Society/Culture Australian Property Prices to Crash?

[Madas]

I don't have any research on what it would have been if it applied to everyone, but I still don't think it would have had a major impact on house price wise.

The biggest impact of removing negative gearing would be on those who purched the investment property before it's removal. The investors who purchased their investment property 5, 10, 20 years previous would have less and less impact on them over time because the property would be less negatively geared or even positively geared as time goes by.

No the impact would be that if you have everyone flooding out of rentals into their own homes then there would be one hell of an almighty market crash where people with investment properties default on their loans .
Not going to happen.
One Tear in this tightly wound fabric holding this thing together would send it crashing down spectacularly.

 

[HirdyLannister]

Property investment is a huge capital outlay and a massive yoke around one’s neck so a perfect mechanism to keep people working , paying taxes and banks making huge profits.
I look at it as forced saving and the tax benefits somewhat negate the massive amount you are paying back in interest over the life of the loan.

I call a mortgage self imposed prison, once you have one you need to work for X amount of years and chained to the one place.

I have two commercial properties and one rental - all rented. I find the commercial properties to be a much better option. The rent is higher, customer pays all the rates and insurance. The rental just covers expenses and the small interest amount.

One of the commercial rentals is in my super fund - the other we are moving across to a unit trust in the super fund. In 8 years I retire and the rent will be tax free. If you are worried about the government and your super - that might be a strategy to retain value.

I should look into commercial properties more, I hear capital growth is less than a free standing home. I wonder if my standard agent can manage commerical too.

 

[Madas]

I do enjoy this discussion as it’s meaningful and generous in its intent.

Not trying to bring and end to it ( in fact the more I read the harder it is to think that there are any answers at all ) , but can I encourage participants to list what they think would be genuine, realistic measures that both governments and individuals could do to assist this problem.
My thoughts:

Individuals
•Don’t borrow the maximum affordable , live within your means and don’t get in too deep .
•Change the culture of ownership particularly multiple properties
•Spread the load of retirement investment between super , shares and property so you don’t have all your eggs in one basket .

Government
•remove incentives for multiple existing housing ownership but retain for creating new housing
•Implement policies to try and limit housing bubbles being created
•Spend in infrastructure to decentralise large urban areas
•Provide infrastructure, incentives and education to encourage people into regional areas .

 

[00Stinger]

We're looking at signing paperwork to build a 3rd property, 250sqm block and will put a low maintenance house on it. Probably be all in at 500k or less
Rent it out claim depreciation, still early 30s and earn less than six figures.


Done rough calcs on my super too, very conservative I'll have 6 million if I work for another 30 years but I don't trust the government,they'll see everyone having millions and they'll fu** us somehow with super in 20-30years.

$6m in super in 30 years but earning less than $100k?

Unless you have the properties as part of a SMSF or you have some ridiculous amount of salary sacrificing going into super that seems impossible

 

[HirdyLannister]

$6m in super in 30 years but earning less than $100k?

Unless you have the properties as part of a SMSF or you have some ridiculous amount of salary sacrificing going into super that seems impossible

Been paying super for 16 years already

After 20 years of work it'll be 3 million and if you calc the last 10 years at 10% average without 12% contribution or compounding total each year it jumps 300k a year.

 

[00Stinger]

Been paying super for 16 years already

After 20 years of work it'll be 3 million and if you calc the last 10 years at 10% average without 12% contribution or compounding total each year it jumps 300k a year.

So you are saying in 4 years you will have $3m in super?

 

[HirdyLannister]

So you are saying in 4 years you will have $3m in super?

No, in 20 years, it should be around the mark.

If you use the rough growth of 10%, could be 7% growth next year but this year grew 20%, it was a rough estimate

 

[Bombermania]

Emphasis the point even further sorry .
The point is that someone who isn’t even funny has got $8m to spend on a shell .
If he was smart he would wait 2 years when the price of that place comes back down 20% plus .

The Media is a clinky group and Andy Lee falls into that group of comedians that get more than their fair share of TV time.

 

[Madas]

So you are saying in 4 years you will have $3m in super?

I hope Hirdy isn’t a math teacher because something isn’t adding up here . ??
On average contributions after 16 years a super balance would only be around $400k
Even adding another 17.5% in personal contributions only brings it to $850k ?

 

[HirdsTheWord]

I don't have any research on what it would have been if it applied to everyone, but I still don't think it would have had a major impact on house price wise.

The biggest impact of removing negative gearing would be on those who purched the investment property before it's removal. The investors who purchased their investment property 5, 10, 20 years previous would have less and less impact on them over time because the property would be less negatively geared or even positively geared as time goes by.

If they got rid of negative gearing they wouldn't just remove it.

it would need to be phased out.

if they got rid of it overnight it there would be a housing crash of almighty proportions.

 

[HirdyLannister]

I hope Hirdy isn’t a math teacher because something isn’t adding up here . ??
On average contributions after 16 years a super balance would only be around $400k
Even adding another 17.5% in personal contributions only brings it to $850k ?

Do the math, I have 30 years of work till early 60s

230k with a flat 10k a year contribution an average increase of 10% a year.

Some years will be lean an other boom like this year at 20%, so I did an average percentage per a year.

 

[Madas]

Do the math, I have 30 years of work till early 60s

230k with a flat 10k a year contribution an average increase of 10% a year.

Some years will be lean an other boom like this year at 20%, so I did an average percentage per a year.

Hmm
The way you worded it sounded like it was $3 mill after 20 years

even still put it in a calculator
After 47 years with 10% employer contributions and 17.5% personal it still only adds up to $1.8m

You are doing the righty though mate that’s all that matters
Play the long game
Don’t get too bedazzled by the numbers

 

[HirdyLannister]

Hmm
The way you worded it sounded like it was $3 mill after 20 years

even still put it in a calculator
After 47 years with 10% employer contributions and 17.5% personal it still only adds up to $1.8m

You are doing the righty though mate that’s all that matters
Play the long game
Don’t get too bedazzled by the numbers

Should be more than that, are you not adding super growth each year. Unless I'm totally fluffing this

10k - each year contribution without inflation

1.1 - 10% yearly super fund growth on average

(230k+10k)*1.1 = 264k

(264k+10k)*1.1 = 301.4k

That's the next two years unless I'm ballsing this up

 

[FRUMPY]

2/ I think it is just waste of tax payers money in general. The money gained by it's removal would be better used on something else.

and what will they waste it on this time....

 

[HirdsTheWord]

Should be more than that, are you not adding super growth each year. Unless I'm totally fluffing this

10k - each year contribution without inflation

1.1 - 10% yearly super fund growth on average

(230k+10k)*1.1 = 264k

(264k+10k)*1.1 = 301.4k

That's the next two years unless I'm ballsing this up

I'm not sure but 3 million is a huge super number. maybe the calcs are a bit off. I don't think super is cumulative interest year on year.

My projected Super balance at retirement is 1.2 million based on;

- my salary of 170k
- Age of 33
- Current Super Balance 95k
- Employer Contributions of 12%



if i take your calculation method of (90k+10k)*1.1 and apply it to myself I get the below.......Doesn't seem right.

Age 65 - $4.1m of super........

 

[Madas]

Should be more than that, are you not adding super growth each year. Unless I'm totally fluffing this

10k - each year contribution without inflation

1.1 - 10% yearly super fund growth on average

(230k+10k)*1.1 = 264k

(264k+10k)*1.1 = 301.4k

That's the next two years unless I'm ballsing this up

Plug it all into this calculator mate
They are pretty accurate and take into account average fees etc

Superannuation calculator - Moneysmart.gov.au

Find out how much super you'll have when you retire and how fees can reduce your super balance.

moneysmart.gov.au

 

[Madas]

I'm not sure but 3 million is a huge super number. maybe the calcs are a bit off. I don't think super is cumulative interest year on year.

My projected Super balance at retirement is 1.2 million based on;

- my salary of 170k
- Age of 33
- Current Super Balance 95k
- Employer Contributions of 12%

View attachment 1285770

if i take your calculation method and apply it to myself i get the below.......Doesnt seem right.

Age 65 - $4.1m of super........

View attachment 1285779

That would be nice

 

[HirdsTheWord]

That would be nice

*in oath it would be.

4.1m for me and 4.1m for my wife who is on about the same coin as me.

i wish!

 

[Madas]

We're looking at signing paperwork to build a 3rd property, 250sqm block and will put a low maintenance house on it. Probably be all in at 500k or less
Rent it out claim depreciation, still early 30s and earn less than six figures.


Done rough calcs on my super too, very conservative I'll have 6 million if I work for another 30 years but I don't trust the government,they'll see everyone having millions and they'll fu** us somehow with super in 20-30years.

Hirdy mate
If there’s one bit of advice I can impart to you with my extra 20 odd years on the planet is don’t get caught up in the frenzy of these boom times . It isn’t real and doesn’t last .
Trust me I got my fingers singed in the 2007 boom and learnt a lot from it .
Based on your super calculations it Sounds like you are taking the best case returns into account when working your future investment forecasts .
Be careful if you are basing your equity calculations on your Existing properties to finance new investments.
Be conservative and best to plan for the worst case scenario not the best , that way everything else is a bonus.
Just my humble advice , tread your own path but do it carefully.

 

[HirdsTheWord]

Hirdy mate
If there’s one bit of advice I can impart to you with my extra 20 odd years on the planet is don’t get caught up in the frenzy of these boom times . It isn’t real and doesn’t last .
Trust me I got my fingers singed in the 2007 boom and learnt a lot from it .
Based on your super calculations it Sounds like you are taking the best case returns into account when working your future investment forecasts .
Be careful if you are basing your equity calculations on your Existing properties to finance new investments.
Be conservative and best to plan for the worst case scenario not the best , that way everything else is a bonus.
Just my humble advice , tread your own path but do it carefully.

Not too mention the 6 million he reckons hell have is completely wrong judging by the way he has calculated his super.

 

[Madas]

Not too mention the 6 million he reckons hell have is completely wrong judging by the way he has calculated his super.

Yes that’s what I was getting at .
Going back through the thread there was talk of throwing down a 3rd investment property.
Not my place to judge but if he’s using the same “ calculator “ for his super as he is for his property equity and borrowing capacity , I would be hearing alarm bells !

 

[HirdyLannister]

I'm not sure but 3 million is a huge super number. maybe the calcs are a bit off. I don't think super is cumulative interest year on year.

My projected Super balance at retirement is 1.2 million based on;

- my salary of 170k
- Age of 33
- Current Super Balance 95k
- Employer Contributions of 12%

View attachment 1285770

if i take your calculation method of (90k+10k)*1.1 and apply it to myself I get the below.......Doesn't seem right.

Age 65 - $4.1m of super........

View attachment 1285779

I'm sitting at 230k in super at 33 years old, I started full time work at 16 and was adding extra until a purchase a house.

All I can do is use prior results for a rough guess and super grows at 10% on average.

 

[HirdsTheWord]

I'm sitting at 230k in super at 33 years old, I started full time work at 16 and was adding extra until a purchase a house.

Even starting at 230k you wont have 3 million in super by the time you retire.

you are doing your math's wrong.

 

[FRUMPY]

Wrong or right calculation he's doing the right thing by putting more in than just super guarantee. Every bit helps. More you put in now the better you'll be off later in life

(But as the ads say 'past performance is no indication of future performance')

Sent from my CPH2005 using Tapatalk

 

[mr bagcroft]

lol, you got to make it to reitrement age first !!