Society/Culture Australian Property Prices to Crash?

[Kwality]

The comparison to the stock market is invalid - assume rational investors and then compare the costs of entry and re-entry into the Property market vs buying/selling shares.

Investing your own money is a skill we are rarely borne with. Yesterdays winners may not win today.
Building a shopping centre is not like buying a collectable car/picture, or shares.

How far in was Gina Rhinehart before Roy Hill stopped costing $millions into $billions, breakeven/pay back time went on, on ... one day she had more in her pocket than she started with, up steps the ATO.

 

[Kwality]

Works in theory until the person who's paying 59$ originally employs a good accountant, and takes advantage of tax write-offs and your argument has no applicability in current day Australia.

Good accountants can only deal with the facts & if its after the event, they are limited by what the facts are. Consult the experts beforehand, you dont go to a GP for brain surgery, same applies to your books/tax.

 

[Royal Flush]

This is gibberish.

If I buy a property for $900k and sell it for $1.2m, I've realised a $300k capital gain. I pay zero tax on that gain. Whether I put the net proceeds into another property, invest in shares/crypto, or run it through the pokies, it is irrelevant - I have made a capital gain from that transaction.

Contrast this with the tax on my productive output, which actively benefits the economy, where I can be taxed as high as 47c in every dollar earned.

This is the same argument Warren Buffett made when he complained about his effective tax rate (18%), mainly from capital gains, being significantly lower than his own secretary’s effective tax rate (32%) on her salary that she derived from her productive hard work.

I'm no ideologue - I am just presenting the facts.

No, that's not correct.
You argued your CG exempt.

Meaning it's your principal place of residence.

You said you were stamp duty exempt . On the way in.

Meaning you were an eligible first home buyer.

You choose to sell your house and make a 30%

What you do with that money is up to you.
You no longer have a house, so I'm not sure where your gonna live.

You decided to spend it else where , that's your stupid problem.

Now your holding no housing stock.

And your renting , if there are enough rentals on the market you should be able to get a decent house for rent.
If there is a shortage of houses because investors decided to not invest, then you are up for a lot of rent.


If your house was your investment (which you have made clear is your principal),
You would have paid stamp duty when buying..
And when you sold , would pay 50k CG assuming your at the 30% tax bracket, plus agent fees , plus ECT.

What exactly is your point?




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[Suspense]

No, that's not correct.
You argued your CG exempt.

Meaning it's your principal place of residence.

You said you were stamp duty exempt . On the way in.

Meaning you were an eligible first home buyer.

You choose to sell your house and make a 30%

What you do with that money is up to you.
You no longer have a house, so I'm not sure where your gonna live.

You decided to spend it else where , that's your stupid problem.

Now your holding no housing stock.

And your renting , if there are enough rentals on the market you should be able to get a decent house for rent.
If there is a shortage of houses because investors decided to not invest, then you are up for a lot of rent.


If your house was your investment (which you have made clear is your principal),
You would have paid stamp duty when buying..
And when you sold , would pay 50k CG assuming your at the 30% tax bracket, plus agent fees , plus ECT.

What exactly is your point?

The point is very clear. The popularity of Property as an investment vehicle, is due, in part, to preferential tax treatment compared to ordinary income. The differences in how we tax capital gain vs ordinary income reduces vertical equity as it provides preferential tax treatment to those with existing access to capital.

NATSEM data shows 73% of capital gains discounts go to the top 10% of households by income levels. It's a few years old now, but as of 2014, the Australia Institute identified that asset inequality was at least 14 times worse than income inequality in Australia. The top 20 percent have five times more income than the bottom 20 percent - but hold 71 times more wealth.

The CGT Discount and CGT Exemptions such as Main Residence have also been shown to drive house prices higher - see the Gratten Institute report - as you yourself have identified that if I sell my property (earning a tax-free capital gain), I need to buy back in at inflated prices - so the property market is reflecting a wealth of untaxed gains (as well as concessionally taxed gains on investment properties).

I agree with you that Property is a great investment, independent of any preferential tax treatment (NG, CG Discount etc.) - I don't know why you refuse to acknowledge the fact that this preferential tax treatment exists (and, in part, holds some blame for increasing property values).

 

[Deliverance]

Because some people are just out for themselves, which is fine. But at least own it.

 

[Taylor]

What are you on about? All I said was that you cannot compare volatility in the share market to property ownership - as the costs of entry and exit are higher in property than they are in share ownership.

You seriously think that if the 50% CGT concession was removed that people would be day-trading property - incurring legals, stamp duty, advertising, etc. with each trade?

I don't think day trading will happen because of that month long settlement, but I do think there will be less incentive to hold onto property that starts to drop in price so they will be dumped more and create more volatility.

I expect there to be more markets open up around them too once volatility enters the picture with people seeking to capitalise on the fluctuations.

 

[Royal Flush]

The point is very clear. The popularity of Property as an investment vehicle, is due, in part, to preferential tax treatment compared to ordinary income. The differences in how we tax capital gain vs ordinary income reduces vertical equity as it provides preferential tax treatment to those with existing access to capital.

NATSEM data shows 73% of capital gains discounts go to the top 10% of households by income levels. It's a few years old now, but as of 2014, the Australia Institute identified that asset inequality was at least 14 times worse than income inequality in Australia. The top 20 percent have five times more income than the bottom 20 percent - but hold 71 times more wealth.

The CGT Discount and CGT Exemptions such as Main Residence have also been shown to drive house prices higher - see the Gratten Institute report - as you yourself have identified that if I sell my property (earning a tax-free capital gain), I need to buy back in at inflated prices - so the property market is reflecting a wealth of untaxed gains (as well as concessionally taxed gains on investment properties).

I agree with you that Property is a great investment, independent of any preferential tax treatment (NG, CG Discount etc.) - I don't know why you refuse to acknowledge the fact that this preferential tax treatment exists (and, in part, holds some blame for increasing property values).

So what exactly are you suggesting?

The normal Australian starts of with a unit for example.
They then get married and pregnant.
They sell , then re enter the market to purchase a 3 bedroom house.
Years later their family gets bigger,
They sell and buy again a 4 bedroom house.
Then most likely another upgrade or down grade depending on circumstances.
What your saying, that on-top of stamp duty , agents fees , legal ect.
They should be taxed each time of their capital gains?

What exactly are you trying to achieve in this circumstance?

We are not even talking about taxing the investor.
Just the ordinary Australians , that you seemingly appear to be "protecting" from wealth inequality?


Let's look at the stock investor.
The CG is exactly the same as it is with investing in housing.
Which is fair.
Short term trader no 50% discount.
Hold for a year and get the 50% discount.

People risk capital in the pursuit of profits.
People loose when they invest, and nobody gives them s**t. Ah well bad luck I guess.
As soon as you make a profit they're ready to take a cut and share it with the community.
Ok that's life that's how it is.

The last thing any government wants to do is disensentivise investment into the stock market.
As the markets hold trillions of dollars in Aussie super and the companies are mainly Australian.
Do we want to weaken these companies?

How would it be logical to rid the housing market of CG discount and not the stock market.

Super also has its investment in real-estate too, they'd be negligent not to diversify when investing our citizens capital.

I'm really not sure what your suggesting ?







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[CatFan79]

Because some people are just out for themselves, which is fine. But at least own it.

Everyone is out for themselves, it's the so called 'socially minded' people who pretend otherwise... and it's usually because they'd benefit from some form of wealth redistribution.

 

[Deliverance]

Everyone is out for themselves, it's the so called 'socially minded' people who pretend otherwise... and it's usually because they'd benefit from some form of wealth redistribution.

You need to expand your social circle.

 

[HirdsTheWord]

Because some people are just out for themselves, which is fine. But at least own it.

id suggest its far more than some. You only need to read a few pages of this thread to realise how selfish people are. It really is a game of the haves vs the have nots.

In hindsight Housing should never have been a vehicle for people to make investment money off, It should have only ever been allowed to limit people to a single Owner Occupier. The government allowed this and now they have made a machine they cant switch off, it will now get worse and worse now that people are invested into it. its now a cultural thing.

There are plenty of ways people can make money investments in life, something as critical as housing should NEVER have been it.

 

[Royal Flush]

id suggest its far more than some. You only need to read a few pages of this thread to realise how selfish people are. It really is a game of the haves vs the have nots.

In hindsight Housing should never have been a vehicle for people to make investment money off. The government allowed this and now they have made a machine they cant switch off, it will now get worse and worse now that people are invested into it. its now a cultural thing.

There are plenty of ways people can make money investments in life, something as critical as housing should NEVER have been it.

All around the world people buy land and property to invest.

Yet somehow Australia is unique?

Why don't you sell your 3 million in real-estate and give out some deposits to first home seekers .
Because it's the right thing to do.

Show us in actions how you are so generous and caring

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[HirdsTheWord]

All around the world people buy land and property to invest.

Yet somehow Australia is unique?

Why don't you sell your 3 million in real-estate and give out some deposits to first home seekers .
Because it's the right thing to do.

Show us in actions how you are so generous and caring

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I never said people needed to make cash donations to others.

I simply said id be happy to lose my investment tax advantages if it means that first home buyers, or others who are owner occupiers had a better chance of buying a house. I can easily just invest elsewhere as I would be less inclined to remain investing in property. I am not a selfish arsehole like most of the others in this thread who already own property.

I am very fortunate in life. I have worked hard and reaped the benefits.

Younger people who work just as hard as me are being ****ed over, simply because they weren't born at the same time as me.

I can see the forest for the trees, you seemingly just see it for the $, cause you don't give a s**t about anyone else.

 

[Taylor]

The most successful store of wealth for Australians is the home they live in and you're right that we need people getting into their own as much as possible.

 

[Stan_Darsh72]

The most successful store of wealth for Australians is the home they live in and you're right that we need people getting into their own as much as possible.

With Casual jobs now being how most people are employed we as a nation need either that to change to full time careers ASAP or prices to crash to 1970s levels.

 

[HirdsTheWord]

The most successful store of wealth for Australians is the home they live in and you're right that we need people getting into their own as much as possible.

I agree, hence why I believe investors should be put under much heavier financial burdens to own multiple homes.

 

[Taylor]

With Casual jobs now being how most people are employed we as a nation need either that to change to full time careers ASAP or prices to crash to 1970s levels.

Or perhaps we need flexible mortgages with longer terms that will allow you to pay more or less each week/fortnight/month/quarter depending on your ability in that period to pay for you home.

Assuming the people who are seeking the mortgage are capable of servicing the loan.

I've floated my solution for housing but I'll expand on it. The State Government should get investors from China who want to put a few apartments in Australia on their resume for a wife to fund the building of bulk high quality apartments near existing services that can only be rented out by local residents - the state government can handle the rent payments and maintenance costs - the Chinese investors just front the capital to build the housing in the first place - they get full benefit of owning them for the purpose they would anywhere else, being to show their wealth for prospective partners and Australians get the full utility of them, being to house people for cheaper rates and reduce the cost of renting broadly by reducing demand for rentals thereby reducing the value of owning the rental to begin with and sitting on the value of property in general.

 

[Frank Grimes]

In hindsight Housing should never have been a vehicle for people to make investment money off, It should have only ever been allowed to limit people to a single Owner Occupier.

I agree the housing affordability is getting out of control. However, no matter how affordable housing could be, rental properties will still be needed.

Even if houses manage to get to 3-4 median wage levels, there will still be people in society who can't even afford that.

There are also people who due to life circumstances don't need a house not for the long term.

 

[Royal Flush]

I never said people needed to make cash donations to others.

I simply said id be happy to lose my investment tax advantages if it means that first home buyers, or others who are owner occupiers had a better chance of buying a house. I can easily just invest elsewhere as I would be less inclined to remain investing in property. I am not a selfish arsehole like most of the others in this thread who already own property.

I am very fortunate in life. I have worked hard and reaped the benefits.

Younger people who work just as hard as me are being f’ed over, simply because they weren't born at the same time as me.

I can see the forest for the trees, you seemingly just see it for the $, cause you don't give a sh*t about anyone else.

You like to go around in circles.

Cut the tax benefits.
And what is likely next, is that housing is still unaffordable.

Do you have any ability in coming up in discussing solutions that actually may work.

Rather then banging on over and over how greedy people are because they only invest because of tax concessions.

You just frustratingly distract from meaningful dialogue.



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[HirdsTheWord]

I agree the housing affordability is getting out of control. However, no matter how affordable housing could be, rental properties will still be needed.

Even if houses manage to get to 3-4 median wage levels, there will still be people in society who can't even afford that.

There are also people who due to life circumstances don't need a house not for the long term.

I don't disagree, there will always be people who own multiple properties who simply can just afford to do it.

But removing things like negative gearing will just make a lot of investors (like myself) baulk at investing in property as it makes it less financially viable.

 

[HirdsTheWord]

You like to go around in circles.

Cut the tax benefits.
And what is likely next, is that housing is still unaffordable.

Do you have any ability in coming up in discussing solutions that actually may work.

Rather then banging on over and over how greedy people are because they only invest because of tax concessions.

You just frustratingly distract from meaningful dialogue.



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Removing Tax Benefits makes Investors less likely to invest. Also might make existing investors sell their Investment properties as they cannot sustain them without these benefits.

Investors less likely to invest means less competition for owner occupier's

Less competition means lower house prices at auction.

Am I suggesting that by putting more financial burden on Investors is going to turn the market around instantly? No Nothing Will. Prices will Generally ALWAYS go up. But it certainly will help stem drastic housing prices increases year on year and allow more first home buyers into the market.

I also think the RBA should be increasing Interest Rates. Immediately. There is clearly enough confidence in the economy to warrant this. Nothing shows confidence by paying an additional 20% on a house!

 

[Bombermania]

The point is very clear. The popularity of Property as an investment vehicle, is due, in part, to preferential tax treatment compared to ordinary income. The differences in how we tax capital gain vs ordinary income reduces vertical equity as it provides preferential tax treatment to those with existing access to capital.

NATSEM data shows 73% of capital gains discounts go to the top 10% of households by income levels. It's a few years old now, but as of 2014, the Australia Institute identified that asset inequality was at least 14 times worse than income inequality in Australia. The top 20 percent have five times more income than the bottom 20 percent - but hold 71 times more wealth.

The CGT Discount and CGT Exemptions such as Main Residence have also been shown to drive house prices higher - see the Gratten Institute report - as you yourself have identified that if I sell my property (earning a tax-free capital gain), I need to buy back in at inflated prices - so the property market is reflecting a wealth of untaxed gains (as well as concessionally taxed gains on investment properties).

I agree with you that Property is a great investment, independent of any preferential tax treatment (NG, CG Discount etc.) - I don't know why you refuse to acknowledge the fact that this preferential tax treatment exists (and, in part, holds some blame for increasing property values).

That's questionable research from the Grattan Institute because at the time of selling a house the price is set by local market factors not whether the possible owner will be required to pay taxes on their investment or not because its a family home.

 

[Royal Flush]

Removing Tax Benefits makes Investors less likely to invest. Also might make existing investors sell their Investment properties as they cannot sustain them without these benefits.

Investors less likely to invest means less competition for owner occupier's

Less competition means lower house prices at auction.

Am I suggesting that by putting more financial burden on Investors is going to turn the market around instantly? No Nothing Will. Prices will Generally ALWAYS go up. But it certainly will help stem housing prices increases year on year and allow more first home buyers into the market.

I also think the RBA should be increasing Interest Rates. Immediately. There is clearly enough confidence in the economy to warrant this. Nothing shows confidence by paying an additional 20% on a house!

This is where , you assume what you do , is what investors do.
This is also why I question your integrity and debate in good faith.

Only a stupid investor invests for tax deductions.

And so many uneducated posters think positively geared properties , don't exist.

You know the ones who's rent offsets losses, meaning they pay tax on their return.




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[HirdsTheWord]

This is where , you assume what you do , is what investors do.
This is also why I question your integrity and debate in good faith.

Only a stupid investor invests for tax deductions.

And so many uneducated posters think positively geared properties , don't exist.

You know the ones who's rent offsets losses, meaning they pay tax on their return.




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You have a habit of not reading what people actually Post. The sooner you actually read what people type and get less emotional about the subject, you will be much better served in this argument. if you want to keep doing this fine, but id appreciate you stop quoting me as honestly its time wasting.

I didn't say investors only invest for tax deductions.

I didn't say positively geared properties don't exist.

All I said was that by removing negative gearing you will remove a portion of investors from the market especially at certain price levels, which will limit competition with people who are buying as an owner occupier. Many people only invest in property, because negative gearing allows for it to be commercially viable for them to do it.

There will always be people who are rich enough to buy property without having to factor in tax benefits, this is not the majority of people.

I also clearly said that this needs to be coupled in along with increased interest rates. Removing NG is not the only solution.

 

[FRUMPY]

I don't disagree, there will always be people who own multiple properties who simply can just afford to do it.

But removing things like negative gearing will just make a lot of investors (like myself) baulk at investing in property as it makes it less financially viable.

Why dont you just sell your investment properties to people who cant afford it at an affordable price? Or are you just looking out for yourself? (as you are calling everyone else an arsehole for doing so)

Hypocrite 101 if ever ive seen it

 

[HirdsTheWord]

Why dont you just sell your investment properties to people who cant afford it at an affordable price? Or are you just looking out for yourself? (as you are calling everyone else an arsehole for doing so)

Hypocrite 101 if ever ive seen it

I am Hypocrite for something I didn't even say? go pull the other one mate. When did I tell anyone in this thread they should sell their property below market rate. Go on, link it.

I said id be happy to lose tax benefits on my housing investments, in order to stem overall Growth. Helping others doesn't mean giving them cash handouts. Its about slowing down exponential growth of housing so others can afford to partake, and not always play catch up with something they can keep up with.