Australian Housing Affordability Discussion

[trippin_the_rift]

All of this affordability is solved if folks would stop paying stupid prices for housing. It's not the gov fault in any way.

Nobody is forcing you to live anywhere. Grow some balls people!

However a simple way to balance the scales would be like this:
-not a citizen? 100% gov tax on buying any property.
-not lived in the area you're buying into for the past 5 years? 30% tax on the purchase.
-own more than 2 properties in a suburb? 20% tax on new property purchases.

Free money for gov and real locals realise the benefits.

Negative gearing needs to stay otherwise people would simply push it through a company/trust. Capital gains needs to stay the same because it's already a expensive.

Problem solved. Next?

 

[straitman]

All of this affordability is solved if folks would stop paying stupid prices for housing. It's not the gov fault in any way.

Nobody is forcing you to live anywhere. Grow some balls people!

However a simple way to balance the scales would be like this:
-not a citizen? 100% gov tax on buying any property.
-not lived in the area you're buying into for the past 5 years? 30% tax on the purchase.
-own more than 2 properties in a suburb? 20% tax on new property purchases.

Free money for gov and real locals realise the benefits.

Negative gearing needs to stay otherwise people would simply push it through a company/trust. Capital gains needs to stay the same because it's already a expensive.

Problem solved. Next?

I can see a few people here not liking that answer.

 

[robd]

All of this affordability is solved if folks would stop paying stupid prices for housing. It's not the gov fault in any way.

Nobody is forcing you to live anywhere. Grow some balls people!

However a simple way to balance the scales would be like this:
-not a citizen? 100% gov tax on buying any property.
-not lived in the area you're buying into for the past 5 years? 30% tax on the purchase.
-own more than 2 properties in a suburb? 20% tax on new property purchases.

Free money for gov and real locals realise the benefits.

Negative gearing needs to stay otherwise people would simply push it through a company/trust. Capital gains needs to stay the same because it's already a expensive.

Problem solved. Next?

Some positives in that, but why would you tax someone 30% for buying outside the area that they have lived in for the past 5 years? In the case of a young couple, you would expect that they could probably not afford to purchase their first home where they are currently living/renting and would have to buy further out?

 

[footy99]

All of this affordability is solved if folks would stop paying stupid prices for housing. It's not the gov fault in any way.

Nobody is forcing you to live anywhere. Grow some balls people!

However a simple way to balance the scales would be like this:
-not a citizen? 100% gov tax on buying any property.
-not lived in the area you're buying into for the past 5 years? 30% tax on the purchase.
-own more than 2 properties in a suburb? 20% tax on new property purchases.

Free money for gov and real locals realise the benefits.

Negative gearing needs to stay otherwise people would simply push it through a company/trust. Capital gains needs to stay the same because it's already a expensive.

Problem solved. Next?

I don't agree with some of this but love the blunt, no nonsense writing style!

 

[medhead]

The attractiveness of negative gearing can be reduced while not removing it entirely. They could accrue annual losses to be claimed when selling. Not paying tax on any loss in the long run and also not reduce other income.

 

[cove]

We had the Henry Tax Review and it was ignored by the pollies at that time.

 

[OATEK]

The attractiveness of negative gearing can be reduced while not removing it entirely. They could accrue annual loses to be claimed when selling. Not pay tax on any loss in the long run and also not reduce other income.

The negative gearing debate seems to be very confused. I personally like the idea of restricting it to new properties, as you are encouraging investment in new production rather than existing stock.

I assume the key reason for deferring the losses until the sale is that you not only defer the rebate, but also pay a lower rebate given the CGT is applied at a lower rate than the annual losses against marginal tax rates. This would leave a bit more in the kitty for Govt. along the way.

Such a change should have the impact of refocussing the investment on capital gains rather than loss-making.

But then would it still be negative gearing?

 

[burmans]

All of this affordability is solved if folks would stop paying stupid prices for housing. It's not the gov fault in any way.

Nice logic, government policy which favours housing investment in housing over other investments is in no way responsible for people thinking housing is a good investment and pushing up prices. Clearly not a student of economic theory.

As for no one telling you where to live, I think you have misunderstood the difference between investors and lome-owners!

 

[medhead]

The negative gearing debate seems to be very confused. I personally like the idea of restricting it to new properties, as you are encouraging investment in new production rather than existing stock.

I assume the key reason for deferring the losses until the sale is that you not only defer the rebate, but also pay a lower rebate given the CGT is applied at a lower rate than the annual losses against marginal tax rates. This would leave a bit more in the kitty for Govt. along the way.

Such a change should have the impact of refocussing the investment on capital gains rather than loss-making.

But then would it still be negative gearing?

The main thing is it just varies the timing of claiming the loss. Making the focus change from offsetting other income to a more tangible investment goal, as you say capital appreciation or perhaps investment income. I haven't really considered the tax rate that would apply. Presumably there might be a significant capital gain which would push total income upto the top marginal rate anyway.

Really I'm thinking about how the capital depreciation allowance works. Most years when I had an operating loss it was that capital depreciation that did it. So I gained a deduction. But then I had to reduce the capital cost base resulting in a bigger CGT bill. Just makes me wonder why not defer annual losses and resolve them on capital gains? Obviously it confuses capital and operating expenses. But it might change behaviour while not denying a legitimate tax deduction.

 

[drron]

Nice logic, government policy which favours housing investment in housing over other investments is in no way responsible for people thinking housing is a good investment and pushing up prices. Clearly not a student of economic theory.

As for no one telling you where to live, I think you have misunderstood the difference between investors and lome-owners!

Though asset prices not just housing have taken off as interest rates go lower.And the Reserve Bank makes those decisions independent of Government.
As someone past retiring age it is becoming harder and harder to make a decent return on your retirement savings.No wonder a lot has been pushed into property.Though most are taking no notice of the risks and really may be hurt at some stage in the future.

The low interest rates particularly in the US and Europe are also one of the main reasons for increasing income inequality-only those who have assets benefit from increased asset prices.

 

[trippin_the_rift]

Clearly not a student of economic theory.

You can't fix a problem using the same logic that caused it.

 

[whatmeworry]

End of the day high property prices means all that money going towards our homes, isn't going into more productive assets that benefit the economy more.

Meanwhile pollies partners doing quite well investing in Canberra.

TREASURER Joe Hockey charges taxpayers $1000 a month, the equivalent of the Newstart unemployment benefit, to sleep in his wife’s $2 million Canberra home.
Mr Hockey has claimed travel allowance totalling $184,000 to stay at the home during parliamentary sittings since 1998, more than half the original sale price of $320,000.

To be fair to Hockey, many other MPs employ similar tactics, according to the Daily Telegraph, including Labor’s Anthony Albanese, Warren Snowden, Tanya Plibersek, Joel Fitzgibbon, Jim Chalmers, Mark Butler, Tony Burke and Doug Cameron.
Nevertheless, Joe Hockey’s claim that “everyone has to live within their means, whether it’s a company, whether it’s a family, whether it’s an individual, whether it’s a government” would hold more weight if politicians also agreed to take a haircut, rather than expecting ordinary Australians to bear the burden of Budget cuts.
Hockey’s goal of “ending the age of entitlement” would also hold more weight if the Government agreed to examine reform of superannuation concessions, negative gearing, and capital gains tax concessions: lurks that overwhelmingly benefit higher income earners, whilst punching huge holes in the Budget bottom line.

Joe Hockey takes his entitlement - MacroBusiness

 

[medhead]

End of the day high property prices means all that money going towards our homes, isn't going into more productive assets that benefit the economy more.

Meanwhile pollies partners doing quite well investing in Canberra.





Joe Hockey takes his entitlement - MacroBusiness

The biggest thing about that is that when I was a public servant I wasn't allowed to use my TA for private rentals, only for commercial accommodation. Seems the bosses don't lead by example.

 

[Hvr]

The biggest thing about that is that when I was a public servant I wasn't allowed to use my TA for private rentals, only for commercial accommodation. Seems the bosses don't lead by example.

The principle was that you wouldn't be out of pocket and I had to use the department credit card to pay for the hotel. There was a city limit and permission had to be received beforehand to exceed it (unless exigent circumstances existed).
If you stayed with friends and/or family then there was no allowance paid.

Nor of course were FF points allowed to be received from government funded travel. Again our political masters have their own opinion on why they should be allowed to profit from their well paid positions.

 

[wooley]

Sure I read Macro Business.
If you want to get started you could buy a bit smaller than you would like and then instal Murphy beds for more living space during the day. Having a pull down bed allows you to use the space twice in a day so your bank debt does not feel like a run away train. We use sofa beds and a brother has a Murphy bed in London.
You can also share your place to help with the mortgage payment and folks in Manhattan and London have had to do this for quite a few years.
Just because your baby boomer parents seem to have it all does not mean you should try to enter the real estate housing market at their level.
It will take a full on recession for Sydney real estate to drop and you could not say that is impossible but we had a beauty in 1991/92.

Funny you mention the sharing to help pay a mortgage...

I thought I'd try and save some rent money considering I travel so much so had a look for share houses.

I found a magnificent share house, and old 4 bedroom terrace in the Brisbane CBD, huge living areas, kitchen, ensuites, the lot...

Went to inspect, and I couldn't believe it. The downstairs living areas including kitchen had been turned into a separate apartment with 5-6 people living there.

Upstairs had 6 people living there, sharing two bathrooms with a make shift kitchen similar size to an aircraft toilet and they'd jammed so many belongings in you couldn't move.

Was an absolute travesty to do such a thing to a house like that.

Especially when charging around 250-450 per person... Would have been paying his mortgage plus making a nice profit!

I think I'll just keep renting...

 

[cove]

Yes we have 2 bedroom homes with 8 people sleeping there in Perth. It may be against council rules but it seems to happen around Australia.
My son has 2 girls in his 3 bedroom, 2 bathroom apartment so he can afford to travel as well as make progress on his mortgage.
It seems to work out ok.

 

[Pushka]

End of the day high property prices means all that money going towards our homes, isn't going into more productive assets that benefit the economy more.

That is an excellent point.

Yes we have 2 bedroom homes with 8 people sleeping there in Perth. It may be against council rules but it seems to happen around Australia.
My son has 2 girls in his 3 bedroom, 2 bathroom apartment so he can afford to travel as well as make progress on his mortgage.
It seems to work out ok.

Councils in WA actually have a rule about that? Good grief, lets save our taxes and get rid of council interference.

 

[whatmeworry]

I think the problem with overcrowding is to prevent slum lords and potential fire hazards. Recent fire at the Docklands, saw multiple people crammed into small apartments with cladding from China that was not up to Australian standards and very flammable.

 

[medhead]

All councils have rules about maximum occupancy. It's a major safety issue. I'm surprised anyone can think it's interference to have a rule preventing 8 people from living in a 2 bedroom dwelling. Just this morning I was reading about the inquest into the death of a girl who jumped 5 stories from a burning apartment in Sydney. Specifically that the 3 bedroom apartment had been converted to 4 bedrooms without approval. Two girls are trapped in their apartment by a fire and jump out the window. One dies one in a wheelchair. Why were they trapped, because someone added a wall that blocked the second escape route, to make another bedroom???

If we want to talk about interference, this government held a royal commission into why the prime minister of Australia didn't take personal responsibility for implementation of WHS laws by private businesses. That's nanny state 101. Does any business owner here think they need to report whs compliance to the PM?

 

[Pushka]

All councils have rules about maximum occupancy. It's a major safety issue. I'm surprised anyone can think it's interference to have a rule preventing 8 people from living in a 2 bedroom dwelling. Just this morning I was reading about the inquest into the death of a girl who jumped 5 stories from a burning apartment in Sydney. Specifically that the 3 bedroom apartment had been converted to 4 bedrooms without approval. Two girls are trapped in their apartment by a fire and jump out the window. One dies one in a wheelchair. Why were they trapped, because someone added a wall that blocked the second escape route, to make another bedroom???

<snip out irrelevant comment not related to housing>

Because clearly this:

Yes we have 2 bedroom homes with 8 people sleeping there in Perth. It may be against council rules but it seems to happen around Australia.
My son has 2 girls in his 3 bedroom, 2 bathroom apartment so he can afford to travel as well as make progress on his mortgage.
It seems to work out ok.

Seems to be illegal according to cove. So harmless situations get caught up in the mire.

I have never heard of any of this type of legislation in South Australia. Happy to be proven wrong with evidence.