What's your prediction on the Australian Dollar?

[drsmithy]

That would be your opinion of course - I wonder how many people in this forum feel that their view that their house is probably the biggest and most secure investment they will ever make is fundamentally wrong?

It depends whether you're talking about "investment" in the sense of something that costs a lot of money, or "investment" in the sense of making money (without doing anything to earn it).

If the former, I have no problem. But it's the latter I'm talking about.

 

[Cruiser Elite]

It depends whether you're talking about "investment" in the sense of something that costs a lot of money, or "investment" in the sense of making money (without doing anything to earn it).

You've lost me here good dr - enough of this - it is NYE after all - time to pop one.

 

[Deleted member 29185]

You can't have housing appreciating dramatically while remaining affordable for young (or less well off older) people.

And the term investing in "bricks and mortar" came from where?

Why is a material investment evil to you? Dot coms, I can sort of understand, but a solid investment in our own homes is not foolish and is certainly not "I'm all right thanks Jack". I resent the suggestion we're adversely affecting the young, by wisely investing in an asset which will eventually help the young (well, my young). There's another term you may well have heard....."swings and roundabouts"....just because over the past decade housing prices have risen, it doesn't necessarily follow that will remain constant ad infinitum . When the change happens, will you preach about those young and less well off older people who selfishly refused to invest in the bubble and caused the burst? Investment is not a foregone conclusion.

 

[drsmithy]

And the term investing in "bricks and mortar" came from where?

Real estate speculation spruikers ?

Why is a material investment evil to you?

It's not.

Dot coms, I can sort of understand, but a solid investment in our own homes is not foolish and is certainly not "I'm all right thanks Jack".

How do you "invest in your own home" ? What do you do to it to generate a return or increase its value or improve its productivity ?

I resent the suggestion we're adversely affecting the young, by wisely investing in an asset which will eventually help the young (well, my young).

And what about all the young whose parents aren't wealthy enough, or didn't get in early enough, to be able to give them a house ? Why should this home ownership only be for the wealthy and the lucky ?

There's another term you may well have heard....."swings and roundabouts"....just because over the past decade housing prices have risen, it doesn't necessarily follow that will remain constant ad infinitum .

The last decade ? That's only when the true craziness set in (well more like 15 years - since Costello's disastrous CGT changes). House prices have been rising unaffordably since the '80s, spurred on by bank deregulation and loose credit.

When the change happens, will you preach about those young and less well off older people who selfishly refused to invest in the bubble and caused the burst? Investment is not a foregone conclusion.

I don't even know what that means.

It is beyond ridiculous that people think a fundamental staple of living like shelter being outrageously expensive is a good thing. We should be horrified at high house prices and doing everything we can to make it as cheap as possible. They represent a catastrophic drag on the economic and an absurdly unproductive malinvestment.

 

[Deleted member 29185]

Real estate speculation spruikers?

No. Realists who see value in investing in a certain quality of life.

It's not.

Oh.......how insidious of you!

How do you "invest in your own home"? What do you do to it to generate a return or increase its value or improve its productivity?

Really? You want me to genuinely answer that or do you have an ulterior motive for this question?

And what about all the young whose parents aren't wealthy enough, or didn't get in early enough, to be able to give them a house?

When Mum and Dad bought their first house I think they said it cost them 1500 pound. When I bought my first house it cost considerable more. No one said life was easy and to have something of value requires hard work. No one (especially not me) suggested the kids get it for nothing. I have not, nor will my kids if I kick on for as long as I hope! Inflation, like it or not, means prices rise. This comment of your is a cop out. Nothing more, nothing less. Not every one wins every bet and if you saw my house, you'd possibly realise my goal is still a work in progress. I guess we could try the "yours is mine and mine is worthless" attitude that saw communism fail dismally.

House prices have been rising unaffordably since the '80s

That's a reactive way of looking at change. I have a 4th year apprentice student I was just chatting with the other day and he tells me he's just bought a house and is working on it and has sublet a room to help pay the mortgage. Where there is a will, there is a way. No will and we hear defeatist excuses like what you wrote above.

It is beyond ridiculous that people think a fundamental staple of living like shelter being outrageously expensive is a good thing.

You know, when I was a late teen a Big Mac meal was $1.05....now (if I chose to poison myself) it would be around, what....$8 or $9? A house back then was about $60k or $70k and now it's about $600k to $700k (Gold Coast modest nice home). There's absolutely nothing scientific about the analogy, but it seems to me to be somewhat relative. My 21 YO daughter is saving for a house but chose to get another ear piecing for $40..........sounds expensive to me but it's not my life to live, but hers. Perhaps you and I live in the past......or enjoy whining about things we cannot change, a bit too much!

Regardless, people can choose to invest in bricks and mortar....or not. Their choice and if they cannot, well.....homeownership has always been beyond the reach of some people. That's not a new situation, nor is it something I can change by boycotting home ownership if that's what you're suggesting.

 

[whatmeworry]

Interesting discussion on baby boomers on Australian reddit.
Hard times loom for too many boomers : australia

 

[drsmithy]

No. Realists who see value in investing in a certain quality of life.

Right. So you're using "investing" here in the context of putting a lot of money into something, rather than trying to profit monetarily.

Really? You want me to genuinely answer that or do you have an ulterior motive for this question?

Yes.

When Mum and Dad bought their first house I think they said it cost them 1500 pound. When I bought my first house it cost considerable more.

Absolute numbers are meaningless. You need to represent it as a proportion of income to have a relevant comparison and accounting for inflation (*real* inflation).

That's a reactive way of looking at change.

No, it's an analytical way of looking at facts.

I have a 4th year apprentice student I was just chatting with the other day and he tells me he's just bought a house and is working on it and has sublet a room to help pay the mortgage. Where there is a will, there is a way. No will and we hear defeatist excuses like what you wrote above.

Did your parents have to sublet a room to help pay the mortgage ? Did you ? Why do you think he should ? Is he buying a particularly extravagant house ? Is he earning a particularly low income ? Or are both just "average" ?

Perhaps you and I live in the past......or enjoy whining about things we cannot change, a bit too much!

The point is we CAN change it. There's no reason housing needs to be expensive. It is the result of deliberate and conscious policy.

Regardless, people can choose to invest in bricks and mortar....or not. Their choice and if they cannot, well.....homeownership has always been beyond the reach of some people. That's not a new situation, nor is it something I can change by boycotting home ownership if that's what you're suggesting.

I'm suggesting people should be as unhappy with unaffordable housing as they would be with unaffordable food.

 

[Deleted member 29185]

Never the twain shall meet. I'll continue to invest (yes it is the correct word, monetary issues do not own the rights) and I'll continue to watch it appreciate as well. By all means, you can continue to attempt to change it by whining about affordability for the down trodden older generation who failed to plan for the future, invested unwisely or who wasted their prime earning years smoking weed and painting flowers on beat up Combis whilst declaring materialism to be wrong. Kids of today have similar chances to succeed....and similar chances to fail. Such is life.

 

[drsmithy]

By all means, you can continue to attempt to change it by whining about affordability for the down trodden older generation who failed to plan for the future, invested unwisely or who wasted their prime earning years smoking weed and painting flowers on beat up Combis whilst declaring materialism to be wrong.

What ? That is almost the complete opposite of what I actually said.

It would be wrong to say I don't care about older generations, but by and large they (at least from the baby boomers onwards) have been gifted with life opportunities that were unprecedented in history and will not likely been seen again for several generations (depending on how the next decade plays out). There's always going to be losers, but my focus is on the youth of today, not the oldies.

Kids of today have similar chances to succeed....and similar chances to fail. Such is life.

No, they don't. That's the point. They have to spend 2-5x as much *in real terms* on shelter compared to their parents and grandparents, while dealing with reduced opportunities (via less accessible education and less social support), substantially higher taxes in the future (to pay for the largesse of previous generations - or even more reduced social services and opportunities), skyrocketing unemployment (due to poor Government policy in the short term and robotics and AI in the long term) and crushing lifelong debt.

On average, the future looks pretty good for those over about 50 and pretty grim for those under about 30.

 

[Deleted member 29185]

No, they don't. That's the point.

That may be your point......it's not the point. I disagree with your summation. As I said, never the twain shall meet.

 

[drross]

On average, the future looks pretty good for those over about 50 and pretty grim for those under about 30.

what a weird generalisation. i'm over 50 and i'd have to say the future looks fantastic and i know all 4 of my daughters are under 30 and they are travelling the world and saving for their 'homes' while working in rural/outback australia. good paying jobs where their skills are appreciated.

 

[amaroo]

what a weird generalisation.

LOL lowest common denominator ... nothing new, every generation has them

 

[drsmithy]

what a weird generalisation.

It is, of course, a statement about averages.

If you're over 50 you're largely set because the whole system is tilted in your favour, as it has been for most of your life, and almost certainly will be for the rest of it.

If you're under 30, you're going to be saddled with the cost of paying for the over 50s in an extremely poor economic environment.

If you're in the middle it can go either way, depending to some degree on how close you are to 30 and 50, how lucky you are, and what your skills are.

i'm over 50 and i'd have to say the future looks fantastic and i know all 4 of my daughters are under 30 and they are travelling the world and saving for their 'homes' while working in rural/outback australia. good paying jobs where their skills are appreciated.

Good on them. They're lucky to have work at all in rural Australia given its youth unemployment rate, let alone what must be relatively high paying work to fund living, world travel, and saving tens of thousands a year to buy a house.

But a substantial proportion of young people are not, and will not be, as fortunate.

It'd be nice to see society put more thought into their plight than "stop whining".

 

[Mogul]

It is, of course, a statement about averages.

If you're over 50 you're largely set because the whole system is tilted in your favour, as it has been for most of your life, and almost certainly will be for the rest of it.

If you're under 30, you're going to be saddled with the cost of paying for the over 50s in an extremely poor economic environment.

If you're in the middle it can go either way, depending to some degree on how close you are to 30 and 50, how lucky you are, and what your skills are.



Good on them. They're lucky to have work at all in rural Australia given its youth unemployment rate, let alone what must be relatively high paying work to fund living, world travel, and saving tens of thousands a year to buy a house.

But a substantial proportion of young people are not, and will not be, as fortunate.

It'd be nice to see society put more thought into their plight than "stop whining".

People make their own luck.

 

[drsmithy]

People make their own luck.

Yeah, of course. The child of a happily married multi-millionaire couple has just as much "luck" as the child of a single mother on welfare.

 

[moa999]

People make their own luck.

But the average doesn't

 

[Cheatah]

drsmithy is correct. It is not good for society long term if a large proportion of the young are unable to capitalize on the economic success of a country. Its not just about house prices, but education/job opportunities/high value high wage jobs/super tax breaks/capital gains breaks etc. For a variety of reasons the Baby Boomer generation was exceptionally lucky regarding these points, and they took full advantage of it.

Nonetheless, Australia has some hard decisions to make about its future. The incomes from the once in a generation mining boom has enabled these hard decisions to be postponed. No more.

For example the tax system in Australia is incredibly inefficient and in future there will likely be changes to things such as negative gearing/super tax breaks. In some ways the younger generation will benefit from this, in others they wont. Just when the current under 30s will be in a position to start saving more for their retirement the super tax breaks are likely to be made less generous. Just when the current under 30s have enough capital to start a property "investment" portfolio the negative gearing tax breaks are likely to be made less generous.

A lot of baby boomers have a significant amount of wealth for retirement, mainly in property, however being retired for 25/35 years with increasing medical costs isn't cheap & a lot of them will need to reduce their lifestyle expectations, particularly in their later years. The younger generations will not be a position to pay enough tax to support all these baby boomers and their medical bills so they will need to sell assets to live. Given generally how rich and fortunate Australia is this shouldn't be a huge problem, but anyway you look at it the boomers certainly have generally been more "lucky" than generations born subsequently. It unlikely such a large number of those currently under 30 will have such retirement savings in place in 30 years time, given the economic headwinds most of them currently face in their prime earning years.

Australia of course isn't alone in this regard, but we have some pretty unique incentives/distortions here in addition to vastly higher expectations - the current age pension in the UK is £113 per week(200 AUD) -the Australian age pension is much more generous, even taking into account higher cost of living. That is not sustainable.

my 2 cents!

drb
(who is over 30!)

 

[Deleted member 29185]

drsmithy is correct.

What you are speaking of is far different to what drsmithy was stating. You are speaking of the economy and economic issues as a whole whereas drsmithy was targeting all those nasty people who are striving to own their family home, or choose to invest in rental accommodation. The whole economic issue has been discussed at length casually and fervently everywhere from the public bar down at the local to parliament and there are many different opinions.....yours and mine are just two. I don't object to a well rounded discussion on the economy...the good, bad and the ugly......I do however dislike people batting on about one issue in isolation with absolute rubbish statements. I work with many young people (apprentices between 15 and 20 generally) and most are pretty much exactly as my generation was at their age.....happy, funny, smart, optimistic. Many have already bought a house and many others are saving for one (whilst living at home). That's yet another advantage of home ownership as an investment......it's also a great form of saving. Hard to remove a few bricks from the wall to sell to raise cash for a holiday. The same generally can't be said for shares (as an example). I also work in a third world country where basic human needs are often just a pipe dream. That tends to bring the "woe is us" whining brigade shapely into focus as the negative influence they actually are. Our employment rates are good, our wages are good, our conditions are good, our social services are good, our opportunities in life are great.....as Mogul said above, people make their own luck.....especially in Australia. As a wider discussion point, I'm a believer in the total opposite of what most strive for. I think the world needs to embark on an era of sustained negative growth as flapping over the cost of a house is piddly cough compared to what we are doing to the environment. We cannot continue to grow and continue to be sustainable with just one planet.

 

[cove]

The Aussie dollar rallied into 0.82s for a short while so that may have been a buy.

 

[cove]

In our Australian economy no one person can fix the problems. We do have a huge black economy that is estimated at close to 20% of the whole so GST reform could capture a bit of that if it gets done properly.