Society/Culture Australian Property Prices to Crash?

[Royal Flush]

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.

I disagree strongly that people invest in property for taxation reductions . There is ample evidence that supports this.




Anyone that doesn't rely on meme politics as their source of knowledge , knows this.

Not you specifically, but all the posters that keep spruiking NG over inflates the housing market, fail to understand the concept of positively geared

They wouldn't subscribe to this Ludacris notion .

It's lost on them, that most boomers that have investment properties are making an income from it now which is taxed.

Abolishing NG would only affect gen Y and Millennials that have got their foot in the door and building equity.

Take it away, and they will still invest. Just without the tax breaks that older generations have had.



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[yodellinhank]

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.

The last few pages? Welcome to planet earth, i hope you enjoy your stay. Just a tip - while you're here people are going to try to take advantage of you.

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.

It creates jobs and funds people's retirement. I guess those people can be unemployed and live off a pension, not sure how that helps society?

 

[Bombermania]

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.

If all tax deductions were removed tomorrow you might get a short term drop in property prices but over the median and longer term property prices will still go higher because the market can afford those higher prices.

The only way to slow exponential growth is to increase supply or for people to accept they can't afford a certain location and if enough people did that then price growth in that area would slow or fall.

For all the talk about housing affordability it has never been easier for people to get a mortgage and by that i am not talking about the deposit but the ease of getting a mortgage compared to 50 or 100 years ago when many working class people were reduced to renting and its this change that has led to today's higher prices.

 

[Simon_Nesbit]

Banks learned they could make more money through (over-)leveraging risk. The intervention of 'American' corporate leaders and ideals from the late 70s changed the finance market in Australia for ever.

Pre-empting, I believe in taxing accumulated wealth over generated income to create more efficient economies.

If you want "fairness" in the market, and to rediscover the great Aussie Dream...

Remove LVR restriction for owner-occupied property (allow 100% LVR borrowing with proof of savings or rental history). (Increase Demand = Inflationary)
Remove LMI premiums (replace with monthly, or simply higher interest rates for higher risks). (Increase Demand = Inflationary)
Remove Stamp Duty for property. (replace with dramatically increased annual land-tax - deferred for owner-occupied properties until sale/death) (Increase Demand = Inflationary)
Reduce servicing restrictions for owner-occupied lending. (Increase Demand = Inflationary)

All of which would combine to significantly raise house prices. So to counter we also need strong deflationary pressure - to either increase supply, or reduce demand somehow.

Remove immediate taxation benefits of investment properties - treat as an isolated business class like a company (losses offset against future profits, not current year income).

You could introduce greater lending restrictions for 'professional investors' (3+ properties) - reduced LVR, higher interest rates, increased holding costs and servicing requirements for finance - all of these will reduce investor demand.

Create local regionalised benefits - 'satellite' centres outside of major population centres and develop regional areas to lessen concentration of people in major cities will also have significant deflationary effects.

You could make a quantum shift in the dynamics of the Australian housing market in a single election cycle.

 

[Suspense]

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?

People with access to capital are able to generate untaxed wealth through the acquisition of a PPOR.

True or false?

Let's look at the stock investor.
The CG is exactly the same as it is with investing in housing.
Which is fair.

Why should passive capital gains (whether on shares, property, crypto whatever) - be taxed preferentially to income generated from exertion?

Short term trader no 50% discount.
Hold for a year and get the 50% discount.

Why should holding an investment for a year entitle you to a 50% CGT discount on taxation?
You do know what the 50% CGT discount was brought in to replace, right?

People risk capital in the pursuit of profits.
People loose when they invest, and nobody gives them sh*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.

If you make a capital loss, you can carry it forward to offset against future gains. Which is logical and makes sense.
A 50% discount is just a free-kick. A free-kick you clearly feel entitled to - but a free-kick nonetheless.

Again I'm not proposing more taxation, I'm proposing an equalisation of taxation across gains derived from assets and income generated from assets/personal exertion.

You seem to think that I'm persecuting investors when I'm really just presenting the facts - try not to take it personally.

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 ?

As I said before, investment decisions, be it cash instruments, shares, super, crypto - whatever - should be based on rational economic reasons - not whatever quirks in the tax system you can exploit.

A good property investment is a good property investment - regardless of whether you pay tax on only 50% of the gain.
A promising company for scope for capital growth is a promising company - regardless of whether you pay tax on only 50% of the gain.

A broadening of the tax base allows for reductions in income tax and corporate tax - which encourages corporate investment and allows shareholders to retain more of the dividends generated by companies.

 

[Bombermania]

People with access to capital are able to generate untaxed wealth through the acquisition of a PPOR.

True or false?


Why should passive capital gains (whether on shares, property, crypto whatever) - be taxed preferentially to income generated from exertion?


Why should holding an investment for a year entitle you to a 50% CGT discount on taxation?
You do know what the 50% CGT discount was brought in to replace, right?


If you make a capital loss, you can carry it forward to offset against future gains. Which is logical and makes sense.
A 50% discount is just a free-kick. A free-kick you clearly feel entitled to - but a free-kick nonetheless.

Again I'm not proposing more taxation, I'm proposing an equalisation of taxation across gains derived from assets and income generated from assets/personal exertion.

You seem to think that I'm persecuting investors when I'm really just presenting the facts - try not to take it personally.


As I said before, investment decisions, be it cash instruments, shares, super, crypto - whatever - should be based on rational economic reasons - not whatever quirks in the tax system you can exploit.

A good property investment is a good property investment - regardless of whether you pay tax on only 50% of the gain.
A promising company for scope for capital growth is a promising company - regardless of whether you pay tax on only 50% of the gain.

A broadening of the tax base allows for reductions in income tax and corporate tax - which encourages corporate investment and allows shareholders to retain more of the dividends generated by companies.

It is not correct that investors are making untaxed wealth when investment properties are subject to land tax and capital gains tax can apply to that investment property. A person can only reduce their tax against their tax rate.

 

[hamohawk1]

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.

No need for Chinese or overseas investment. The Government (as they used to) could build housing in serious volumes and sell it off accordingly.

 

[Suspense]

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.

Unless you are renovating and flipping a property (in which case you are taxed on income account - so there is no net tax difference), real estate is typically a medium to long-term hold due to entry/exit costs (stamp duty, legal, advertising etc.) - independent of any preferential tax treatment on CG.

Many countries don't have a distinction between the taxation of gains < 1 year and those more than 1 year - and that doesn't change the above fact.

 

[Suspense]

It is not correct that investors are making untaxed wealth when investment properties are subject to land tax and capital gains tax can apply to that investment property. A person can only reduce their tax against their tax rate.

Re-read my post.

I never said investors make untaxed wealth - I said they generate preferentially taxed wealth compared to the taxation of ordinary income.

 

[Royal Flush]

People with access to capital are able to generate untaxed wealth through the acquisition of a PPOR.

True or false?


Why should passive capital gains (whether on shares, property, crypto whatever) - be taxed preferentially to income generated from exertion?


Why should holding an investment for a year entitle you to a 50% CGT discount on taxation?
You do know what the 50% CGT discount was brought in to replace, right?


If you make a capital loss, you can carry it forward to offset against future gains. Which is logical and makes sense.
A 50% discount is just a free-kick. A free-kick you clearly feel entitled to - but a free-kick nonetheless.

Again I'm not proposing more taxation, I'm proposing an equalisation of taxation across gains derived from assets and income generated from assets/personal exertion.

You seem to think that I'm persecuting investors when I'm really just presenting the facts - try not to take it personally.


As I said before, investment decisions, be it cash instruments, shares, super, crypto - whatever - should be based on rational economic reasons - not whatever quirks in the tax system you can exploit.

A good property investment is a good property investment - regardless of whether you pay tax on only 50% of the gain.
A promising company for scope for capital growth is a promising company - regardless of whether you pay tax on only 50% of the gain.

A broadening of the tax base allows for reductions in income tax and corporate tax - which encourages corporate investment and allows shareholders to retain more of the dividends generated by companies.

So you are all for more taxes then.

Great.

Not sure how that will equalise the imaginary playing field.



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[Suspense]

So you are all for more taxes then.

Great.

Not sure how that will equalise the imaginary playing field.

Dunno where you got that from?
Suggest you re-read (use Windows Narrator if you are having difficulties with the text).

Again I'm not proposing more taxation, I'm proposing an equalisation of taxation across gains derived from assets and income generated from assets/personal exertion.

...

A broadening of the tax base allows for reductions in income tax and corporate tax - which encourages corporate investment and allows shareholders to retain more of the dividends generated by companies.

 

[Taylor]

Dunno where you got that from?
Suggest you re-read (use Windows Narrator if you are having difficulties with the text).

Isn't broadening the tax base more things being taxed?

 

[Suspense]

Isn't broadening the tax base more things being taxed?

More 'things' are brought into the potential net of 'economic activity subject to tax' - but it doesn't necessarily lead to greater net tax receipts - if you offset with reductions in tax rates elsewhere (ie. income taxes and corporate taxes).

 

[Royal Flush]

Dunno where you got that from?
Suggest you re-read (use Windows Narrator if you are having difficulties with the text).

No it doesn't.

I can't offset my loses, but when I win you tax me.
Sounds fair.

"Allows for reductions in income tax"
Weren't we already doing it.
And your dead against it

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[Suspense]

No it doesn't.

I can't offset my loses, but when I win you tax me.
Sounds fair.

What do you mean? You can offset your capital losses against capital gains (both current and future).

If you never ever make a capital gain, you have nothing to offset the capital loss against!

You cannot currently deduct a capital loss against salary and wages because ordinary income and Capital Gains are taxed differently. If they were equalised, you could certainly make the argument that capital losses ought to be deductible - with similar application to the business loss provisions.

Personally, it's not even an issue - most savvy investors regularly make capital gains - meaning any losses are able to be used. It would also make sense that any investors who are constantly making capital losses probably shouldn't be encouraged to continue to make poor investments by being able to deduct their losses against ordinary income.

"Allows for reductions in income tax"
Weren't we already doing it.
And your dead against it

Reductions in income tax rates for all - not a reduction in income taxes for only property investors via negative gearing.

 

[HirdsTheWord]

The last few pages? Welcome to planet earth, i hope you enjoy your stay. Just a tip - while you're here people are going to try to take advantage of you.

It creates jobs and funds people's retirement. I guess those people can be unemployed and live off a pension, not sure how that helps society?

not sure that's a good enough argument to keep letting house prices sore.....id say the negatives outweigh the positives.

There will always be jobs in the housing sector to keep up with population growth......

 

[CatFan79]

There will always be jobs in the housing sector to keep up with population growth......

There will always be affordable housing, just not the size and in the place you want.

 

[Ned_Flanders]

There will always be affordable housing, just not the size and in the place you want.

People also need to remember what govt designed housing is like. Practical, cheap, cookie cutter. There is a reason people hate the commission towers today

 

[Deliverance]

They're a disgrace those towers. Remnants of a bygone era. We should be building much better considering how many Aussies need social housing.

 

[Rad Roo]

Lol, not likely, the gov will flood the market with free money to keep the majority afloat.
Property owners are the king.

 

[Scotland]

There will always be affordable housing, just not the size and in the place you want.

Hasn't that always been the case? Unless you are Jeff Bezos then everyone can afford something slightly better.

The point of conjecture is that it wasn't that long ago you could be a school teacher or something and afford a 3 bedroom home in a decent suburb and have a family. If you were a lawyer you could afford a home in a better suburb. Etc.

Now there's an artificial floor propping up everything. If you are a school teacher you can now afford a small unit, or if you want to have a family you have to move further out. If you are a lawyer you can afford what the teacher used to buy. What the lawyer used to buy now takes two full time professional salaries at least. If this continues then in another generation you will need to be in a high earning job just to afford a unit. And then the next generation? Do we just start paying everyone $200k a year?

The ridiculous thing about our property market is the percentage of people who live in and own houses they can't actually afford. I'm not talking about people who bought a basic 3x1, paid it off then upgraded to a 4x2 etc. I'm talking about people who bought a house for $300k that is now worth $1m.

 

[Frank Grimes]

The ridiculous thing about our property market is the percentage of people who live in and own houses they can't actually afford. I'm not talking about people who bought a basic 3x1, paid it off then upgraded to a 4x2 etc. I'm talking about people who bought a house for $300k that is now worth $1m.

Though it is more magnified than in the past, that is not recent phenomenon. It's been happening for a good 50 years.

My parents bought their house in the mid-late 1960's for $12k~14k. When I turned 20 at the turn of the century (2000) their house would have been worth around $250,000, approx 20 times what it was paid for.

Now it would be valued around 800k+.

 

[FRUMPY]

Now there's an artificial floor propping up everything. If you are a school teacher you can now afford a small unit, or if you want to have a family you have to move further out.

My grandparents grew up in Northcote, my folks bought in Hurstbridge because they couldn't afford Northcote, we bought another 20 mins out because we couldn't afford the Hurstbridge area....it's been happening for 50 years FFS.

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[Bombermania]

Hasn't that always been the case? Unless you are Jeff Bezos then everyone can afford something slightly better.

The point of conjecture is that it wasn't that long ago you could be a school teacher or something and afford a 3 bedroom home in a decent suburb and have a family. If you were a lawyer you could afford a home in a better suburb. Etc.

Now there's an artificial floor propping up everything. If you are a school teacher you can now afford a small unit, or if you want to have a family you have to move further out. If you are a lawyer you can afford what the teacher used to buy. What the lawyer used to buy now takes two full time professional salaries at least. If this continues then in another generation you will need to be in a high earning job just to afford a unit. And then the next generation? Do we just start paying everyone $200k a year?

The ridiculous thing about our property market is the percentage of people who live in and own houses they can't actually afford. I'm not talking about people who bought a basic 3x1, paid it off then upgraded to a 4x2 etc. I'm talking about people who bought a house for $300k that is now worth $1m.

I know you are only trying to make a point but Melbourne isn't that unaffordable and there are many decent suburbs under the city median.

 

[Scotland]

My grandparents grew up in Northcote, my folks bought in Hurstbridge because they couldn't afford Northcote, we bought another 20 mins out because we couldn't afford the Hurstbridge area....it's been happening for 50 years FFS.

Your kids and grandkids have a super life ahead of them then.