Society/Culture Australian Property Prices to Crash?

[HPKS]

I've heard of people who are selling up now before the rate rises make servicing the loan unworkable, which sucks for those people working to get a start as the people who already hold property are going to be waiting to buy up those opportunities and the rich will get richer.

The rich will buy their property to rent it out back to them.

 

[Taylor]

The rich will buy their property to rent it out back to them.

And as long as wage growth remains under the rise in cost of living (as CPI basket of goods swaps out everything down to bread and milk to keep the inflation figure low) the value of one home in dollar figures will rise and rise and those renting will never get into the market

 

[HPKS]

And as long as wage growth remains under the rise in cost of living (as CPI basket of goods swaps out everything down to bread and milk to keep the inflation figure low) the value of one home in dollar figures will rise and rise and those renting will never get into the market

Exactly. It’s why so many are so desperate to buy a house. We have conditioned the public to believe property will continue to grow at these huge rises they have over the years so they think if they don’t get in now they’ll never get a look in and will be 62 years old still renting with sfa to show for a lifetime of working.

How do you fix it? We had the chance to start fixing it but the public wouldn’t vote it in. So this cycle will pick up again in a couple years time and we’ll be in exactly the same place again.

 

[Simon_Nesbit]

Guess it's time to cut back on those discretionary expenses like Fuel, Heating and Food!

 

[HirdsTheWord]

They are selling up because they expect that buffer to be blown out of the water with rises above 3%.

The rich will get richer.

that is a different argument to rate rises.

The rich will always get richer as long as people are allowed tax breaks to invest in property. That has nothing to do with rate rises.

This is why generally the people who benefit of things like negative gearing are the top 20% of income earners. Rising rates wont change this.

 

[Blue1980]

I have zero sympathy.

Banks are supposed to ensure people have a 2%-3% buffer.

If they are selling up after 0.85% RBA rise they clearly could not afford the property they bought in the first place.

People need to crash and burn to ensure the housing market is sustainable long term.

Agree 100%, if you can't handle RBA putting up rates to 0.85% you shouldn't have a mortgage, simple.

 

[scoman]

Guess it's time to cut back on those discretionary expenses like Fuel, Heating and Food!

Not quite smashed avo on toast is it.

 

[Taylor]

that is a different argument to rate rises.

The rich will always get richer as long as people are allowed tax breaks to invest in property. That has nothing to do with rate rises.

This is why generally the people who benefit of things like negative gearing are the top 20% of income earners. Rising rates wont change this.

The rich aren't paying more with this rate rise, just the regular poor people who didn't get the benefit of the cash injected into the market.

Now the rich will also swoop in to pick up the poorer peoples assets at discount prices greater than other poor can afford and the nightmare gets worse.

The interest rates pushing people out of their homes ad everything in life gets more expensive isn't hitting the big end of town.

 

[ExcitementMachine]

Not quite smashed avo on toast is it.

Smashed Avo on toast has been a bargain the last few years anyway.

 

[scoman]

Smashed Avo on toast has been a bargain the last few years anyway.

Almost had it this morning. Went eggs on toast instead.

 

[HirdsTheWord]

The rich aren't paying more with this rate rise, just the regular poor people who didn't get the benefit of the cash injected into the market.

Now the rich will also swoop in to pick up the poorer peoples assets at discount prices greater than other poor can afford and the nightmare gets worse.

The interest rates pushing people out of their homes ad everything in life gets more expensive isn't hitting the big end of town.

You are not understanding.

Rich people en masse would not be buying poor Peoples homes if they did not get tax benefits to do so.

Tax benefits fuel housing growth. Without them housing doesn’t grow as fast thus there is much less benefit for someone to buy them.

They are 2 different issues.

Investment loans are already much higher than OO loans. As long as you can claim a loss on property people will use it.

 

[Taylor]

You are not understanding.

Rich people en masse would not be buying poor Peoples homes if they did not get tax benefits to do so.

Tax benefits fuel housing growth. Without them housing doesn’t grow as fast thus there is much less benefit for someone to buy them.

They are 2 different issues.

Investment loans are already much higher than OO loans. As long as you can claim a loss on property people will use it.

You need to look at it as a preservation of wealth strategy. Property is worth one property worth of whatever the figure ends up being post rampant inflation cycle.

You need only look at the strategy of blackrock buying so much residential property. It's treating it as a lifeboat for wealth.

This isn't something anyone who will be impacted created, they will just pay the bill for it when the wealthy park their money into property to ride out inflation and the poor will never get a chance to own it again.

I'm not expecting the real value of property to change, it might even go down, but the value as a measure of ability to pay for it will be through the roof. Wage growth won't keep up with the actual cost of living increases because the CPI is distorted by basket substitutions. The ability to pay people more will diminish when there is less surplus funds in people pockets after fuel, housing and food to spend on non critical "luxuries" like entertainment.

 

[Deliverance]

When are they going to return to .25 multiples

Oh well, at least RBA has made a clear admission that they are well behind the curve.

I want them to do something weird, like 0.33

 

[Madas]

The rich aren't paying more with this rate rise, just the regular poor people who didn't get the benefit of the cash injected into the market.

Now the rich will also swoop in to pick up the poorer peoples assets at discount prices greater than other poor can afford and the nightmare gets worse.

The interest rates pushing people out of their homes ad everything in life gets more expensive isn't hitting the big end of town.

“The rich get richer
The poor get the picture
The bombs never hit you when you're down so low”

 

[Suspense]

Locking in last year at 1.99% fixed-rate until mid 2025 was money for jam.

 

[Suspense]

You are not understanding.

Rich people en masse would not be buying poor Peoples homes if they did not get tax benefits to do so.

Tax benefits fuel housing growth. Without them housing doesn’t grow as fast thus there is much less benefit for someone to buy them.

They are 2 different issues.

Investment loans are already much higher than OO loans. As long as you can claim a loss on property people will use it.

Negative gearing is a middle class mom and pop tax minimisation strategy - not really the domain of the rich. The rich usually come from inherited wealth - many who still surprisingly have access to pre-CGT assets - sell a property for $3m and pay $0 tax.

In my experience, even younger HNWIs rarely bother with negative gearing - they usually earn business or investment income (not salary and wages) - and so are able to utilise a whole range of other tax minimisation strategies - which wage slaves cannot access (hence the popularity of negative gearing for middle class types).

 

[HirdsTheWord]

Negative gearing is a middle class mom and pop tax minimisation strategy - not really the domain of the rich. The rich usually come from inherited wealth - many who still surprisingly have access to pre-CGT assets - sell a property for $3m and pay $0 tax.

In my experience, even younger HNWIs rarely bother with negative gearing - they usually earn business or investment income (not salary and wages) - and so are able to utilise a whole range of other tax minimisation strategies - which wage slaves cannot access (hence the popularity of negative gearing for middle class types).

No, it isn't.

The people who benefit from negative gearing are generally in the top 25% of income earners.

https://australiainstitute.org.au/wp-content/uploads/2020/12/Who-really-benefits-from-negative-gearing_0.pdf

 

[FRUMPY]

No, it isn't.

The people who use negative gearing are the top 25% of income earners.

just another side brag.....'The people who use negative gearing are the top 25% of income earners - an i am one of them'

look at me, look at me, look at me......

 

[HirdsTheWord]

just another side brag.....'The people who use negative gearing are the top 25% of income earners - an i am one of them'

look at me, look at me, look at me......

how is stating a fact bragging? rofl.

 

[FRUMPY]

how is stating a fact bragging? rofl.

you sit on this thread complaining about the rules but then brag each time about how much assets and money you have - you're just a w***er who is part of your own so called problem that needs fixing......getting tiresome hearing you complain about how much money/assets you have and wont sell the property to people looking for a house at a decent price.....

you just sit here talking rubbish - if you really cared as much about the issue as you say you do then you would sell your property to someone looking to buy a house for half the price you could sell it for......but we know you are only in it for the money.

 

[HirdsTheWord]

you sit on this thread complaining about the rules but then brag each time about how much assets and money you have - you're just a w***er who is part of your own so called problem that needs fixing......getting tiresome hearing you complain about how much money/assets you have and wont sell the property to people looking for a house at a decent price.....

you just sit here talking rubbish - if you really cared as much about the issue as you say you do then you would sell your property to someone looking to buy a house for half the price you could sell it for......but we know you are only in it for the money.

lol i never bragged about a thing, the only time i talk about my personal situation is when someone (like you) brings it up.

I was asked once in this thread what my situation is. I was open and honest that I have a high household income and i negatively gear a property. I have also been open with the fact that it is complete bullshit that i am allowed to do it, at my income level. You have mistaken fact for bragging. Unsurprising considering your posting quality.

I have no issues admitting i take the piss out of a system geared to favor high income households. I'd be financially illiterate not too. Me alone stopping will not change the system as a whole, if it did i'd sell my investment property tomorrow. Government Legislation and Policy will of which I would support as a high income household.

What your problem is, is jealously thus you reading into a fact as a brag. I am unfazed at what you think is tiresome because frankly you don't add anything to the discussion except taking personal shots, because as a low IQ poster, that's all you can do.

 

[HirdsTheWord]

You need to look at it as a preservation of wealth strategy. Property is worth one property worth of whatever the figure ends up being post rampant inflation cycle.

You need only look at the strategy of blackrock buying so much residential property. It's treating it as a lifeboat for wealth.

This isn't something anyone who will be impacted created, they will just pay the bill for it when the wealthy park their money into property to ride out inflation and the poor will never get a chance to own it again.

I'm not expecting the real value of property to change, it might even go down, but the value as a measure of ability to pay for it will be through the roof. Wage growth won't keep up with the actual cost of living increases because the CPI is distorted by basket substitutions. The ability to pay people more will diminish when there is less surplus funds in people pockets after fuel, housing and food to spend on non critical "luxuries" like entertainment.

Companies buying residential property is relatively only a new thing, AND it only really started as interest rates plummeted, as interest rates go up (especially the forecasted long term rates cycle we see now) wholesale purchases of residential property is less attractive as companies taking them out are all of a sudden paying massive amounts more of interest payments, as well as banks will see them as more high risk investments thus limiting lending.

Go watch below. Very interesting talk about what have said about BlackRock and other Financial Companies buying mass amounts of housing in the states.



if you wanted to park cash during inflation things like, OIL, gold etc are much better safe havens than property. only an idiot would park money in housing for inflation, unless they are willing and able to wait multiple years to get their money back.

 

[FRUMPY]

lol i never bragged about a thing, the only time i talk about my personal situation is when someone (like you) brings it up.

I was asked once in this thread what my situation is. I was open and honest that I have a high household income and i negatively gear a property. I have also been open with the fact that it is complete bullshit that i am allowed to do it, at my income level. You have mistaken fact for bragging. Unsurprising considering your posting quality.

I have no issues admitting i take the piss out of a system geared to favor high income households. I'd be financially illiterate not too. Me alone stopping will not change the system as a whole, if it did i'd sell my investment property tomorrow. Government Legislation and Policy will of which I would support as a high income household.

What your problem is, is jealously thus you reading into a fact as a brag. I am unfazed at what you think is tiresome because frankly you don't add anything to the discussion except taking personal shots, because as a low IQ poster, that's all you can do.

so you are just part of what you claim to be the problem.....

and jealous - no not at all. ive got no issue with investment properties and people who do it. Secondly, in regard to property prices, there are plenty of houses/packages out there that are affordable for most people wanting to buy a home

 

[Gigantic]

Negative gearing is a middle class mom and pop tax minimisation strategy - not really the domain of the rich. The rich usually come from inherited wealth - many who still surprisingly have access to pre-CGT assets - sell a property for $3m and pay $0 tax.

In my experience, even younger HNWIs rarely bother with negative gearing - they usually earn business or investment income (not salary and wages) - and so are able to utilise a whole range of other tax minimisation strategies - which wage slaves cannot access (hence the popularity of negative gearing for middle class types).

It may have the perception to be a mum and dad tax minimisation strategy but its design and effect really isn't.

1/4 of all property investors who are negatively geared get no net benefit from negative gearing because they simply don't have a large enough tax liability for the deductions to make sense.

The tax benefit on an average property for someone earning the median salary is going to be minuscule. Compared to someone on >$180k with multiple negatively geared properties.

 

[HirdsTheWord]

so you are just part of what you claim to be the problem.....

and jealous - no not at all. ive got no issue with investment properties and people who do it. Secondly, in regard to property prices, there are plenty of houses/packages out there that are affordable for most people wanting to buy a home

yes, of course i am part of the problem, and I'm certainly not bragging about it, i didn't even mention my situation before you brought it up this morning. But it is not my job to fix it, my job is to ensure my family has the best possible life within the laws of the country. All I can do is say i would support the removal of my tax benefits, i didn't say i am a beacon of morality. If you think me selling my property would change the system , than great ill sell mine tomorrow, but we both know this is a cheap line by you, an uneducated one at that.

You have a different opinion to me, whatever, that's great. But you are the one on here making personal attacks calling me a w***er and such. Why? because i believe high income earners like me should not be able to claim a tax benefit to buy additional housing?. Pull the other one mate. You are 100% jealous whether you claim it or not.

There are plenty of housing packages 1.5 hours commute each away from CBD's that's great. I don't believe this should be the only option for people to buy a house when the benefiters of tax investments are typically already wealthy people.

You don't like my stance, great. Lets discuss it rather than you acting like a *******.