Society/Culture Australian Property Prices to Crash?

[Royal Flush]

Banks assess you on a serviceability of 7% interest.

While the rates are low, smart people will/should be piling extra dollars into their mortgage

Don't get sick, lose your job, get pregnant, have a reduction in pay or have interest rates move upwards or you're f’ed.

Interest rates hit 5%? oops it's now $870 a week

On Pixel 4a (5G) using BigFooty.com mobile app

 

[HirdsTheWord]

Don't get sick, lose your job, get pregnant, have a reduction in pay or have interest rates move upwards or you're f’ed.

Interest rates hit 5%? oops it's now $870 a week

this is why people shouldn't be over extending themselves and to borrow responsibility.

If you do not have flexibility in your financials to be able to deal with issues as they arise, like losing your job etc then you are living above your means.

only an idiot doesn't allow contingency when borrowing.

 

[HirdsTheWord]

Banks assess you on a serviceability of 7% interest.

While the rates are low, smart people will/should be piling extra dollars into their mortgage

On Pixel 4a (5G) using BigFooty.com mobile app

Smart people will always pile money into their mortgages, regardless of rate figures.

 

[Kwality]

Which is why not many single people are buying houses!

A young couple, no kids, both working full time in entry level qualified jobs (say 120kpa combined income). This will comfortably get to a $700k borrowing which with 100k savings that will get you to a 750k house. That's a whole lot of house for a first home-buyer with minimal savings, and repayments of $650pw shouldn't be a stretch - certainly not a lot more than equivalent rental.

LIVE AT HOME. AS LONG AS YOU CAN. SAVE. Buy as cheap as you can, and ALWAYS commit as much to permanent savings as you can.

Access to super with qualification as a deposit should be considered despite the vested interests of the Superannuation industry. The current system puts that money into the hands of the landlords.

 

[HirdsTheWord]

Access to super with qualification as a deposit should be considered despite the vested interests of the Superannuation industry. The current system puts that money into the hands of the landlords.

I thought you could withdraw super? But Banks don't tend to like it, they may not grant the loan if you can show actual savings.

 

[Deliverance]

Will they have the guts to pull the trigger?

RBA tipped to put brakes on house prices in 2021

RBC Capital says lending restrictions could be imposed on banks again this year, with RBA governor Philip Lowe already laying the groundwork.

www.afr.com

 

[FRUMPY]

this is why people shouldn't be over extending themselves and to borrow responsibility.

If you do not have flexibility in your financials to be able to deal with issues as they arise, like losing your job etc then you are living above your means.

only an idiot doesn't allow contingency when borrowing.

Yep, people who extend themselves way to much and then wonder what happens when the s**t hits the fan.....

 

[Kwality]

Smart people will always pile money into their mortgages, regardless of rate figures.

Bit hard when you are trying to build a business - certainly applies to wage & salary earners though.

 

[HirdsTheWord]

Bit hard when you are trying to build a business - certainly applies to wage & salary earners though.

well that's true, obviously you can only do so when able. But it should definitely be a priority over other things.

 

[Kwality]

well that's true, obviously you can only do so when able. But it should definitely be a priority over other things.

Your house can be at the mercy of a bad debt.

 

[Bombermania]

Access to super with qualification as a deposit should be considered despite the vested interests of the Superannuation industry. The current system puts that money into the hands of the landlords.

It is crazy to take capital out of long term investments earning income to then use that capital to buy debt which needs to be paid back.

 

[Deliverance]

We could always scrap negative gearing. I'm not 100% sure. But I have a theory that people don't need more than one house each.

 

[Kwality]

It is crazy to take capital out of long term investments earning income to then use that capital to buy debt which needs to be paid back.

Makes sense for some to have the money being paid in rent now, applied to a mortgage even in the low interest environment.

Its not a one size fits all scenario. $30k in rent versus $25k off your mortgage is a real opportunity for some, more usually professionals in the inner city with $heaps in their super, an expensive life style. I've a daughter in that position.

 

[Golden_6]

It is crazy to take capital out of long term investments earning income to then use that capital to buy debt which needs to be paid back.

This makes sense in basic economic theory, but the reality is that some people would put much more stock in the ability to put a permanent roof over their head.

 

[Kwality]

We could always scrap negative gearing. I'm not 100% sure. But I have a theory that people don't need more than one house each.

Tell that to renters.
We seem to forget negative gearing leads to an income that is taxed. Very widely used by small business operators as a form of super.

 

[Brad Goodman]

We could always scrap negative gearing. I'm not 100% sure. But I have a theory that people don't need more than one house each.

This is groundbreaking!

Unfortunately it’ll be a miracle if a party can ever get elected running with removing negative gearing as a policy.

 

[Deliverance]

Tell that to renters.
We seem to forget negative gearing leads to an income that is taxed. Very widely used by small business operators as a form of super.

People in other countries rent just fine without giving massive tax advantages to those who need them the least.

 

[Deliverance]

This is groundbreaking!

Unfortunately it’ll be a miracle if a party can ever get elected running with removing negative gearing as a policy.

Yep, the last election became a class war. And well, the poor don't have hundreds of millions to sped on LNP smear campaigns.

 

[Royal Flush]

People don't understand what negative gearing is, it's not a law, it's a type of investment.
IE you can make a positively geared investment, as part of a strategy.

And that at some point, a rental property goes from losing money to making money.

So it is no longer negative geared.

On Pixel 4a (5G) using BigFooty.com mobile app

 

[FRUMPY]

It is crazy to take capital out of long term investments earning income to then use that capital to buy debt which needs to be paid back.

Yep, taking Super out to get the deposit for a house in mega stupid

 

[FRUMPY]

Yeah i dont see the issue with negative gearing and investment properties, if someone has the money and or balls to put their money into a rental property, good for them.

 

[Gigantic]

I think the issue some find with negative gearing is the way Australia's system allows you to deduct income produced by one source from another income source. There are not many countries in the world that allows you to do that to the extent that you can in Australia.

The only people who receive tax benefits from negative gearing are high income earners who really don't need the leg up.

 

[Ned_Flanders]

Yeah i dont see the issue with negative gearing and investment properties, if someone has the money and or balls to put their money into a rental property, good for them.

negative gearing was brought in to encourage investment in rental properties because there was a shortage in the market

that has completely reversed now, with a massive oversupply in some areas

negative gearing isnt needed anymore because its reason to be has gone

 

[FRUMPY]

I think the issue some find with negative gearing is the way Australia's system allows you to deduct income produced by one source from another income source. There are not many countries in the world that allows you to do that to the extent that you can in Australia.

The only people who receive tax benefits from negative gearing are high income earners who really don't need the leg up.

who also pay the most tax though, so.....

 

[Gigantic]

who also pay the most tax though, so.....

So what? If it was up to the negative gearers they'd pay no tax at all while enjoying all the tax benefits.