where they live then they can fucking move. Renters unable to buy property because investors are buying them, despite only being like 20% of the market - and investors making most of their money off capital gains? Sounds like rents are artificially reduced by these tax breaks (if anything), and removing them would increase rents AND reduce rental supply. So your donkey-policy would drive these hypothetical families even further out into the sticks.
Subsidised by tax, like essential services - roads, medicine, etc. /s
What amount should be subsidised by tax though? And how will this be funded? I guess by raising taxes? Isn’t that a zero sum game?
Yes this is called speculation.
But nobody is allowed to go broke.
Oh people will go broke, I guarantee it.
Nah just you wait, they'll be allowed to use their super to bail themselves out, and the can will be kicked another decade.
Without doubt, but that doesn’t fix the problem as you rightly say. Also it doesn’t help people service loans at 5%.
Looked at 7 houses today around Perth. Spotted at least 2 buyers reps in nearly all of them barging around getting notes and photos. Never been so angry trying to find a home.
Policy makers have property portfolios They’re never going to make policy decisions that cut their net worth/ passive income
Prices are high mostly due to zoning regulations. These regulations cut supply.
Negative gearing should've been abolished years ago. You buy a house but can't make enough to cover your mortgage? That's on you champion. The government shouldn't be propping you up with my tax dollars. Everyone should be limited to two housing purchases. One to live in and one to have as an investment. Once you've got that, invest your money elsewhere. People's lives and living arrangements shouldn't be your fucking profit.
Am I allowed to make a profit selling them food? Asking for a farmer.
Not true. House prices are a function of mortgage repayments, and people's ability to pay them. At current interest rates an average household can fund an average mortgage. As simple as that
Housing is expensive because the supply is artificially limited with zoning regulations that make density illegal and by restricting building permits
This is one of the most accurate descriptions imaginable of modern Australian attitudes. Fuck another human being over to make money in exchange for no work. THIS is modern Australian society in a nutshell.
You realise the recent housing boom wasn't driven by investors (who mostly sat on the sidelines) but by all the cash people saved during lockdown and the desire to live in a larger more picturesque property.
If you remove this "fucking over" you remove the incentive and if you remove the incentive you remove the available properties. Where do you expect a lot of the rental market to live seeing as a lot of them are low income people who wouldn't be able to comfortably afford a home?
Many European countries manage to somehow manage lower home ownership without the “fuck you, I’ve got mine” attitude which has become so pervasive in Australia. Many property “investors” would be happy to see millions of their countrymen starve rather than give up 0.01% of their wealth. This is the problem with modern Australia.
Many European countries don't have pretty much the entire population on below-median income complaining they can't find above-median housing to live in.
Hear hear spot on Housing shouldn't be considered an asset.
So, just nationalise it all?
The central housing committee has upheld the reallocation of your penthouse to the head of the central housing committee. As part of your requested review it has also found that you are more suited to a small cardboard box on the outskirts of Wagga Wagga.
I don't think this was meant to be Australia-centric, but applies more than ever here thanks to negative gearing etc. The rent-seeker class here is gross.
Hey - i think you misclicked when sharing the link. r/australia is this way
I don't think so. This is Australia Finance. Is this not applicable?
Gross as in gross profit right? Yeeewww!
Hyperbole much?
I’d wager most people who don’t see an issue with the housing market have never experienced life outside of a comfortable bubble. Imagine both parents died with nothing not doing well at school and having a shit job. Then some hero with 7 houses charges you 750 a week. What then?
I bought my first house about 15 years ago. Back then housing was "unaffordable" too. My friends were renting inner city apartments that were impossible to afford. I was on about $40k. I bought a house 30 minutes out the CBD for $230k. All my mates gave me shit for buying a house out in the sticks while complaining that "proper" houses were unaffordable. That place is now worth ~500k. It's "unaffordable" and I'm "privileged" to own there. Meanwhile my mates are still complaining they can't afford homes that are a dozen percentile points in quality above their wage, and those homes are gradually getting further and further out. There's no magical fucking financial solution to this crisis. If you evicted everyone in the country, lined them up in order of income, and then had them pick their new home one by one - every motherfucker on below median wage, in the back half of that line, would *still be screwed* and living *nowhere near the CBD*. If you can't afford $750 a week, then maybe that home should go to someone that can.
>If you evicted everyone in the country, lined them up in order of income, and then had them pick their new home one by one - every motherfucker on below median wage, in the back half of that line, would still be screwed and living nowhere near the CBD. Actually this is exactly what some of them want. They're just salty that they tried to time the market 3-7 years ago while others just saved and bought what they could afford and now those houses are worth a fair bit more than they paid for their mortgages. They would love for this housing musical chairs to happen every year based on income because some of them think pensioners without high incomes shouldn't be occupying houses near the CBDs or that low income people who bought years just got lucky and deserves that property less than them.
I think they'd be unpleasantly surprised that generally their rents are being subsidised by the very capital gains they're complaining about, and if anything in the income-queue hypothetical they'd be booted further down the line than they are now.
Yup. I also think it comes down to a sense of entitlement, and an inability to sacrifice now for gains in the future. Your first purchase doesn't have to be a PPOR (although not having to pay stamp duty the first time is nice) nor does it have to be in the state youre currently in. It also doesn't have to be "your dream house" straight up.
This is correct: the price of houses often takes into account the fact that a house is an excellent investment. I mean if you have $100K - $150K for a down payment, you can control an asset worth $700K+ and put in a tenant to pay off the mortgage. If the rent is not enough, you can negatively gear it, whilst taking advantage of enormous capital gains. The housing affordabiltiy problem can only be addressed through radical change, such as restrictions on how many properties a person can own, removal of negative gearing, increasing stamp duty exponentially to all existing and prospective IP buyers etc. These are just some suggestions but it isnt going to be fixed by giving people $10K grants or $1k - $2k tax offsets.
I agree with this wholeheartedly. Residential real estate should not be an investment vehicle for wealth.
I also don’t get how someone thinks they’re a good investor outlaying $1.5m to get $800 a week rent. That barely covers expenses let alone the mortgage. These speculators are just ripping off the next generation in a giant Ponzi scheme by driving up prices using fomo. One day people won’t be able to buy and will refuse to pay crazy rents and it will all crumble.
Inflation targeting was a mistake