Society/Culture The housing crisis. How is it fixed?

[Frank Grimes]

The Australian Property Institute has released a comprehensive paper into housing affordability.

50 years ago, a property in Melbourne required 3.5 times the average annual income to purchase, fast forward to now and it's 8.4 times.

I have an issue with the language being used and it really needs to be updated to reflect the times.

50 years ago, the bank would lend based on the male householder's wage and them having a 20% deposit. Households were predominantly single income. Dad working, mum at home rearing the kids, maybe a few hours of work if they were lucky enough to find something during school hours or they'd volunteer at the school canteen or the like.

That single income was also the entire household income.

Fast forward to now and that household income is now typically two people with full time careers contributing.

So, is it now 8.4 times the average annual income to purchase a property or should it be 4.2 times the average household income? The former just gives young people anxiety and makes them either panic or resign themselves to never being homeowners if that's what they want.

What is the average income these days? I'm guessing about $70k. That would mean the average house price would need to be $245k to be the equivalent.

Disregarding the land you are looking at typically $300k+ to have a builder build a house these days. $245k wouldn't even cover building the physical house itself.

I just can't see house prices dropping to 3.5 times the average again ($245k).

 

[Kram]

Kram is spot on, social housing is necessary but it should never be concentrated in one place. Fixing that would even go a long way to fixing house prices in general, because then you'd have families with school aged children less motivated to move to places where the poors won't be.

This is what happens with just 24 units in one spot. We learned this was an awful idea in the 1970s the wa government decided it was a good idea to try it again 6 months ago.

Nightmare on Ninth Ave: The troubled unit complex police have visited 300 times

Crime and anti-social behaviour are out of control, and tenants say they would rather take their ‘chances on the street’.

7news.com.au

Wouldn't have been difficult to pick up the same amount of places sprinkled throughout the area but that would require common sense and a little more work.

 

[Kram]

What is the average income these days? I'm guessing about $70k. That would mean the average house price would need to be $245k to be the equivalent.

For a full time employee it would be more like $90k+

 

[Golden_6]

For a full time employee it would be more like $90k+

The median full time salary is $67,600. The average is never a good representation.

 

[Andre]

The Australian Property Institute has released a comprehensive paper into housing affordability.

50 years ago, a property in Melbourne required 3.5 times the average annual income to purchase, fast forward to now and it's 8.4 times.

I have an issue with the language being used and it really needs to be updated to reflect the times.

50 years ago, the bank would lend based on the male householder's wage and them having a 20% deposit. Households were predominantly single income. Dad working, mum at home rearing the kids, maybe a few hours of work if they were lucky enough to find something during school hours or they'd volunteer at the school canteen or the like.

That single income was also the entire household income.

Fast forward to now and that household income is now typically two people with full time careers contributing.

So, is it now 8.4 times the average annual income to purchase a property or should it be 4.2 times the average household income? The former just gives young people anxiety and makes them either panic or resign themselves to never being homeowners if that's what they want.

Two issues with just doubling the income.
1. Women make less than men on average. The main reason tying into 2) women are out of the workforce or working part time, for a significant time post having kids (sometimes the father, but still usually the mother). So a more realistic base line would be average household wage as something like 1.5 x average wage across the life of the loan. Purchasing is half the issue. A more telling one is percentage of household income required to service a loan. From around 2000 to now, that's gone from around 20% to around 40%.

 

[Aido97]

It would assist 'minimising' the price acceleration - thats a tick

It would reduce supply for the rental market - thats no good

About 25/30% of households are renters, there will always be a rental market, its a very important market

No self interest here, in a former life, I worked in the social housing industry - im highlighting my interest in affordable housing.

The best things to do: a) minimise interfering in the market; b) ensure sufficient land supply/streamline planning; c) take planning off Council - due to SOS/NIMBY types (as they do stop housing supply); d) go on a long term social housing build (this will take time); e) dont introduce demand policies (which both major parties do)

Agree with this post but i would add f) incentivise innovation and productivity in the construction industry. The CFMEU have held the country over an absolute barrel both in terms of worker productivity and also blocking large scale investment in Modern Methods of Construction. To still be building the same way we were 100 years ago with all the advancements technologically made is absolute insanity. Flat pack houses and modular apartments should be invested in particularly in the social housing space initially to enable this to be rolled out with scale

 

[leon123]

Agree with this post but i would add f) incentivise innovation and productivity in the construction industry. The CFMEU have held the country over an absolute barrel both in terms of worker productivity and also blocking large scale investment in Modern Methods of Construction. To still be building the same way we were 100 years ago with all the advancements technologically made is absolute insanity. Flat pack houses and modular apartments should be invested in particularly in the social housing space initially to enable this to be rolled out with scale

Totally agree and.... quality has declined not increased (for the bulk market)

 

[Carringbush2010]

Property valuation should not and will not come down, if at all, it will be very minimal.

• The market values property, always has always will. We have to accept that, we can't lament the past causes of price acceleration, it is futile.
• Too many non wealthy / non ahole mum and dad tryna get ahead investors to effect negatively if property valuation was forced to lower for the purposes of making it more affordable for others. They make up the overwhelming bulk of property investors
• The 'acceleration' of value is a problem that can be fixed, this problem is driven by the incentive to use property as an investment vehicle. This enables the greedy types or in other words multiple property owners to drive up value by being in competition to each other and snuff out first home buyers. The Greens policy would take away the incentive to use property as a pure investment vs a step up investment like the tryna get ahead investors.
• Supply is a major issue, caused by a myriad of factors.
  • Increased material costs due to
  • Covid and the war in Ukraine, driving up inflation and stalling wage growth, among other factors
  • Supply timeline due to the above
  • Increased labor (construction) costs, driven by increased supply costs and timelines
• The affordability problem, in recent years we've seen inflation surpass wage growth, everything is more expensive and more difficult to afford, in short COL, only very recently are wages starting to outpace inflation.
• Planning and developers, are they road blocks? Is there red tape there?
• State and local govts. are they road blocks? Is there red tape there?
• Infrastructure in new estates, lack of and slow implementation of. Can these be fixed?
• Is there enough social housing? I doubt it, how could it be increased?

Even if you fix the supply and labor cost problems, property valuation will not go down or only minimally and will not address the affordability problem.

So affordability is the key to COL and by extension being able to buy a roof over your head. So how to fix the lack of affordability?

I don't really have many ideas here.

• If the Greens policy were to be implemented, at least that money that would've otherwise gone to greedy investors could be used to relieve Hecs debts for example?, increasing the money in the purse of those who need it most.
• Subsidised tertiary education / training in sectors where it's needed most? Like construction? Is there already subsidised tafe spots for such a thing?
• Maybe a UBI, our country can afford it, we've seen it during Covid, anything on top of your UBI is yours to save for a deposit. If we had a UBI where people can afford the basics then this drives the economy, right now people aren't spending on the basics because they can't afford.
• If not a UBI, then increase welfare that allows people to afford to spend on the basics and drive the economy.

All of this doesn't really amount to much in regard to saving for a deposit but it'd be better than what is current.

 

[Seeds]

Reading an interesting book at the moment that basically claims the housing crisis is the result of the left poltical parties push for increased building regulation that begun in the 1970s (particularly environmental regulation) that lead to a collapse in home construction growth and explosion in construction costs, particularly environmental regulation. It focuses on the US example but a lot of its reasoning applies across the developed world.


This problem has impacted not only housing but all building construction. And ironically now its greatly harming the build out of renewable and transmission as lawyers make it almost impossible to build in the developed world.

 

[H00t]

Reading an interesting book at the moment that basically claims the housing crisis is the result of the left poltical parties push for increased building regulation that begun in the 1970s (particularly environmental regulation) that lead to a collapse in home construction growth and explosion in construction costs, particularly environmental regulation. It focuses on the US example but a lot of its reasoning applies across the developed world.


This problem has impacted not only housing but all building construction. And ironically now its greatly harming the build out of renewable and transmission as lawyers make it almost impossible to build in the developed world.

Given the current standard of new buildings in Australia the last thing that comes to mind is that’s it’s too regulated.

Problems like land banking, airbnb, supply issues and the government
inflating property prices are actual issues creating the housing crisis.

 

[Seeds]

Given the current standard of new buildings in Australia the last thing that comes to mind is that’s it’s too regulated.

Problems like land banking, airbnb, supply issues and the government
inflating property prices are actual issues creating the housing crisis.

Someone clearly hasn't tried to build a new house before. The regulations on what you have to build is insane in this country.

 

[Johnny Bananas]

Reading an interesting book at the moment that basically claims the housing crisis is the result of the left poltical parties push for increased building regulation that begun in the 1970s (particularly environmental regulation) that lead to a collapse in home construction growth and explosion in construction costs, particularly environmental regulation. It focuses on the US example but a lot of its reasoning applies across the developed world.

This problem has impacted not only housing but all building construction. And ironically now its greatly harming the build out of renewable and transmission as lawyers make it almost impossible to build in the developed world.

Nonsense. The issue with supply is three-fold:

1. There is a massive shortage of experienced tradies, particularly in the construction sector. This has existed for at least the past 20 years and never been adequately addressed. It's no mystery why the CFMEU is more powerful than other unions, it's simply a question of the demand and supply of skilled workers. This, combined with the inflation in building materials costs, is what is responsible for the increasing cost of construction.

2. Height restrictions reduce the ability to construct more apartment blocks. This is nothing to do with environmental regulations and everything to do with NIMBYism. And it isn't the fault of the left alone, but of political parties from all sides of the spectrum. To be fair to the NIMBYs, they do sometimes pose valid questions around whether the infrastructure in the area will cope with the extra residents. This can be easily addressed by imposing infrastructure charges on the developers. However, both major parties have excused developers from needing to contribute to infrastructure improvements on many occasions. This is nothing short of corporate welfare, privatising the profits and socialising the losses.

3. The private sector has no incentive to build affordable housing, as the profit margin is far lower than for market rate housing, and there is no shortage of demand for that market rate housing. If there was an adequate incentive for it, then they would have solved it by now, not just in Australia but also in the UK and Canada, yet all these countries have ridiculously expensive housing anywhere near major cities. So the only solutions are for the government to mandate that every private development contain a percentage of affordable housing, or build it themselves through public housing, like they did up until the 1980s when the "greed is good", "government can't do anything right" era of free market fetishism took hold.

On the demand side of the equation, there are also three big issues:

1. Demand is artificially inflated by all the tax incentives for property investment, including negative gearing and the capital gains tax discount. The system is so thoroughly rigged that an investor was being silly if they put their money in almost anything other than property over the past 25 years. This inflated demand ensures there is never a property price correction, and the bargaining power of tradies continues to rise, exacerbating construction costs.

2. Australia has failed to geographically decentralise its economy, so all the well-paying jobs are either in the mainland capital cities, adjacent cities like Geelong and the Gold Coast, or jobs in mines that are fly-in fly-out from mainland capital cities. So unless one has a job that can be done entirely remotely, there's little ability to move where housing is cheap and remain in a well-paying job. Consequently, demand for housing in major cities becomes so great that almost all the new construction happens there, crippling the construction of new housing in regional areas, ensuring prices end up rising in those areas too, albeit at a slightly reduced rate than major cities. But this also means there's fewer alternatives to the major cities that are easily affordable and have job prospects.

3. Yes, immigration numbers are high. This is routinely blamed by xenophobes as being the #1 cause of high house prices. I think it's down at #6 actually, but it is still a factor, and reducing the numbers would reduce demand for housing. But I'd argue the raw numbers are less important than the skills of the people coming in, as relatively few immigrants are skilled tradies in the construction industry, the exact type of workers we need to reduce the cost of construction. If the majority of skilled immigrants were in that category, I reckon their effect on housing supply would easily outweigh their effect on housing demand. But even if immigration were drastically reduced, demand would still be huge because of how many people want an(other) investment property.

There isn't just one solution to all of this, each requires its own solution.

On supply:

1. Train more apprentices and bring in more skilled tradies.

2. Roll back height restrictions where critical infrastructure like train stations exist, in return for ensuring developers contribute their fair share to additional infrastructure that the area needs to cope with the additional population.

3. Mandate a percentage of affordable housing in every new private sector development, and/or get governments building public housing at a large scale again. The HAFF is a fake solution, social housing will never be built in numbers large enough to actually stabilise house prices, and they're worse than public housing anyway.

On demand:

1. Remove all incentives for property investors. And none of this grandfather clause bullshit, that's just designed to ensure older generations can continue benefiting from the rort while preventing younger generations from doing the same. There should be a five-year phase-out period for negative gearing and the CGT discount on investment properties, that's more than enough time for existing investors to get their affairs in order and adapt.

2. Actually work at spreading economic activity and investment outside the biggest 7-8 cities. No Australian government has really tried to do this since Whitlam and Dunstan back in the 70s. Maybe there should be tax incentives for businesses operating in regional areas.

3. Reprioritise skilled immigration to put tradies in the construction sector at the top of the priority list. Neither major party has seemed interested in doing this, in fact the current government originally left all tradies off their priority list before adding them back in a year later, but only if they're not well-paid, which is a bizarre set of priorities.

 

[Carn The Berries]

Nonsense. The issue with supply is three-fold:

1. There is a massive shortage of experienced tradies, particularly in the construction sector. This has existed for at least the past 20 years and never been adequately addressed. It's no mystery why the CFMEU is more powerful than other unions, it's simply a question of the demand and supply of skilled workers. This, combined with the inflation in building materials costs, is what is responsible for the increasing cost of construction.

2. Height restrictions reduce the ability to construct more apartment blocks. This is nothing to do with environmental regulations and everything to do with NIMBYism. And it isn't the fault of the left alone, but of political parties from all sides of the spectrum. To be fair to the NIMBYs, they do sometimes pose valid questions around whether the infrastructure in the area will cope with the extra residents. This can be easily addressed by imposing infrastructure charges on the developers. However, both major parties have excused developers from needing to contribute to infrastructure improvements on many occasions. This is nothing short of corporate welfare, privatising the profits and socialising the losses.

3. The private sector has no incentive to build affordable housing, as the profit margin is far lower than for market rate housing, and there is no shortage of demand for that market rate housing. If there was an adequate incentive for it, then they would have solved it by now, not just in Australia but also in the UK and Canada, yet all these countries have ridiculously expensive housing anywhere near major cities. So the only solutions are for the government to mandate that every private development contain a percentage of affordable housing, or build it themselves through public housing, like they did up until the 1980s when the "greed is good", "government can't do anything right" era of free market fetishism took hold.

On the demand side of the equation, there are also three big issues:

1. Demand is artificially inflated by all the tax incentives for property investment, including negative gearing and the capital gains tax discount. The system is so thoroughly rigged that an investor was being silly if they put their money in almost anything other than property over the past 25 years. This inflated demand ensures there is never a property price correction, and the bargaining power of tradies continues to rise, exacerbating construction costs.

2. Australia has failed to geographically decentralise its economy, so all the well-paying jobs are either in the mainland capital cities, adjacent cities like Geelong and the Gold Coast, or jobs in mines that are fly-in fly-out from mainland capital cities. So unless one has a job that can be done entirely remotely, there's little ability to move where housing is cheap and remain in a well-paying job. Consequently, demand for housing in major cities becomes so great that almost all the new construction happens there, crippling the construction of new housing in regional areas, ensuring prices end up rising in those areas too, albeit at a slightly reduced rate than major cities. But this also means there's fewer alternatives to the major cities that are easily affordable and have job prospects.

3. Yes, immigration numbers are high. This is routinely blamed by xenophobes as being the #1 cause of high house prices. I think it's down at #6 actually, but it is still a factor, and reducing the numbers would reduce demand for housing. But I'd argue the raw numbers are less important than the skills of the people coming in, as relatively few immigrants are skilled tradies in the construction industry, the exact type of workers we need to reduce the cost of construction. If the majority of skilled immigrants were in that category, I reckon their effect on housing supply would easily outweigh their effect on housing demand. But even if immigration were drastically reduced, demand would still be huge because of how many people want an(other) investment property.

There isn't just one solution to all of this, each requires its own solution.

On supply:

1. Train more apprentices and bring in more skilled tradies.

2. Roll back height restrictions where critical infrastructure like train stations exist, in return for ensuring developers contribute their fair share to additional infrastructure that the area needs to cope with the additional population.

3. Mandate a percentage of affordable housing in every new private sector development, and/or get governments building public housing at a large scale again. The HAFF is a fake solution, social housing will never be built in numbers large enough to actually stabilise house prices, and they're worse than public housing anyway.

On demand:

1. Remove all incentives for property developers. And none of this grandfather clause bullshit, that's just designed to ensure older generations can continue benefiting from the rort while preventing younger generations from doing the same. There should be a five-year phase-out period for negative gearing and the CGT discount on investment properties, that's more than enough time for existing investors to get their affairs in order and adapt.

2. Actually work at spreading economic activity and investment outside the biggest 7-8 cities. No Australian government has really tried to do this since Whitlam and Dunstan back in the 70s. Maybe there should be tax incentives for businesses operating in regional areas.

3. Reprioritise skilled immigration to put tradies in the construction sector at the top of the priority list. Neither major party has seemed interested in doing this, in fact the current government originally left all tradies off their priority list before adding them back in a year later, but only if they're not well-paid, which is a bizarre set of priorities.

This is a pretty logical summation of what could/should be done. Sadly, I don't think there is political will on either side of the isle to address most of this, and there are some practical limitations as well (diversifying where employment hubs are is something that will take decades, if not generations to reap benefits).

The centralised design of our major cities is the single biggest contributor to decreasing housing affordability (IMHO). There is limited scope for development close to capital cities (though changes to density restrictions may help to combat that to some degree) and people want to live as close as possible to where they work (a large % of those being in the CBDs).

We can tinker around the edges with policy to address this, but as long as a large chunk of the population are working in centralised hubs I don't see the issue going away.

 

[Johnny Bananas]

This is a pretty logical summation of what could/should be done. Sadly, I don't think there is political will on either side of the isle to address most of this,

Of course not. Almost all politicians have property portfolios themselves, and they all know there are more home owners than aspiring first home buyers amongst the voting population. It's a great example of self-interest versus the national interest, and our political culture is nowhere near being decent or principled enough for most politicians to choose the national interest. As much as I'm unimpressed by Mehreen Faruqi being a landlord at all, I'm at least appreciative that she still advocates for dismantling tax breaks for landlords.

and there are some practical limitations as well (diversifying where employment hubs are is something that will take decades, if not generations to reap benefits).

Indeed, and this is rarely bipartisan either. The Liberals immediately ripped up Whitlam's plans for Albury-Wodonga and starved all funding to Dunstan's efforts in Monarto as soon as they got in. This is one reason why Australia is very reactive in terms of planning, not proactive like the Scandinavians and the Japanese.

It isn't the end of the world if we don't decentralise, but it does mean we'll just have bigger and bigger major cities and little else in the way of development, outside of satellite towns orbiting the major cities and a few sea change and tree change communities. Get ready for 10 million people in Melbourne.

The centralised design of our major cities is the single biggest contributor to decreasing housing affordability (IMHO). There is limited scope for development close to capital cities (though changes to density restrictions may help to combat that to some degree) and people want to live as close as possible to where they work (a large % of those being in the CBDs).

This is true, but it's not insurmountable if we truly embraced dense living in major cities. I think Sydney is starting to get to that level, and it's also probably the most decentralised of the the major cities, with plenty of white collar businesses in North Sydney, Chatswood and Parramatta.

We can tinker around the edges with policy to address this, but as long as a large chunk of the population are working in centralised hubs I don't see the issue going away.

I don't know, Tokyo is apparently quite affordable (albeit for a small apartment size by Australian standards).

 

[Carringbush2010]

Remove all incentives for property developers

Developers or investors or both?

There should be a five-year phase-out period for negative gearing and the CGT discount on investment properties, that's more than enough time for existing investors to get their affairs in order and adapt.

That's all good and well, until the mention of the policy 'we're going to phase out tax concessions for investment properties over five years'

As soon as that's mentioned then property value drops just on that news...........unless it is grandfathered to protect those just tryna get ahead investors, like those who have mortgaged an investment property and are renting themselves or couch surfing or the mums and dads just tryna get ahead like the rest of us. Read the large bulk of property investors.

The Greens policy is best for this, it takes away incentive for the greedy multiple owners (who are the few in percentage of investors but a large part of the price inflation problem), but it also doesn't throw the current Jan and Joe public investors under the bus at the same time.

As for the rest of your post, totes agree re immigration, training (I believe there is Tafe courses for construction that may be free or discounted? Not sure) and supply issues (driving material costs up)

 

[Scotland]

The Greens policy is best for this

Unlikely.

Anyway, building houses is all well and good but the Google tells me 177,000 dwellings were constructed last year. That's enough for maybe 450-500k people, and the net migration intake was 510,000. So we're treading water if not going backwards in most markets. What we actually need is to slow immigration right down and keep building houses. Growth in demand outpaces growth in supply and that won't self correct, it needs intervention.

Stabilising demand and supply is only one piece of the puzzle. Who is building new dwellings and who is buying them? No point building 100,000 new homes for first home buyers if every first home buyer is competing with 5 investors. You can remove negative gearing completely but you are still left with the issue that equity in the housing market is disproportionately held. I am in a better position to buy an investment property equivalent to my first home than I was when I bought my first home. And that's ****ed because under no circumstance do I need a second or third or tenth roof over my head.

The nation would be so much better off if people invested capital into incoming producing assets but people are so obsessed with real estate they don't understand the damage high asset prices do. Even as they sit their complaining that their coffee and eggs cost $48. Well maybe if leasing a cafe didn't cost tens of thousands of dollars... ah nevermind.

 

[Carringbush2010]

Anyway, building houses is all well and good but the Google tells me 177,000 dwellings were constructed last year. That's enough for maybe 450-500k people, and the net migration intake was 510,000.

Well net migration isn't going to sustain to those numbers. It's clear the sentiment is to reduce net migration, because supply does not meed demand.

The current govt. has alluded this and have alluded a decrease in net migration.

Who is building new dwellings and who is buying them? No point building 100,000 new homes for first home buyers if every first home buyer is competing with 5 investors.

And the greens policy would remove incentive for the greedy investors, not those who have one investment property which is the overwhelming majority of property investors

You can remove negative gearing completely but you are still left with the issue that equity in the housing market is disproportionately held.

Experts say that removing tax concessions like NG adn CGT won't move the needle much in lowering property value. And like I said that shouldn't be the aim anyway because the bulk of investors aren't the greedy mulitple owners, the multiple owners are the ones with financial backing squeezing the first home buyers out of the market. Not the tryna get ahead 1 property owners. As you said.

The aim should be to as I said in the post you replied to is to increase affordability, forcing reduction in property value only hurts the tryna get ahead investors

The greens policy doesn't remove tax concessions for the 1 property investors, only for multiple property owners

And that's ****ed because under no circumstance do I need a second or third or tenth roof over my head.

Regardless, as I've already stated, people buy property in an attempt to get ahead, grow their wealth above being living on the week to week wage. It's a slog for the most.

Property appreciates in value regardless of any economic landscape, after WWII we had an abundance of property and STILL the valuation appreciated, sure not as much as now but none the less it still did and has done in perpetuity. Apart from some minor value depreciations, exception rather than the rule.

That's why property has always been and always will be an attractive investment option because the risk is less than that of other investments

The nation would be so much better off if people invested capital into incoming producing assets but people are so obsessed with real estate they don't understand the damage high asset prices do

And that will never change, see above.

Even as they sit their complaining that their coffee and eggs cost $48. Well maybe if leasing a cafe didn't cost tens of thousands of dollars... ah nevermind.

Yeah you're talking about the greedy investors, not the majority.

 

[Jello_B]

It's a pretty sensible policy, would like to hear the arguments against that weren't blatant self interest.

I disagree with the second dot point if it’s referring to company shares. As a company owner, who bought shares in the company after paying tax, has paid company tax and other taxes on company income, to then lose the CGT when I sell those shares to another employee in the business (who also paid tax go buy those shares), I don’t agree with

 

[Johnny Bananas]

Rather than simply winding back tax concessions for property investors, in a perfect world I'd like to impose a limit on the number of properties one individual can own. Either a hard limit or a sort of annual luxury tax for any residential properties above what is reasonable for financial security. Subdivisions and apartments in a newly constructed building get a certain grace period and then must change hands or be subject to fines/extra tax.

 

[Scotland]

Well net migration isn't going to sustain to those numbers. It's clear the sentiment is to reduce net migration, because supply does not meed demand.

The current govt. has alluded this and have alluded a decrease in net migration.

Govts allude to things all the time. The proof is always in the pudding. Migration = overall GDP increase. Govts care about this more than they do falling GDP per capita and falling real living standards. It NEEDS to happen ASAP.

And the greens policy would remove incentive for the greedy investors, not those who have one investment property which is the overwhelming majority of property investors

Experts say that removing tax concessions like NG adn CGT won't move the needle much in lowering property value. And like I said that shouldn't be the aim anyway because the bulk of investors aren't the greedy mulitple owners, the multiple owners are the ones with financial backing squeezing the first home buyers out of the market. Not the tryna get ahead 1 property owners. As you said.

The aim should be to as I said in the post you replied to is to increase affordability, forcing reduction in property value only hurts the tryna get ahead investors

The greens policy doesn't remove tax concessions for the 1 property investors, only for multiple property owners

Regardless, as I've already stated, people buy property in an attempt to get ahead, grow their wealth above being living on the week to week wage. It's a slog for the most.

Property appreciates in value regardless of any economic landscape, after WWII we had an abundance of property and STILL the valuation appreciated, sure not as much as now but none the less it still did and has done in perpetuity. Apart from some minor value depreciations, exception rather than the rule.

That's why property has always been and always will be an attractive investment option because the risk is less than that of other investments

And that will never change, see above.

Yeah you're talking about the greedy investors, not the majority.

Every investor is greedy. It's the whole point of investing. Why does anyone need two properties?

Each to their own but I give zero ****s if anyone finds owning an investment property or properties a "slog". Pretty simple solution, don't own one. You know what's a slog? Not having a roof over your head.

Whatever the strategy, the problems still exist about the current state of property ownership. Round numbers but a third of properties are owned outright. Three quarters of people over 60 own property compared to a third of people under 30. Etc. This will shift over the next decade or so as Gen X/Gen Y inherit wealth from the boomers.

The only people I know over 60 who currently have a home loan would have gained $1m+ in equity since they purchased the property and previously used equity available to start a business. Between relatives and family friends that would be 30 or 40 households and I can't think of anyone else who rents or pays a loan. I know two people my own age or younger that own their homes outright. Two. This is pretty common as most people don't have the luxury of living mortgage free in their 30s and 40s but most people I know are still impacted in some way by house prices, rents, interest rates etc. in that phase of life. But the concentration of ownership still impacts market dynamics. There is discouraging people from accumulating property and there is the effect of people already having accumulated property. I don't see removing negative gearing or changing CGT concessions leading to a glut of affordable properties on the market or falling rents.

If you don't solve the root cause of endless population growth then the rest is window dressing. I still think that property is taxed incredibly poorly. If I sell my house and buy another whether I upgrade, downgrade or whatever then I will end up paying something in the vicinity of $50-100k in stamp duty and commission. That is a joke. Obviously commission isn't mandated and people should en masse stop entertaining useless real estate agents but paying tens of thousands of dollars in taxes for a non productive asset built 50 years ago is insane. Govt policies encourage people to buy and hold. But as above if you push that burden onto investors it will just get pushed onto renters while market dynamics stay as they are.

 

[Carringbush2010]

Govts care about this more than they do falling GDP per capita and falling real living standards. It NEEDS to happen ASAP.

Net migration WILL reduce because it is not sustainable, not to mention politically unpopular.

Every investor is greedy. It's the whole point of investing. Why does anyone need two properties?

WRONG! The whole point of investing is wealth creation, there's nothing nefarious about wanting to increase one's wealth.

Are you suggesting that Mums and Dads who have one property to increase their wealth to pass on to their kids are greedy?

Going by your sentiment may as well have a society of no profit at all. the govt. distributes a UBI and the good little slaves be them dentists or fork lift drivers all get the same, all the houses are the same and everyone has one.

We don't people being in better positions than others through investing and or hard work do we?

You must like uniformed authoritarian societies.

Each to their own but I give zero ****s if anyone finds owning an investment property or properties a "slog". Pretty simple solution, don't own one. You know what's a slog? Not having a roof over your head.

If you don't own one then you'll need to rent one, or couch surf or share house or tent at the local footy oval. Why not just do what you're alluding what should be done then?

If you don't solve the root cause of endless population growth then the rest is window dressing.

The root causes are many, supply and demand is one, and affordability is another. It's not just flick a switch and it's all fixed

Your posts gives the impression your judgement is clouded by emotion / anger.

You should direct your anger at the greedy multiple property owner investors (who are the overwhelming minority) NOT the mum and dads tryna create wealth to get their kids through school or build a nest egg for them.

Taking away incentive to invest in multiple properties is what you should be barracking for.

Your grouping of ALL investors as greedy shows how out of touch you really are on the subject.

 

[Kram]

I'm with Scotland greed for a lack of a better word, is good.

 

[Scotland]

Net migration WILL reduce because it is not sustainable, not to mention politically unpopular.

Can I have next week's lotto numbers?

WRONG! The whole point of investing is wealth creation, there's nothing nefarious about wanting to increase one's wealth.

What do you think 'wealth creation' is exactly?

Are you suggesting that Mums and Dads who have one property to increase their wealth to pass on to their kids are greedy?

Moving the goal posts. If you want to buy a house to give to your kids when they are older then that's your prerogative. I've met 0 people who did this, but plenty of people who talk about how hard it is for the kids to get into the market who themselves own investment properties.

Going by your sentiment may as well have a society of no profit at all. the govt. distributes a UBI and the good little slaves be them dentists or fork lift drivers all get the same, all the houses are the same and everyone has one.

We don't people being in better positions than others through investing and or hard work do we?

You must like uniformed authoritarian societies.

Uninformed nonsense.

Buying and selling houses creates nothing. I could sell my house tomorrow for $1m more than I paid for it (I wish). It's sill the same house it's always been. It's not like I paid a carpenter $20k and a painter $10k and a plumber $5k. and that's why the value went up. Just a pile of bricks and tin sitting on the same plot of land it has for decades.

If it takes earning $100k to own a house and you earn $200k then you can in theory buy two houses. Or one bigger, nicer house. Or a big arse boat. Whatever.

People are allowed to be successful. If you think I'm some commie poster then wowee are you in the minority. I don't know why you are so fixated on people owning two houses being 'just getting ahead' but three is bad. Buy as many as you want, just don't cry if the market goes down and your investment loses you money. You could buy $1000 of BHP shares tomorrow. Or $10,000. Or $10m. And then when the share price halves you only have $500. Or $5,000. Or $5m. Why would I feel sorry for you either way? That's investing. Risk and reward.

If you don't own one then you'll need to rent one, or couch surf or share house or tent at the local footy oval. Why not just do what you're alluding what should be done then?

The root causes are many, supply and demand is one, and affordability is another. It's not just flick a switch and it's all fixed

Your posts gives the impression your judgement is clouded by emotion / anger.

You should direct your anger at the greedy multiple property owner investors (who are the overwhelming minority) NOT the mum and dads tryna create wealth to get their kids through school or build a nest egg for them.

Taking away incentive to invest in multiple properties is what you should be barracking for.

Your grouping of ALL investors as greedy shows how out of touch you really are on the subject.

All investors want the same thing. Which is to make money. People invest in real estate primarily because of capital growth. This isn't controversial. If there are 27m people and 10m houses what does it really matter if 1m or 5m or 9m people own the 9m that are rented? If you want to buy one investment property or 5 or 200 have at it. Just don't sook if the market does market things.

My judgement isn't clouded by anything. I have a house and for a while had two. I would probably be financially better off if I kept playing the game and leveraging upwards. I'm just a realist. There are only so many houses and people competing to own them to make money with people who want their heads to stay dry when it rains is problematic. Housing, unlike other asset classes is a societal need. Most people can get by without shares or term deposits or Rembrandts. Harder to get by without housing.

I just got my water bill the other day. Costs $2.66/kL here. Power is about 29 c/kWh. I don't know the average use per household but it's there's a finite amount of each total for the level of infrastructure at a given point in time. Would you be happy with people buying the power and water allocations of other households? Is it OK for my neighbours to pay $5/kL for water because that's the market rate for water re-selling? These concepts sound silly but that is basically how we've commoditised housing.

Society would be better off if real estate was cheaper and incomes were higher. But we've totally lost sight of that. Change my mind. I've seen breakdowns before of the cost of a litre of petrol. This much is excise and GST, this much is exploration and refining, this much is transport, this much is what the servo actually makes etc. People would be shocked to see the same thing for household budgets and retail/hospitality purchases. 'Yes your sandwich is $12. $2 is ingredients, $2 is labour, $1 is overheads and utilities and the rest is paying the least on a 50 year old premises'.

 

[btdg]

For me, the unsolvable problem is stamp duty.

Part of the issue with housing is that it isn't a single market. It's two markets (rental and owner occupied). Or it's 100 markets (each suburb). Or it's even sub-markets there (apartments in South Yarra Vs family houses in Toorak Vs holiday homes on Lorne).

At different stages in their lives people want to buy and sell in different housing markets and the decision to move into a new housing market is now almost unequivocally the worst financial decision you can make.

To give an example, my wife and I purchased our first home 15 years ago and to do so paid around $65,000 in tax, which we borrowed to pay, and so ultimately paid about $100,000 for over 9 years. Then we moved to a family house and paid around $95,000 in stamp duty.

The penalty for moving is just far too damn high. But how else do you really free up supply? Want more family homes, or to knock down rebuild more apartments - convince empty nesters to downsize. Want more townhouses or apartments - convince people on big blocks to sell to developers.

I honestly think the actual COST of housing isnt too far off where it should be, all other things being equal
A far bigger issue to me is MISMATCHED housing - people are trapped living into the wrong house, and when they go looking there aren't enough of what the want, and prices easily get distorted or it takes too long, or they lose too much on the turnaround.

Combined that with negative gearing and you get big incentives for investors to hold rather than selling as well - they have already paid stamp duty, get tax concessions while they hold, then face a CGT bill on sale...

But I don't know how you fix it. Eliminating stamp duty crushes state revenue. Shifting to a land tax has the same issue. We have got ourselves trapped in the reality where half the population is living in the wrong house...

 

[Billy ray]

For me, the unsolvable problem is stamp duty.

Part of the issue with housing is that it isn't a single market. It's two markets (rental and owner occupied). Or it's 100 markets (each suburb). Or it's even sub-markets there (apartments in South Yarra Vs family houses in Toorak Vs holiday homes on Lorne).

At different stages in their lives people want to buy and sell in different housing markets and the decision to move into a new housing market is now almost unequivocally the worst financial decision you can make.

To give an example, my wife and I purchased our first home 15 years ago and to do so paid around $65,000 in tax, which we borrowed to pay, and so ultimately paid about $100,000 for over 9 years. Then we moved to a family house and paid around $95,000 in stamp duty.

The penalty for moving is just far too damn high. But how else do you really free up supply? Want more family homes, or to knock down rebuild more apartments - convince empty nesters to downsize. Want more townhouses or apartments - convince people on big blocks to sell to developers.

I honestly think the actual COST of housing isnt too far off where it should be, all other things being equal
A far bigger issue to me is MISMATCHED housing - people are trapped living into the wrong house, and when they go looking there aren't enough of what the want, and prices easily get distorted or it takes too long, or they lose too much on the turnaround.

Combined that with negative gearing and you get big incentives for investors to hold rather than selling as well - they have already paid stamp duty, get tax concessions while they hold, then face a CGT bill on sale...

But I don't know how you fix it. Eliminating stamp duty crushes state revenue. Shifting to a land tax has the same issue. We have got ourselves trapped in the reality where half the population is living in the wrong house...

15% gst rate may (i stress may)be enough to eliminate stamp duty.
States just need to agree to it as its their tax money.