Select to expand quoteTonyAbbott said..
"No. Look, if housing were unaffordable in Sydney, no one would be buying it,"
In my inner NW Sydney suburb where I have been for 10 years, there didn't used to be many oriental looking people until Japswood and Eastwoo, the rest being mostly Aussie or European (Greeks, Italians) some Azeri and Persians. Now the orientals who drive MASSIVE SUV and take 1hr to park, have displaced those and extend from Lane Cove all the way to Parramatta/Hornsby... I'm guessing they bought with hot Chinese money.
foil hat on - Last night I noticed Chan 7 have started playing the old episodes of ,selling properties Australia, from the GFC days. Are Sydney folk being conditioned for things to come? 
It's (finally) coming Haircut:
www.smh.com.au/business/companies/the-8b-exodus-sydney-home-owners-are-selling-up-and-queensland-is-the-big-winner-20171006-gyvdco.html
I'd be buying now.
I'm going to put my money where my mouth is and do the same.
Select to expand quoteevlPanda said..
I'd be buying now.
www.seabreeze.com.au/forums/General-Discussion/Chat/Syd-vs-Bris-work-wind
Not sydney related, but interesting changes in Vic
www.abc.net.au/news/2017-10-08/victorian-tenants-allowed-pets-in-rental-properties/9027000
From the Finder website:
"What is Australia's personal debt?
As of 2016, Australia's total personal debt is around $2 trillion and the average Australian household owes $250,000. This debt can be broken down into the following categories.
* Mortgages. Australian Bureau of Statistics (ABS) data analysed in the AMP.NATSEM report showed that mortgages for owner-occupier housing makes up 56.3% of all personal debt in Australia.
* Investor debt. Debt associated with investments such as rental properties or shares makes up 36.5% of our household debt.
* Personal debt. Personal loans make up 3.1% of Australian household debt and are commonly used to buy cars, other consumer items or to pay for holidays.
* Student debt. Debt from student loans, particularly Higher Education Loan Program (HELP) loans (formerly known as HECS), makes up 2.1% of Australian household debt. The AMP.NATSEM report says this figure reflects the time it takes to pay off these loans, with repayments typically deducted from your salary when you reach the threshold ($54,869 for the 2016-17 tax year).
* Credit card debt. While there are often reports on the sheer volume of credit card debt in Australia, it only makes up 1.9% of all household debt."
It appears a significant amount of debt is associated with existing owner-occupier and rental properties which produce nothing (other than escalating property prices). I thought that only allowing negative gearing for new builds could be a step in to right direction as it should potentially reduce both total Mortgages and Investor debt as the market rebalanced to a less speculative based model.
www.dailymail.co.uk/news/article-4971428/Prices-Sydney-s-wealthy-inner-suburbs-plunge-6.html
Property boom is over: Prices in Sydney's wealthy inner suburbs plunge by 6% - with Chinese buyers now snapping up one of every four properties
I reckon we should start changing the suburbs names to attract more chinese.
- Dongzhimen
- Fuqing
- Nanping
- Moading
The simple fix is:
1. Get rid of negative gearing on residential property.
2. Make citizenship a pre-requisite for owning residential property.
And whole they're at it, fix the stamp duty bracket creep debacle....an ordinary family shouldn't need to save for years to be able to afford to move to a home similar in value to what they have now.
Select to expand quoteHarrow said..
The simple fix is:
1. Get rid of negative gearing on residential property.
2. Make citizenship a pre-requisite for owning residential property.
And whole they're at it, fix the stamp duty bracket creep debacle....an ordinary family shouldn't need to save for years to be able to afford to move to a home similar in value to what they have now.
I agree with you on No. 2.
No. 1. is more tricky. It's a basic principle that the costs of seeking an investment return should be tax deductible in the same way that the profits from that investment are taxed.
The asymmetry comes about because the costs (read interest payments) are tax deductible at your full marginal tax rate whereas the (assumed) capital gain is taxed at half your marginal tax rate.
The tricky part re: citizenship would mean that all Permanent Residents would be forced to rent. That's a very major disincentive when trying to attract skilled labour into the workforce for the benefit of the overall economy.
How about this for a solution... Incomes and expenses are siloed so property investment costs can only be offset against property investment income, share investment costs can only be offset against share investment income, etc. That would remove the inequality where high earners in high tax brackets get a greater benefit from negatively-geared investments.
Select to expand quotealbers said..
From the Finder website:
"What is Australia's personal debt?
As of 2016, Australia's total personal debt is around $2 trillion and the average Australian household owes $250,000. This debt can be broken down into the following categories.
* Mortgages. Australian Bureau of Statistics (ABS) data analysed in the AMP.NATSEM report showed that mortgages for owner-occupier housing makes up 56.3% of all personal debt in Australia.
* Investor debt. Debt associated with investments such as rental properties or shares makes up 36.5% of our household debt.
* Personal debt. Personal loans make up 3.1% of Australian household debt and are commonly used to buy cars, other consumer items or to pay for holidays.
* Student debt. Debt from student loans, particularly Higher Education Loan Program (HELP) loans (formerly known as HECS), makes up 2.1% of Australian household debt. The AMP.NATSEM report says this figure reflects the time it takes to pay off these loans, with repayments typically deducted from your salary when you reach the threshold ($54,869 for the 2016-17 tax year).
* Credit card debt. While there are often reports on the sheer volume of credit card debt in Australia, it only makes up 1.9% of all household debt."
It appears a significant amount of debt is associated with existing owner-occupier and rental properties which produce nothing (other than escalating property prices). I thought that only allowing negative gearing for new builds could be a step in to right direction as it should potentially reduce both total Mortgages and Investor debt as the market rebalanced to a less speculative based model.
Not entirely correct.
A sizeable portion of owner occupier debt would be for house refurbishment and extensions. e.g.. new bathrooms, kitchens and decks. There are 10,000's of tradesmen and their suppliers who rely solely on this market. As does the likes of Bunnings.
Also remember that 80-90% of unit projects bought by investors are sold off the plan. In other words if they did get the finance to buy the unit the unit project wouldn't happen. This is more jobs, jobs, jobs. Same goes for townhouses. Close to half of sales of the massive land subdivisions taken on by LendLease, Stockland and the likes are sold to investors. This supports the whole project house building economy and their suppliers like Clarendon homes, Simmonds homes, etc.
Take away negative gearing and the impact on the development and construction industry will be pretty significant.
Indeed it would, but not if NG was only removed from established property, as planned by the Labor opposition.
Removing NG from established property is sound economic policy and would discourage benignly this incessant pursuit of profit from established residential property at the expense of everyday Australians.
Select to expand quoteAdriano said..
Indeed it would, but not if NG was only removed from established property, as planned by the Labor opposition.
Removing NG from established property is sound economic policy and would discourage benignly this incessant pursuit of profit from established residential property at the expense of everyday Australians.
yep as long as you could still get deductions for capital upgrades and maintenance.
to be honest Im surprised it hasn't been done this way
Negative gearing allows you to offset losses from your property investment against your salary, bringing down your taxable income.
Who invests in a loss making asset? Someone who is expecting a big capital gain.And those capital gains on property also have further tax advantages.
Negative gearing encourages speculative investment in property.
At this stage, I think any tinkering in NG will affect the market. If you limit NG to new properties only, then the first owner gets the NG benefits, but the 2nd buyer cannot get the NG benefits. The 2nd buyer will want to get the property with good rental returns. What do you think that will do to the sale price when the 1st owner tries to sell? Smart investors will project forward and see this will reduce their expected capital gain, and so will likely be reluctant to buy a new development that will make them a loss, even if they get NG benefit.
Keating tried to reform NG in a sensible way that would encourage investment in construction by replacing it with depreciation of the building. So investors would not get as easy a ride on appreciation in the site's value, but would be able to slowly write off any building work.
Needless to say, the Real Estate industry shot that reform down.
The current Labor promise to preserve NG for current owners, but restrict it to new buildings in the future is a bit loopy. Far better to just phase it out at a steady rate over a few years to minimise sudden changes in the market, while also switching over to the depreciation model.
Negative gearing is only one piece of the puzzle. It's not that simple.
Easy access to cash at historically low interest rates is the and will always be the main driver. Access to easy credit.
And im not talking about the mum and dad investors. Look at the bigger picture guys, the big land owners and developers..the big movers and shakers in this space.
And the lever that will burst the Ponzi bubble.
But we've got a way to go yet...it will easy off in the next few years slightly...might even look like it's all gonna go pop in 2020.... but hold on....the real gains believe it or not will be coming after that.
But watch land price averages....when it starts to dip, you've got a year or two at most before the market imploded (the stock market that is).
People have been saying the bubble is going to burst "in the next year or 2" for years but the only places the bubble really bursts are those places where no one wants to, or can, live anymore. In simple terms, there's plenty of supply and no demand.
Historically in Australia that's been country towns relying heavily on mining and not nice Sydney/Perth/Melbourne suburbs etc with a higher standard of living.
In the next 30 years the population in Australia is forecast to increase by 14million people. Space in the cities will probably be non existant so they'll have to find housing just outside the cities right? Build up or out but still all those 14million people need a place to live...
Nope the bubble bursts when the prices get to a place that the real economy can no longer support, then credit becomes harder to get and the squeeze begins. Followed by a reducing land price led (because most banks balance sheets are leveraged on loans for land) stock market crash. Then property really can take a hit. We didn't feel it as bad as the rest of the world in 2007 cushioned by the mining boom through a rising china (who pumped 28 trillion funny money into their own economy ..but that's a whole other story that will play out soon enough).
No boom this time around (it's very cyclical), and far more leveraged debt to fuel more than just a minor 4 year recession.
Anyhow, you'll see.
But plenty for life left in property right now, so in that respect you are right given a very simple supply and demand point of view you use.
Outside of any external influences, if rates went up 1-2% alone, the market in Sydney and Melbourne would probably be pretty much stuffed.
Select to expand quoteAdriano said..
Outside of any external influences, if rates went up 1-2% alone, the market in Sydney and Melbourne would probably be pretty much stuffed.
Imagine Japan where the interest rate has been -0.1% for almost 2 years now. That's right you now have to pay interest to the bank for looking after the money you have in your bank account. It's actually cheaper to stuff the money under your mattress!!
Select to expand quoteMr Milk said..
The current Labor promise to preserve NG for current owners, but restrict it to new buildings in the future is a bit loopy. Far better to just phase it out at a steady rate over a few years to minimise sudden changes in the market, while also switching over to the depreciation model.
That's where politics gets in the way of common sense policy. If they said they would phase it out for everyone, a lot of people would not vote for them.
if the government did nothing.... no negative gearing, no incentives, ...just kept the Fck out of the market completely ...it would sort itself out just nicely.
But they don't and ALWAYS make the situation worse.
Whatever policy / crazy idea they implement will ONLY be priced back into the price of land.
Governments need to stay the hell out of ALL marketplaces and while its at it, reduce it's size by a good 80 percent.
History will see them as they are now, as a really expensive experimental mistake.
Governments and their licenses are the ROOT cause of all market price anomalies.
But that's the game folks, just puppets in the hands of big corporate globalised business monarchs. The modern feudal lords of the world.
They don't give a flying fck about you or I.
The sooner you wake up to that fact the more sense this strange world will make.
Select to expand quoteeppo said..
Governments need to stay the hell out of ALL marketplaces and while its at it, reduce it's size by a good 80 percent.
What about natural monopolies and cosy oligopolies? Surely marketplaces are only effective in the presence of genuine competition?
Select to expand quoteeppo said..
if the government did nothing.... no negative gearing, no incentives, ...just kept the Fck out of the market completely ...it would sort itself out just nicely.
But they don't and ALWAYS make the situation worse.
Whatever policy / crazy idea they implement will ONLY be priced back into the price of land.
Governments need to stay the hell out of ALL marketplaces and while its at it, reduce it's size by a good 80 percent.
History will see them as they are now, as a really expensive experimental mistake.
Governments and their licenses are the ROOT cause of all market price anomalies.
But that's the game folks, just puppets in the hands of big corporate globalised business monarchs. The modern feudal lords of the world.
They don't give a flying fck about you or I.
The sooner you wake up to that fact the more sense this strange world will make.
Hang on Eppo...
You argue that if we withdrew Govt intervention the market would sort itself out. Presumably you mean the property market.
But you rightly said earlier that market growth (or decline) is largely been driven by access to credit. Indeed the price of properties is driven more by credit demand/supply rather than demand/supply of land/buildings.
Without APRA or any regulation on banks/lending, what would happen to the credit tap? Right now, APRA is pressuring the banks to tightening their lending, which they are.
Removal of negative gearing. So, you mean no investor or business can take their interest expenses as a deduction against their taxable profits?
Select to expand quoteCambodge said..
Removal of negative gearing. So, you mean no investor or business can take their interest expenses as a deduction against their taxable profits?
YES
In the Australian Economy biz interest expenses is peanuts in size if comparing to the size of mortgaged loans who are negatively geared probably.
If someone here has that info (how much all other business not related to real estate negatively gear) versus NG's would be good to know.
Select to expand quotenovetti said..Cambodge said..
Removal of negative gearing. So, you mean no investor or business can take their interest expenses as a deduction against their taxable profits?
YES
In the Australian Economy biz interest expenses is peanuts in size if comparing to the size of mortgaged loans who are negatively geared probably.
If someone here has that info (how much all other business not related to real estate negatively gear) versus NG's would be good to know.
Every small business startup is presumably negatively geared at the beginning?
