Australian Housing Affordability Discussion

[Moody]

Anyone can own a home with very little effort. Only problem is you want one on the harbour and everyone else to pay for it. People earning something themselves instead walking around with their hand out all the time.

Define where and define "very little effort". If I was to go cap in hand to the banks to borrow the money required to now purchase the house I have lived in for eighteen years, they would die laughing as they kicked me out their marbled edifices. Exactly how many years should someone have to save for the most modest dwelling within an hours' commute of where they work?

Your concern is noted.

 

[exceladdict]

Define where and define "very little effort". If I was to go cap in hand to the banks to borrow the money required to now purchase the house I have lived in for eighteen years, they would die laughing as they kicked me out their marbled edifices. Exactly how many years should someone have to save for the most modest dwelling within an hours' commute of where they work?

Your concern is noted.

Over here in Perth, $1000 and a good credit rating will see you in a house an hour from the city.

But also half an hour from the nearest train station.

Times quoted not in good traffic, not bad.

Alternatively you can get a modest studio apartment for 250k or less, in or near the CBD. But you need 20% or a guarantor.

Generationally, I think the issue is a mix of sights set too high and instant gratification meaning money goes to contiki, not savings. (I am a member of that generation so can tease it fairly).

 

[Moody]

Over here in Perth, $1000 and a good credit rating will see you in a house an hour from the city.

Seriously? $1000 ?? What's the catch because I will buy 100 of those and negative gear myself to retirement???!!!

Generationally, I think the issue is a mix of sights set too high and instant gratification meaning money goes to contiki, not savings. (I am a member of that generation so can tease it fairly).

So how long did it take you to save the deposit on your first home?

 

[exceladdict]

Seriously? $1000 ?? What's the catch because I will buy 100 of those and negative gear myself to retirement???!!!



So how long did it take you to save the deposit on your first home?

In short, it's one of those first home buyer things: http://www.nowliving.com.au/ (re, the $1000 question).

Mrs excel and I used money saved from when we started working our first jobs at 14 right through to when we bought (a small percentage of) our own very small place. Not through one of those $1000 places, I might add. But that's another story.

But I agree, the 20% deposit is what holds most of them off. Even with the first home buyers grant and shared equity loans through keystart, or else LMI is a killer.

I maintain that expectation is key though. We set our sights low, so can afford a mortgage on a very small place.

 

[JohnK]

The Australian Dream is to own a home, not own 50 homes with negative gearing.

Negative gearing did not inflate property prices.

~10-15 years ago they were buying small blocks in Earlwood for ~$1,000,000 with old Federation or Californian Bungalows dwellings and the next day they knocked them down to build modenr mansions. This type of entry into the property market helped push property prices up.

A 2 story duplex style house in Belmore recently sold for ~$950,000 on a half block of land. Not an investment house. Other properties in the area are selling for between $1,200,000 and $2,000,000. These prices are ridiculously expensive for that area.

This was not as a result of people like me spending ~$113,000 on their first apartment. My brother spend $104,000 on his first apartment. We started off small and entered the property market.

A company owned and operating in Shanghai entering the Australian property market as one of the biggest builders of new apartment buildings in Sydney and selling exclusively in Shanghai is what has been killing Australia. Money laundering on a grand scale is what is killing Australia but we sit back and blame it in on negative gearing because we can't stop money laundering.

We don't need foreign investment here.

 

[cove]

There may be a quite few thousand fraudulent loan applications with the Big 4 banks from foreign purchasers that may need to be resold in 2016-2017.

 

[samh004]

I don't pretend to understand negative gearing and economics. But surely if the naysayers are concerned that individuals will take advantage to own 50 homes with negative gearing, couldn't the government just limit the process to one home, anything after that you're on your own?

 

[whatmeworry]

Columnist John Birmingham would love like to thank us all helping lower his tax bill whilst he was negative gearing.

Thanks for paying for it, because that's what you did while it was negatively geared. What you didn't do was increase the stock of housing for first-time buyers or add to the country's productive capacity. You just helped me lower my tax bill for a while.

It's doubtful negative gearing will remain a standout issue in the election. Our attention spans are too short to maintain that sort of focus. And that's a pity because it's an issue which wraps up a lot of what should be in contention over the coming weeks.
Most people do not enjoy the direct benefits of negative gearing, just as most people do not have the option of parking their money in the Cayman Islands or some dodgy Irish post office box to avoid paying tax.

Read more: Federal election 2016: Thanks for paying for my house, loser
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[cove]

Negative gearing is based on the expectation that prices will rise and the tax losses from interest and other costs reduce a taxpayers taxable income. Then the capital gain on the sale is concessionally taxed.
Right now in Perth if you held 10 of these you could find yourself with deepening losses as buyers are getting set at lower prices most months. If you get out of Perth some results would be far worse.

 

[JohnK]

I don't pretend to understand negative gearing and economics. But surely if the naysayers are concerned that individuals will take advantage to own 50 homes with negative gearing, couldn't the government just limit the process to one home, anything after that you're on your own?

It's a complex argument and those against negative gearing are using the most complex and unlikely scenarios to put their point across.

Simply put negative gearing works quite well. It allows people such as myself to save for their retirement and not be a burden relying on government handouts in their retirement.

My biggest worry right now if a certain party comes into power is losing the majority of my profit to capital gain. There goes my retirement plans.

 

[moa999]

Negative gearing is based on the expectation that prices will rise and the tax losses from interest and other costs reduce a taxpayers taxable income. Then the capital gain on the sale is concessionally taxed.
Right now in Perth if you held 10 of these you could find yourself with deepening losses as buyers are getting set at lower prices most months. If you get out of Perth some results would be far worse.

Exactly - even a reduction in expectation that house prices will rise will wipe out negative gearing.

No point making a loss if there is no chance of a capital gain, let alone risk of a loss

Would also mean smart negative gearing investors would sell out to put in positive investments leading to price falls and a bit of a virtuous downward spiral.

 

[andye]

It's a complex argument and those against negative gearing are using the most complex and unlikely scenarios to put their point across.

Simply put negative gearing works quite well. It allows people such as myself to save for their retirement and not be a burden relying on government handouts in their retirement.

My biggest worry right now if a certain party comes into power is losing the majority of my profit to capital gain. There goes my retirement plans.

I was under the impression that the CGT on existing properties (and other investments) were grandfathered so your retirement seems safe

As said, negative gearing is not deducting expenses (including mortgage interest), it is deducting expenses as losses against non-investment income. As you became positively geared, if the proposed Labour system were in place when you bought, you would have been able to deduct any 'excess' losses from the early years

The fact that the difference between the ability to deduct expenses and negative gearing is not fully understood by all does not bode well for Labour

 

[cove]

JohnK we have been selling off property every couple of years and paying the capital gains tax. You can choose to do that any time provided you can face the taxes generated from the capital gain.
Get advice from someone reliable as the tax could be 24.5% if you have a big win.
If you wait a new Government could double that for you.

 

[dajop]

If you wait a new Government could double that for you.

Although for someone with long term property holdings, if the government returned to indexation of cost base method, then it may not double. For example someone on top rate of tax selling a property bought for $300K in 2000, selling it for $1m now, would pay 32.6% under indexation method vs discount method of 24.5% - not the full 49%.

 

[JohnK]

I was under the impression that the CGT on existing properties (and other investments) were grandfathered so your retirement seems safe

The whole debate right now is that Labour's proposed changes are not clear and not clear that existing arrangements are grandfathered.

Anything more than 24.5% capital gain is totally unacceptable. My retirement in a few years time is not negotiable.

I will just borrow some more money to get by the next 2-3 years and then retire and start selling the properties yearly to take advantage of the reduced tax rate.

 

[Moody]

The whole debate right now is that Labour's proposed changes are not clear and not clear that existing arrangements are grandfathered.

Anything more than 24.5% capital gain is totally unacceptable. My retirement in a few years time is not negotiable.

I will just borrow some more money to get by the next 2-3 years and then retire and start selling the properties yearly to take advantage of the reduced tax rate.

To simplify what someone said before .... what have you produced to gain this benefit? Where do you think the money comes from? Are you willing to cut funds to schools and hospitals to fund your negative gearing arrangements?

As long as you understand the full picture, then who is to say your choices are wrong ... they just have consequences.

 

[JohnK]

To simplify what someone said before .... what have you produced to gain this benefit? Where do you think the money comes from? Are you willing to cut funds to schools and hospitals to fund your negative gearing arrangements?

As long as you understand the full picture, then who is to say your choices are wrong ... they just have consequences.

LOL. Trying to make me feel guilty? Who uses that type of propaganda? Doesn't work on me. I sleep quite easy at nights. Actually not sleeping that well as I don't want to pay any tax. I don't owe any tax.

 

[whatmeworry]

LOL. Trying to make me feel guilty? Who uses that tyoe of propaganda? Doesn't work on me. I sleep quite easy at nights. Actually not sleeping that well as I don't want to pay any tax. I don't owe any tax.

Good luck when you have your next medical emergency and your hospital can't provide you a good service.

 

[JohnK]

Good luck when you have your next medical emergency and your hospital can't provide you a good service.

Because I didn't pay all the profit on my investment as a capital gain tax? LOL again.

 

[JohnM]

LOL. Trying to make me feel guilty? Who uses that tyoe of propaganda? Doesn't work on me. I sleep quite easy at nights. Actually not sleeping that well as I don't want to pay any tax. I don't owe any tax.

John, are you saying that you don't want to pay any tax at all, ever​?