Society/Culture Australian Property Prices to Crash?

[Kwality]

There has to be investors in the market to create enough properties for rentals, but it seems the scales have tipped way too much in favour of investors who are looking at the capital growth and using negative gearing as a means to enter and stay and increase their market presence

A reason for the introduction of a Capital Gains Tax in 1999.

 

[Kwality]

Interesting. So realistically I’m not sure where to go from here, I’ll keep looking and hope something pops up that I’m comfortable with. If I’d known the demand for the house I offered top dollar for was so strong, I would’ve gone higher. I thought going top dollar with quick settlement and pre-approval I was good to go. Demand. Went to a few opens yesterday arvo and one was a virtually a dump (but in a good area hence the $), the other was the same, and was essentially a land value purchase.

Rude question but what is your aim? Live in it, rent it out? Any subject clauses on your offer?

 

[Drummond]

Rude question but what is your aim? Live in it, rent it out? Any subject clauses on your offer?

Not rude at all! To live for 5-10 years, then probably rent it out. No clauses on offer. I’m not after a forever home, just something liveable, preferably a good area and one that will increase in value over time.

 

[Kwality]

Any personal investment. It's creating to two tier society. People with multiple properties and people without any.

Its (property) been that way for a long time, nothing new. The CGT grabs those in for a quick buck.

Plenty of those with two properties go without to build for the future. Plenty of people prefer to live for the now, get to their mid 30s & ask 'what about me'.

So you would simply tax investment income on the gross income, i.e the taxpayers highest rate. But SMSF is ok, a company structure is ok, same for trusts, all get deductions just not individuals (the lawyers & accountants would love you. Poor company you know.)
Is a family business, Mum & Dad fruit shop a personal investment, or only if it doesnt employ people? You operate an on line business from home, with a garage full of stock, no deductions?

Dont you like aspiration to give your kids what you didnt have?

 

[hamohawk1]

Feel like the government is sitting too much on the fence, if not helping the property bubble expand. They either should tighten things up and get proper about property affordability, or get rid of all regulation and have a free for all.

 

[CheapCharlie]

A reason for the introduction of a Capital Gains Tax in 1999.

Yeah, people negative gear in an expectation that the capital gain will offset their prior loss. There is a decent enough discount on the capital gains once owned for over 12 months.

 

[Deliverance]

Its (property) been that way for a long time, nothing new. The CGT grabs those in for a quick buck.

Plenty of those with two properties go without to build for the future. Plenty of people prefer to live for the now, get to their mid 30s & ask 'what about me'.

So you would simply tax investment income on the gross income, i.e the taxpayers highest rate. But SMSF is ok, a company structure is ok, same for trusts, all get deductions just not individuals (the lawyers & accountants would love you. Poor company you know.)
Is a family business, Mum & Dad fruit shop a personal investment, or only if it doesnt employ people? You operate an on line business from home, with a garage full of stock, no deductions?

Dont you like aspiration to give your kids what you didnt have?

The SMSF and company structure is beyond my accounting knowledge, although it seems companies in this country get it too easy with tax. Happy for it to be scrapped completely for personal residential investments. Beyond greed, there's no need for anyone to own two houses.
As for my kids. I want to give them an education and have them be positive, productive members of society. I don't want them thinking making money at the expense of others is a noble pursuit.

 

[hamohawk1]

Yeah, people negative gear in an expectation that the capital gain will offset their prior loss. There is a decent enough discount on the capital gains once owned for over 12 months.

Doesn't NG only work if you earn 'decent' money e.g. 80k +. For the average retail 35-50k worker it doesnt help benefit them? Could be wrong.

 

[CheapCharlie]

Doesn't NG only work if you earn 'decent' money e.g. 80k +. For the average retail 35-50k worker it doesnt help benefit them? Could be wrong.

The current NG system only benefits those with money?

 

[hamohawk1]

The current NG system only benefits those with money?

Well it assists/ serves as a tax break, so the more you earn the better it is for an investor.

 

[Kwality]

Feel like the government is sitting too much on the fence, if not helping the property bubble expand. They either should tighten things up and get proper about property affordability, or get rid of all regulation and have a free for all.

Such as? Get into property development ....

 

[hamohawk1]

Such as? Get into property development ....

Let everyone have their 'chance' to get into the property market, and force it to burst... which i truly feel would've already occurred if not for government assistance/ policy.

 

[Kwality]

Yeah, people negative gear in an expectation that the capital gain will offset their prior loss. There is a decent enough discount on the capital gains once owned for over 12 months.

You negatively gear for tax relief in the short term - thats the crux of most of the criticism.

 

[Kwality]

Let everyone have their 'chance' to get into the property market, and force it to burst... which i truly feel would've already occurred if not for government assistance/ policy.

Agree with the sentiment, but 'you're dreaming' if you think there is an easy solution - it involves going without.

 

[Kwality]

The SMSF and company structure is beyond my accounting knowledge, although it seems companies in this country get it too easy with tax. Happy for it to be scrapped completely for personal residential investments. Beyond greed, there's no need for anyone to own two houses.
As for my kids. I want to give them an education and have them be positive, productive members of society. I don't want them thinking making money at the expense of others is a noble pursuit.

Believe me what you are suggesting would simply increase compliance costs to avoid income tax.

Sad you cant see any social benefit in owning a rental property.
Hard to start your own business without capital & again that involves going without.

 

[Poor Form]

Let everyone have their 'chance' to get into the property market, and force it to burst... which i truly feel would've already occurred if not for government assistance/ policy.

Better still would never have been a bubble without government policy.

 

[Kwality]

Better still would never have been a bubble without government policy.

You've got the answer, how did you get there.
We're no where near the price increases of the inflation era of 70s under Whitlam. Lonnng bubble.

 

[Snake_Baker]

Do folks believe the property market is an actual free market?

No "bubble is going to burst" because the entire economy would go with it.

 

[Cuzz09]

Most people dont think that much about it I reckon.

Set out to just buy a house and go from there.

Its when richies get lots of houses and do tricks with the rules

 

[Ned_Flanders]

Do folks believe the property market is an actual free market?

No "bubble is going to burst" because the entire economy would go with it.

Yes it is. There are far too many buyer and far too many sellers for it to be controlled by govt or any cartel.

And history has shown property prices can collapse, and they does bring a nasty depression (or recession if you're lucky)

 

[CheapCharlie]

Let everyone have their 'chance' to get into the property market, and force it to burst... which i truly feel would've already occurred if not for government assistance/ policy.

Policies are geared towards keeping property prices high.

Is there even an affordable 5+ year rental option that people can take these days?

 

[Snake_Baker]

Yes it is. There are far too many buyer and far too many sellers for it to be controlled by govt or any cartel.

And history has shown property prices can collapse, and they does bring a nasty depression (or recession if you're lucky)

How many of the top 10 stocks in this country are banks? Imagine what a 10% default rate would do to them?

I hope the market does collapse, because I reckon it's the biggest racket in the country. Housing is ridiculously overpriced.

 

[Ned_Flanders]

How many of the top 10 stocks in this country are banks? Imagine what a 10% default rate would do to them?

I hope the market does collapse, because I reckon it's the biggest racket in the country. Housing is ridiculously overpriced.

you mean the same as what happened in the USA with the GFC (where it peaked at 11.54%)?

worst case scenario is govt takeover of 1-2 banks

our banks are all in the "too big to fail" box, so they will never be allowed to collapse

 

[Snake_Baker]

our banks are all in the "too big to fail" box, so they will never be allowed to collapse

That's kinda my point.

The housing market will always be artificially propped up.

 

[Ned_Flanders]

That's kinda my point.

The housing market will always be artificially propped up.

you're confusing two things

banks maintaining loans is very different to banks issuing new ones

after the GFC getting a loan in the USA became a lot harder, and that suppressed demand for new houses (and therefore prices in specific markets)

if the banks got hit here, the price would be a similar restriction on new credit, but you have to look who gets that. first homeowner and lower end of the market would be crushed. the rest would be okay, slower, but okay (as people are using existing equity to get loans)

the exception is apartments, these are driven by demand from migrants, so its immigration that will dictate their demand