Madas
Norm Smith Medallist
- Aug 16, 2020
- 6,120
- 7,736
- AFL Club
- Fremantle
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It’s crazyBack when we were looking at some work, the builder said it would be cheaper to borrow money for the build and pay the interest than wait until we had the cash, such were the price increases on copper alone.
Unfortunately there's plenty of unscrupulous builders, some very high up in the Master Builders Association.It’s bloody ridiculous !
We are bleeding and it’s not only the price increases that we have to swallow it’s the delays on the jobs causing cash flow issues getting paid , more overheads while on site longer , more protection and security of finished work ...... it just goes on .
I truly hate booms !!
Been through about 3 now and they are nothing but a sh*t show .
We have tried to lobby the government via The Master Builders Association to change the legislation around Contract Law which prohibits us including a Rise and Fall clause in our contracts , but by the time they legislate it will be over .
And then a minority of unscrupulous builders will take advantage of it and ruin the purpose of protection . It bloody sucks that we have to absorb these price increases on behalf of the people who created the problem in the first place .
It’s bloody ridiculous !
We are bleeding and it’s not only the price increases that we have to swallow it’s the delays on the jobs causing cash flow issues getting paid , more overheads while on site longer , more protection and security of finished work ...... it just goes on .
I truly hate booms !!
Been through about 3 now and they are nothing but a sh*t show .
We have tried to lobby the government via The Master Builders Association to change the legislation around Contract Law which prohibits us including a Rise and Fall clause in our contracts , but by the time they legislate it will be over .
And then a minority of unscrupulous builders will take advantage of it and ruin the purpose of protection . It bloody sucks that we have to absorb these price increases on behalf of the people who created the problem in the first place .
After the banking RC, APRA tightened lending conditions and house prices fell. Scomo loosened the borrowing reigns and prices rose again. ALPs negative gearing changes were forecast independently to reduce prices by about 10%.So may I ask a question:
In this Utopian world where houses are cheap as chips because;
•Building materials grow on trees
•Tradies earn nothing
•Land and it’s related infrastructure of roads , power , sewage systems etc are gifted by generous philanthropist developers
How much should a house and land cost to be affordable?
What percentage of the over 18 population would still want to rent therefore how many rentals are required ?
Begs a serious question, somebody has to provide rentals .
Not everyone wants to tie a mortgage around their neck at the age of twenty .
It’s easy to blame the government, their incentives schemes to investors produced rental stock of all shapes and sizes and affordability . Not just government housing project dog boxes .
The cheap money that follows bust cycles inevitably encourages people to borrow and spend more than they otherwise would .
Hence investors outbid each other for property.
All of this is part of free market capitalism which no one is going to stop in our lifetime ( unless the Chinese invade us and turn us into Communists - but that’s for another thread )
So perhaps the way to turn the flame down on this overheating every time we come out of a bust cycle is for the banks to only lend say 80% of what someone is able to borrow based on their income ( not the proposed value of the property or asset )
I am a little annoyed we didn’t do the major work years ago. We just put it off again and again. Would have been a great investment.
As a builder of 30 years I can % confirm that they have and in the last 10 months more so than I’ve seen in about 20 years
The Covid situation along with bushfires in 2019 created the perfect storm for timber supply .
Labour has gone up across the board as tradies can go to the next guy if you aren’t willing to pay their escalated fees , so with contracts in place , there’s no choice but to pay them .
Then you get the Grand Design factor where everyone wants an “architectural “ house with all the bling ( big windows , open plan , fancy kitchen, fully tiled bathrooms , European appliances, flash alfresco, brand new furniture........ the list goes on )
All that stuff costs money .
Now with FOMO at its peak worst time in history people are outbidding and outstripping supply .
It’s full on and all we can do is try our best to keep it real and affordable for people .
I’m pretty ethical so keep my fee the same as always but I know other builders and materials suppliers taking advantage and price gouging the hell out of the situation.
And the worst thing is I can’t see an end in site .
We have 2 years worth of work on the books and that’s before the massive wave of migration I’m anticipating in 2023.
Interest rates rise might cool things slightly but the supply won’t improve and I can’t see prices coming back down till the next major downturn.
Summary- get used to the higher prices , they are here to stay
I don't agree. Investors compound the issue - but they are not the key driver the price increases. Investors invest in property due to the high capital growth over the last two decades - this capital growth isn't driven by mere investor speculation, but by rapid population growth (beyond all estimates in the late 90s) and dwindling access to detached homes that aren't on the far metro fringe. Many investors would still invest in property - even if it were not preferentially taxed.
If houses prices continue in the trend we’re going we may end up finding on retirement there’s a lot of people who don’t have a house and may find it more cost effective to enter an aged care facility than rent or use their super to buy a cheap regional house then have to draw a government pension. Long term if nothing is done we could have a major problem on our hands. If people start choosing aged care over renting then we’ve basically got a de facto government housing scheme. Something needs to be done.
But often homes are signed over to aged care “charities” to cover expenses at end of life. It can’t be an investment for retirement and a legacy for your kids.The trends for home ownership of age demographics near or in retirement isn't actually gloomy. In fact, I reckon we'll continue to see the positive upward trend in the coming census results.
And let’s not forget that on death their “kids” are in their 50’s getting half of what’s left meaning they ain’t replacing what their parent had. They ain’t using half of what’s left to go get a 40 year mortgage then. And as you say that’s after the other parties have dipped their fingers in the pie. Most times the ones arguing there’s no problem have it pretty good and want to keep the status quo.But often homes are signed over to aged care “charities” to cover expenses at end of life. It can’t be an investment for retirement and a legacy for your kids.
Home ownership is not getting easier so stop trying to spin that it is. Every bit of data says that. They don’t just reckon it, it shows out in facts not hunches.But eventually, those in retirement now will die and either they'll pass on their wealth and/or home(s) to their kids/grandkids or market equilibrium will sort itself out. If those in their 20s, 30s or 40s now will have trouble owning a home by retirement, then what about all those who come after them? Are we saying no one will own a home?
The trends for home ownership of age demographics near or in retirement isn't actually gloomy. In fact, I reckon we'll continue to see the positive upward trend in the coming census results.
That blog doesn't show any data on home ownership? Also the "data" is a guy on Reddit who mistook average wage for median wage.Home ownership is not getting easier so stop trying to spin that it is. Every bit of data says that. They don’t just reckon it, it shows out in facts not hunches.
1993 'Average Wage' Statistic Explains Why You Can't Afford A House
Hold onto your hats and chuck on your ear muffs: "Adjusted for house prices, the 1993 average wage would be $175,000 today."www.dmarge.com
It’s a massive issue that will effect younger generations into retirement. House prices have exploded since the mid nineties, wage growth is not keeping pace with the cost of living so it doesn’t take a genius to figure out home ownership is completely out of reach for a lot of people and will effect retirement which in turn effects the cost to government budgets. And it appears it’s not going to get better it’s going to get worse. Like I said for some who don’t have a house it will be cheaper to walk into retirement & straight into aged care. For me it’s not an issue but for whenever I have grand children it will be.That blog doesn't show any data on home ownership? Also the "data" is a guy on Reddit who mistook average wage for median wage.
I'm not arguing that housing affordability is not an issue. It clearly is. Dwelling prices in particular.
Bit off topic but don’t start me on the not for profit charities bs. I worked for two years in the funding side of an aged care facility. Charity my assBut often homes are signed over to aged care “charities” to cover expenses at end of life. It can’t be an investment for retirement and a legacy for your kids.
Some might do that but alot don't.But often homes are signed over to aged care “charities” to cover expenses at end of life. It can’t be an investment for retirement and a legacy for your kids.
If 1 out of every 3 homes is owned by an Investor than of course population issues increases exaggerated issues, because housing is already tied up by inRemove investors from the Market and it frees up the supply required for these population increases, it also allows renters who cant afford to buy the opportunity to become home owners due to cheaper prices.
A lot say this but in the long run don’t have a choice. If they’re non ambulant or have dementia or incontinent which from my experience is becoming more and more prevalent most people are just not able to do this as dementia requires non stop care for safety reasons and non ambulant residents require 2 hourly repositioning because if you don’t pressure area problems become horrendous or if they’re incontinent & unable to look after their own personal care they’ll require you to change them and attend to their personal hygiene needs at any time of the day. Which also means if they’re incontinent they’ll require a toileting schedule. Literally one fall in the garden can & does regularly lead to mobility issues. You’ll basically be giving up full time work for all of this. There’s a lot who can’t stop working or do and go onto a carers pension which eats into government budgets. I’ve admitted a lot into care in this type of scenerio. And when it happens it’s a frightening experience for the elderly. I admire you for wanting to look after your loved ones at home & I truly hope it works out but I’ve seen a lot of broken down family members in their 50’s admitting Mum or dad to care and after reducing their income to care for Mum or dad are unable to help out their children financially. anyway all the best with it for you & I hope it works for youSome might do that but alot don't.
My olds will refuse age care I know I'll be caring for them which I rather than seeing how those places are run.
Cheap credit is part of the issue imo. One other is state governments collect a lot of money from government fees so the higher the price the more revenue they obtain. Here’s a calculator for you to compare the differencesPeople correctly point out that rents won't be affected by investors pulling out of the market because the house will go to sold the a renter who has become home owner. However, the same would apply going the other way because the supply and demand isn't affected.
This is because it is a zero sums game.
If the investment property is going to be sold as a principal residence:
- The demand in the rental market would go down buy one person, however the supply in the rental market is also less one person.
- Supply on the first home buyers market would increase by 1. The demand in the buying a house from the renter becoming a home buyer would go also go up by 1.
The main reason for high prices imo is the availability of cheap credit (how much banks are willing to loan).
No better time than the present they always say ( although at the present you probably couldn’t get anyone to do it anyway )I am a little annoyed we didn’t do the major work years ago. We just put it off again and again. Would have been a great investment.
I’ve been thereI am a client side PM in commercial construction.
There is absolutely no way in this earth that I would sign a contract with a Rise and Fall clause in a contract. There would be way too many builders & subbies who would take the piss out of it.
I agreePeople correctly point out that rents won't be affected by investors pulling out of the market because the house will be to sold the a renter who has become home owner. However, the same would apply going the other way because the supply and demand isn't affected.
This is because it is a zero sums game.
If the investment property is going to be sold as a principal residence:
- The demand in the rental market would go down buy one person, however the supply in the rental market is also less one house.
- Supply on the first home buyers market would increase by 1. The demand in the buying a house due to the renter becoming a home buyer would go also go up by 1.
The main reason for high prices imo is the availability of cheap credit (how much banks are willing to loan).
If the government were serious about creating affordable housing, they'd copy the one tried and true model and that's the one Singapore designed