Australian Housing Affordability Discussion

[junbugging]

These policies have created enormous inter-generational inequality. Those policies that benefited you disadvantaged other people. They have denied hundreds of thousands of Australians the same opportunities that you enjoyed.

Well put. But the response is likely to be along the lines of "Me, me, me!"

 

[andye]

The entitlement of older generations is quite astounding.

Think of it in the following terms. Your current wealth is a product of (a) your labour, (b) the risks you took and (c) the regulatory environment in which you inputted your labour and took those risks.

Your wealth is, therefore, not entirely a product of what you did. In fact, an enormous amount of your wealth is due to the government. If the government didn't create a complex legal system to protect your wealth, you would have less money. If the federal government didn't put in place taxation structures to make property an attractive asset class, you would have less money. If the state government didn't put in place land zoning and planning policies to restrict the supply of new properties, you would have made less money.

These policies have created enormous inter-generational inequality. Those policies that benefited you disadvantaged other people. They have denied hundreds of thousands of Australians the same opportunities that you enjoyed. Need proof? Read this article: The housing affordability trap • Inside Story

It is, therefore, entirely fair for those policies to be changed to redress some of that inequality.

The problem with changing policies to apply retrospectively is that it makes all future investors anxious that their profits will be grabbed once the risk period is over. This is likely to make everyone poorer overall (it is not a zero-sum game).

However, Governments should of course be able to change the rules for future investments.

Personally I would like to see policies that encourage as many people to own their own house as possible (as said before, this is one of the best social security measures for old age which will be our biggest economic challenge over the coming decades). I would also favour seeing investment in a new business attracting a lower (or at least equal) marginal rate than investing in property. If negative gearing is to continue, it should be for a limited time per property and not for the lifetime of a mortgage and only available for a limited number of properties per investor-investing to make an ongoing loss is speculating on capital gains

 

[drron]

The entitlement of older generations is quite astounding.

Think of it in the following terms. Your current wealth is a product of (a) your labour, (b) the risks you took and (c) the regulatory environment in which you inputted your labour and took those risks.

Your wealth is, therefore, not entirely a product of what you did. In fact, an enormous amount of your wealth is due to the government. If the government didn't create a complex legal system to protect your wealth, you would have less money. If the federal government didn't put in place taxation structures to make property an attractive asset class, you would have less money. If the state government didn't put in place land zoning and planning policies to restrict the supply of new properties, you would have made less money.

These policies have created enormous inter-generational inequality. Those policies that benefited you disadvantaged other people. They have denied hundreds of thousands of Australians the same opportunities that you enjoyed. Need proof? Read this article: The housing affordability trap • Inside Story

It is, therefore, entirely fair for those policies to be changed to redress some of that inequality.

There is an inconvenient graph in that story.

The fall in home ownership levels really began in 1965.Now in 1965 in the words of redgum-
[video=youtube_share;Urtiyp-G6jY]https://youtu.be/Urtiyp-G6jY[/video]

So as the first of the baby boomers in 1965 being only 19 it is a bit rich to put the blame entirely on us.
Then politically it is true that Keating did try to get rid of negative gearing in 1985.However what is conveniently forgotten is that he was really responsible for it's introduction some 6 months earlier with changes to the Income Tax Act(1936) where losses from real estate investment before 1983 could not be offset against income from personal exertion but could be rolled over to future years if a profit was then made.
Of course people tried to push the envelope and claim the losses against other income eg share trading as one example.The Deputy Commissioner of Taxation in Victoria in 1983 disallowed this but also ruled you could not roll over your losses which eventually led to the 1985 changes by Keating inadvertenrly unleashing the monster.

Then look at this graph from the same article you quoted-

The percentage of 25-34 year olds owning property first started to dive in 1961 but has been consistently heading south since 1981 the year that I turned 35 in December.The only period where this graph levels out was 1996-2006.Oh dear wasn't Mr.Howard PM then?

 

[JohnK]

The entitlement of older generations is quite astounding.

Think of it in the following terms. Your current wealth is a product of (a) your labour, (b) the risks you took and (c) the regulatory environment in which you inputted your labour and took those risks.

You couldn't be further from the truth.

What I should have done is squandered my money on more overseas travel, expensive clothes, expensive restaurants, expensive cars and continued to live at home. And then expected the government to look after me at 65.

But no that's not what I did. I bought property at 17.3% interest and worked my cough off to pay it off in 5 years. Then bought another and another as I was making all the sacrifices. But then the passion disappeared. Shame but I can't change that now.

Now you are telling me I should hand over all my profit because I was lucky? Who dreams up this rubbish? Go and pick on someone who has money.

And I am being nice.

 

[whatmeworry]

Analysis showing how much negative gearing costs taxpayers who don't.

Taxpayers who negatively gear cost the bulk of other taxpayers an average of $310 per year, a new analysis of Tax Office data shows.
The re-analysis of the 2013-14 tax data, the latest available, shows that each negative gearer claimed an average loss of $8722 per year. Seven out of 10 had income before deductions in the top or second-top tax bracket. The average amount of tax saved by each of the 1.2 million negative gearers was $2900 per year.

Spread over the remaining 11.7 million taxpayers, the average cost was $310 each. The total, $3.646 billion, is about as much as the government spent on assistance to jobseekers and vocational training, and twice what it spent on assistance to indigenous Australians.

Read more: Election 2016: Revealed. What negative gearing costs other taxpayers
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Meanwhile the real estate agents of Australia are about to astro turf a 'grass roots' campaign against labour’s negative gearing cuts.

If real estate agents wanted to scare Bill Shorten into waving the white flag on his planned crackdown of tax breaks for property investors, the Labor leader is not shaking in his boots.
Some of the nation’s biggest real estate firms are launching a grassroots campaign to attack Labor’s plans to curb negative gearing, warning families, renters and homeowners the policy is an “economy killer”.

The Negative Gearing Industry Alliance, a group of about 20 major real estate franchises as well as their state and national peak bodies, will campaign to their extensive client base.
“Everyone, at some point in there life, interacts with a real estate. Our members … have all built up enormous databases and … all those avenues are being utilised,” Real Estate Institute of Australia president Neville Sanders said.

http://www.domain.com.au/news/negat...es-down-real-estate-industry-20160513-gounza/

 

[GarrettM]

Analysis showing how much negative gearing costs taxpayers who don't.



Meanwhile the real estate agents of Australia are about to astro turf a 'grass roots' campaign against labour’s negative gearing cuts.


http://www.domain.com.au/news/negat...es-down-real-estate-industry-20160513-gounza/

$310/taxpayer isn't really a lot in the overall scheme of things. Although I would prefer my $310 to go in another direction.
But that's the thing about taxes. They're not really mine once they're paid, and I have no great say over what happens to them.

If I did, I'd be be putting a line through the ridiculous F35 procurement program, and re-directing that $35 billion into any number of projects that might return some value to me.

I'm not against NG rules being changed. It won't affect me. But I do agree any changes shouldn't punish those who have worked under the old system up till now.
They played the game by the rules in place at the time.

 

[drron]

Analysis showing how much negative gearing costs taxpayers who don't.



Meanwhile the real estate agents of Australia are about to astro turf a 'grass roots' campaign against labour’s negative gearing cuts.



http://www.domain.com.au/news/negat...es-down-real-estate-industry-20160513-gounza/

What a load of rubbish.You are following the letter of the law so you are not costing other taxpayers a cent.

 

[whatmeworry]

$310/taxpayer isn't really a lot in the overall scheme of things. Although I would prefer my $310 to go in another direction.
But that's the thing about taxes. They're not really mine once they're paid, and I have no great say over what happens to them.

If I did, I'd be be putting a line through the ridiculous F35 procurement program, and re-directing that $35 billion into any number of projects that might return some value to me.

I'm not against NG rules being changed. It won't affect me. But I do agree any changes shouldn't punish those who have worked under the old system up till now.
They played the game by the rules in place at the time.

How I read it, it costs the taxpayers who don't negative gear $310 a year.

I totally agree about the jsf. Probably better off waiting till a plane was proven before committing.

 

[drron]

How I read it, it costs the taxpayers who don't negative gear $310 a year.

I totally agree about the jsf. Probably better off waiting till a plane was proven before committing.

Once again it doesn't cost other taxpayers anything.It is legal.You are just playing the politics of envy and class.
I have already stated I support the removal of negative gearing of housing but because it directs investment into non productive areas of the economy.
I also chuckle with the ALP saying getting rid of negative gearing will make housing more affordable but wont lead to a fall in house prices.How can housing be more affordable if prices don't fall?

 

[whatmeworry]

Once again it doesn't cost other taxpayers anything.It is legal.You are just playing the politics of envy and class.
I have already stated I support the removal of negative gearing of housing but because it directs investment into non productive areas of the economy.
I also chuckle with the ALP saying getting rid of negative gearing will make housing more affordable but wont lead to a fall in house prices.How can housing be more affordable if prices don't fall?

Oh the yes the richest class warning about class warfare.

I was simply stating plain facts, your the one that has gone on a rant.

 

[drron]

No I am just telling you that your argument should be on the facts not trying to turn everything into-"soak the rich".Stating that people using a legal tax deduction is costing other taxpayers money is an untruth,not a fact.Do you have any tax deductions?On your reasoning you are costing other taxpayers money.
10% of the population it is estimated engage in negative gearing.10% of the population are not rich.
I certainly don't fall into any definition of rich.
My travel is because at the age of 69 I am still working 5-6 months of the year to fund it.

 

[JohnK]

What a load of rubbish.You are following the letter of the law so you are not costing other taxpayers a cent.

I have given up trying to work out how me paying ~$10,000 additional PAYG tax on my investments is costing anyone any money.

In fact I should be applauded for paying more than my fair share of tax not how much profit my investments have made.

Some people should seriously hide their political obsessions. The same thing occurred with the carbon tax. They do not belong in public.

 

[Moody]

Once again it doesn't cost other taxpayers anything.It is legal.You are just playing the politics of envy and class.

Bottom of the harbour schemes used to be legal too ..... then those "politics of envy and class" scumbags decided it was criminal tax avoidance. Boo hoo!

I have already stated I support the removal of negative gearing of housing but because it directs investment into non productive areas of the economy.
I also chuckle with the ALP saying getting rid of negative gearing will make housing more affordable but wont lead to a fall in house prices.How can housing be more affordable if prices don't fall?

By not increasing by 10-20% PA as they have under "buy your 1-year-old a house now" Trunchbull. Where have you been?

 

[cove]

I bought one house for $6,300 and the other for $6,000 in Bayswater WA and they are still standing.That was back around 1972 when banks were hard on giving you a loan. Had been in the full time workforce for about 3 years. Values changed about 100 times since then over almost 45 years.
We now have our children facing the first time ever not being as well off as their post war baby boomer parents (unless they inherit some loot).
We were concerned about our jobs and occupations and we worked longer and unpaid hours to hold our employed positions.
Now trying to pay off a half million dollar home loan (non tax deductible) can only be possible if interest rates stay subdued. It may require parents help if they have not retired.

 

[dajop]

I have already stated I support the removal of negative gearing of housing but because it directs investment into non productive areas of the economy.

Agree with this remark completely. Getting into either envy or entitlement type arguments distracts from this primary reason why it should be removed.

 

[cove]

I think of today's near city real estate prices as being like telephone numbers in size. 2016 prices cannot be justified as we move closer to deflation which is worse than inflation. Wage increases are dramatically slowing so that will not help pay off large loans. Let's hope we get a long period of low interest rates to stop a crunch.

 

[whatmeworry]

friendlyjordies posted this thought on facebook the other day and has gone viral.



Also a video they did on negative gearing.

[video=youtube;CL7M5RIXjY8]https://www.youtube.com/watch?v=CL7M5RIXjY8[/video]

 

[drron]

Bottom of the harbour schemes used to be legal too ..... then those "politics of envy and class" scumbags decided it was criminal tax avoidance. Boo hoo!



By not increasing by 10-20% PA as they have under "buy your 1-year-old a house now" Trunchbull. Where have you been?

My,My Moody you have excelled yourself getting everything wrong in your reply.
Bottom of the Harbour schemes were never legal.Detected by the ATO in Perth in 1973 with legal advice that the promoters could be charged with defrauding of the Commonwealth.Case referred to the Deputy Crown Solicitor Perth who in polite terms were incompetent at best.Never properly investigated and didn't report back until 1979 that there was insufficient evidence.
So then John Howard introduced legislation in 1980 making it illegal under the tax act.

Subsequent to that in 1982 the Costigan Royal Commission found that the Painters and Dockers Union were involved and the papers invariably ended up in a bottom drawer in the DCS offices in Perth.
As well it was discovered that the wife of one of the senior case offices ran an escort service plus was Company Secretary of many of the sunken companies.
So when that was discovered John Howard introduced legislation specifically making it illegal beginning 1/1/1972.
As well bottom of the harbour schemes were for companies not individuals like negative gearing.

So your first statement as I said is wrong in every respect.

As to your second statement the Reserve Bank wonders where you have been.From 1990-2005 houses rose 7.2% pa and from 2005-2015 by 5% pa.Adjusted for inflation it is 4.5% and 2.5% respectively.

 

[cove]

London has the same lack of affordability as Sydney and Melbourne. There is a plan to build 50,000 new homes as there is a shortage at the moment.

 

[Moindardt]

My,My Moody you have excelled yourself getting everything wrong in your reply.
Bottom of the Harbour schemes were never legal.Detected by the ATO in Perth in 1973 with legal advice that the promoters could be charged with defrauding of the Commonwealth.Case referred to the Deputy Crown Solicitor Perth who in polite terms were incompetent at best.Never properly investigated and didn't report back until 1979 that there was insufficient evidence.
So then John Howard introduced legislation in 1980 making it illegal under the tax act.

Subsequent to that in 1982 the Costigan Royal Commission found that the Painters and Dockers Union were involved and the papers invariably ended up in a bottom drawer in the DCS offices in Perth.
As well it was discovered that the wife of one of the senior case offices ran an escort service plus was Company Secretary of many of the sunken companies.
So when that was discovered John Howard introduced legislation specifically making it illegal beginning 1/1/1972.
As well bottom of the harbour schemes were for companies not individuals like negative gearing.

So your first statement as I said is wrong in every respect.

As to your second statement the Reserve Bank wonders where you have been.From 1990-2005 houses rose 7.2% pa and from 2005-2015 by 5% pa.Adjusted for inflation it is 4.5% and 2.5% respectively.

I am actually really enjoying the mass of factual data in this thread, some I had always wondered about and never gotten the full story eg bottom of the harbour. It's a shame there are some people who really could learn from it but choose not to. As the saying goes, never let the truth get in the way of a good story.