Society/Culture Australian Property Prices to Crash?

Aug 14, 2011
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I own a house and I want it to crash, that or the Government tells me what the long term plan for housing affordability is, so my kid whos 2 has a chance to buy when she is in her 30's without deathriding me and my equity.

The entire problem with housing is its looked at and regulated adhoc as a short term investment opportunity. It should be planned out for the next 30, 40 years. if the clear issue is that interest rates provide such an up and down then regulate it by other means to provide more stability. This sh*t isn't rocket science. But i guess when ministers etc are the ones who own all these investment properties why would they.

I'd argue your home is the best investment you can ever make.
Where you live is your own decision, what you do, where you spend your money are factors that make housing affordability beyond control by Government.

Dick Smith made a few comments recently about levels of migration that drive the economy in the larger population centres:

Plan for two million migrant surge blasted as ‘crazy’ by Dick Smith
Aussie entrepreneur Dick Smith has labelled a plan to bring in two million more migrants post-Covid as “crazy”.

Where immigration goes will effect housing prices for those in their 30s every bit as much as it always has.

The recent agreement between Toll & the TWU, will result in an increased cost of labour, much of which will not be reflected in take home pay, in the same way Super has reduced take home pay.
 
I'd argue your home is the best investment you can ever make.
Where you live is your own decision, what you do, where you spend your money are factors that make housing affordability beyond control by Government.

Dick Smith made a few comments recently about levels of migration that drive the economy in the larger population centres:

Plan for two million migrant surge blasted as ‘crazy’ by Dick Smith
Aussie entrepreneur Dick Smith has labelled a plan to bring in two million more migrants post-Covid as “crazy”.

Where immigration goes will effect housing prices for those in their 30s every bit as much as it always has.

The recent agreement between Toll & the TWU, will result in an increased cost of labour, much of which will not be reflected in take home pay, in the same way Super has reduced take home pay.

Of course your home is best and biggest investment you will make. Buying a house shouldn't lead to you losing money. But you should not be buying a house and expect to make 5-10% year on it, that is the entire problem with the market now. It is an investment before it is a house.

The discussion from now on should be about making the housing market accessible to those who work hard, not just those who already have equity. It's about making the housing market fair, so people who aren't lucky enough to be born when houses were cheap, don't have rich parents but still work hard cant obtain a free standing house within a reasonable suburb to their employment.

This is what the government need to start targeting policy for. If people need to take an economic loss now, so we can protect the ability for future generations to be able to buy a house than that is what needs to be done. Investment into free standing housing needs to be seriously looked at, in a way to drastically reduce or better yet remove investors from the free standing house market. It is the only way this issue is going to be solved.
 
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Harro59

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May 14, 2013
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Yes, that's my point. They want that to feed into retail, hospitality and travel for a bit to get those sectors going again. This will start to increase inflation and naturally rates will rise.

If they put one through now to take the heat out of the housing market it will have down stream impacts on the other industries.

Prices have no doubt increased but some of that is a bubble created by lack of supply, again as we open up and things get back to normal more will come onto the market which will stabilise/reduce prices. If you prematurely add interest rate increases to that, you then have 2 factors potentially reducing prices, creating mortgage stress and putting pressure on lenders,

People who don't own houses want a crash, the RBA doesn't. A stabilisation with a 5-10% reduction to account for the bubble and modest staggered increases to rates would be the best scenario.
A 5 -10% correction is what most are expecting at the moment, likely to come around mid next year.

It was said here earlier it will be linked to the reopening and additional supply. The RBA are hesitant at the moment as the housing industry is driving the economy at the moment with some much of the other GDP offline.

My advice is not to get caught up in the panic buying. People are nuts at the moment. We are looking at buying an solder older house on a larger block and developing it into the family home, but we are ok to wait a bit, a 5% reduction is probably worth waiting for.
 

Madas

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Aug 16, 2020
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This is such a massive , difficult topic and one which I would love to see change within my generation.
The main finger pointing seems to be aimed at Negative Gearing fuelling speculation , which I agree with but feel that the majorities opinions are being clouded by the craziness that is happening in Sydney and Melbourne where ( correct me if I’m wrong) people are buying / building/ renovating all with the intent of flipping it as soon as possible to the next person with the same idea .
This is boom mentality that doesn’t last too long - maybe 2-3 years ( although Sydney seems to be an anomaly?)
To get to my point, and with full disclosure I am someone who has taken advantage of NG as a form of forced savings and investment for retirement.
Theres a difference between the majority of mums and dads ( like me) who buy a rental with the intent of keeping it till retirement and the crazy speculators fuelling this fire in Sydney/ Melbourne.
I can’t be certain but I’d be pretty sure that a lot of people like me who don’t understand shares and possibly haven’t contributed to super as much as they should have as it wasn’t so common in our earlier days or they may be self employed use property as an investment tool for retirement.
My message to those who are anti NG is to be considerate of people like us and also the fact that one day you may be in the position to take advantage of it as an investment tool .
Yes I think the laws around ownership of the property should be strengthened ( property needs to be held for 3-5 years instead of 12 months before CGT is applied, perhaps cap the amount of properties that can be owned to 3 including the primary residence, tighter controls on overseas investment and who actually owns the property)
But as far as NG being a drain on the economy when in reality it is a great tool to provide rental accommodation , maybe aim your angst at the Googles , Facebooks , Mining Companies , corruption etc draining massive amounts of cash out of the country. If you could harness that money to be put towards more public housing you would see real change.
 
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Theres a difference between the majority of mums and dads ( like me) who buy a rental with the intent of keeping it till retirement and the crazy speculators fuelling this fire in Sydney/ Melbourne.

Not in this boom though. This boom early on was driven by owner occupiers and first home buyers. Only in the last half year have we seen investors start to crawl back into the market and add more to the speculation. I don't think mum and dad investors are any less culpable of fueling this boom.

But as far as NG being a drain on the economy when in reality it is a great tool to provide rental accommodation

Perhaps 40 years ago when availability of rental properties was an issue. NG was originally intended to be taken advantage of by new housing, but I think it's fair to say that these days it's used where it can apply, at least until we reached today's low interest rate environment.

From a tax perspective, I don't think the removal of it would really lead to much effect.

But I do think it represents and fuels the common Australian investor psyche around "how can I pay less tax" that i think has become a blight on society. Why? Because it incentivises loss making... people spending a $1 to get back 30c, and asking their accountant how they can pay less tax, rather than how they can get more after tax.
 

Madas

Norm Smith Medallist
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Not in this boom though. This boom early on was driven by owner occupiers and first home buyers. Only in the last half year have we seen investors start to crawl back into the market and add more to the speculation. I don't think mum and dad investors are any less culpable of fueling this boom.



Perhaps 40 years ago when availability of rental properties was an issue. NG was originally intended to be taken advantage of by new housing, but I think it's fair to say that these days it's used where it can apply, at least until we reached today's low interest rate environment.

From a tax perspective, I don't think the removal of it would really lead to much effect.

But I do think it represents and fuels the common Australian investor psyche around "how can I pay less tax" that i think has become a blight on society. Why? Because it incentivises loss making... people spending a $1 to get back 30c, and asking their accountant how they can pay less tax, rather than how they can get more after tax.
Very fair and good points but not considerate of the other side of the equation in the job creation and cash on flow that is created when someone buys / builds and rents out a property.
So yes there is an initial tax saving but then add up all the tax that is created by the following:
Property Taxes
Settlement agent
Real estate agent
Construction workers
Property managers
Maintenance workers
Council rates
Etc. etc

It is a simple , effective way of creating jobs , investment and security that most people can understand and have access to .
I think the huge positive side of it gets lost in the argument for cheaper housing.
 
Very fair and good points but not considerate of the other side of the equation in the job creation and cash on flow that is created when someone buys / builds and rents out a property.
So yes there is an initial tax saving but then add up all the tax that is created by the following:
Property Taxes
Settlement agent
Real estate agent
Construction workers
Property managers
Maintenance workers
Council rates
Etc. etc

It is a simple , effective way of creating jobs , investment and security that most people can understand and have access to .
I think the huge positive side of it gets lost in the argument for cheaper housing.

All those jobs will continue to exist regardless of negative gearing. I don't think we'll see a huge sell-off of investment properties if NG was scrapped.

And if we do, then is the world that much worse off with a few less property managers? They'll get re-skilled and used elsewhere in hopefully more productive activities. Construction and maintenance workers will continue to find work as they do. Or better yet, if the government put money into social housing then there'd be plenty of construction and maintenance jobs to go around.

I don't think creating jobs for the sake of keeping a portion of the investment property market alive is that great of an idea.
 

Madas

Norm Smith Medallist
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All those jobs will continue to exist regardless of negative gearing. I don't think we'll see a huge sell-off of investment properties if NG was scrapped.

And if we do, then is the world that much worse off with a few less property managers? They'll get re-skilled and used elsewhere in hopefully more productive activities. Construction and maintenance workers will continue to find work as they do. Or better yet, if the government put money into social housing then there'd be plenty of construction and maintenance jobs to go around.

I don't think creating jobs for the sake of keeping a portion of the investment property market alive is that great of an idea.
Yes agreed and I was considering that when I posted , that jobs would still be created .
But I do know that for myself and many others , having those tax incentives was the motivation to take the plunge and invest .
All I can say is that I am very happy for that .
Its like forced saving all the while growing an asset . We invest purely for the long term to provide for our retirement, nothing else .
No short term speculation.
For those of us who don’t understand shares or who are self employed and haven’t had the surplus funds to contribute to super , bricks and mortar is our way .
I know you could say that if I had put X amount of $ away every week i would have Y and if I had invested in the ASX I would have Z .
But you have to remember that my generation (and probably still a lot now ) were indoctrinated into investing in property as a means to get ahead and secure our future .
I firmly believe that with other controls , incentives , ways of thinking in place we could have affordable housing as well as retaining the benefits of property as an investment.

Reading back on this I do understand what you younger people are saying, that if we didn’t think of it as an investment then people would invest elsewhere and housing would be sacrosanct.
Utopian and I like it 👌
Just tell me how it can be achieved?
I think even if that ideology was embraced it would take 50-100 years to unravel what we have now . ???
Surely since Feudalism was abolished and mankind was able to enjoy the ownership and security of their own property the world has become a fairer place? ( speaking generally from a Western perspective)
Wow this is a brain bender 🤯
 
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Yes agreed and I was considering that when I posted , that jobs would still be created .
But I do know that for myself and many others , having those tax incentives was the motivation to take the plunge and invest .
All I can say is that I am very happy for that .
Its like forced saving all the while growing an asset . We invest purely for the long term to provide for our retirement, nothing else .
No short term speculation.
For those of us who don’t understand shares or who are self employed and haven’t had the surplus funds to contribute to super , bricks and mortar is our way .
I know you could say that if I had put X amount of $ away every week i would have Y and if I had invested in the ASX I would have Z .
But you have to remember that my generation (and probably still a lot now ) were indoctrinated into investing in property as a means to get ahead and secure our future .
I firmly believe that with other controls , incentives , ways of thinking in place we could have affordable housing as well as retaining the benefits of property as an investment.

Reading back on this I do understand what you younger people are saying, that if we didn’t think of it as an investment then people would invest elsewhere and housing would be sacrosanct.
Utopian and I like it 👌
Just tell me how it can be achieved?
I think even if that ideology was embraced it would take 50-100 years to unravel what we have now . ???
Surely since Feudalism was abolished and mankind was able to enjoy the ownership and security of their own property the world has become a fairer place? ( speaking generally from a Western perspective)
Wow this is a brain bender 🤯
I actually think there's a place for housing as an investment. I myself have an investment property.
 

hamohawk1

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Feb 18, 2011
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Bond rates going absolutely nuts, inflation rising. RBA might want to rethink the 'no rate rises for 3 yrs' mantra.

Even one rate rise and the ensuing higher cost for mortgages doesn't bode well for an economy that requires a bit of post covid spending.
 
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How much CGT paid? Probably none.
 

Opine

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A 5 -10% correction is what most are expecting at the moment, likely to come around mid next year.

It was said here earlier it will be linked to the reopening and additional supply. The RBA are hesitant at the moment as the housing industry is driving the economy at the moment with some much of the other GDP offline.

My advice is not to get caught up in the panic buying. People are nuts at the moment. We are looking at buying an solder older house on a larger block and developing it into the family home, but we are ok to wait a bit, a 5% reduction is probably worth waiting for.
Over past 12 months, my daughter has been searching to buy her first home. She constantly relays examples of vendors adjusting their expected sale price on same property upwards on a weekly basis. I find it frustrating that purchasers are ignoring the comparative sales estimates provided by agents and offering well overs. This is first time I’ve wished for rates to rise, in hope of correction.
 
Over past 12 months, my daughter has been searching to buy her first home. She constantly relays examples of vendors adjusting their expected sale price on same property upwards on a weekly basis.
It's early 00's again.

Damn I wish I had bought another house ten years ago. But at the time they were unvelievable prices. Now they are even MORE unbelievable. It's going to break soon. Has to.
 

Opine

Norm Smith Medallist
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It's early 00's again.

Damn I wish I had bought another house ten years ago. But at the time they were unvelievable prices. Now they are even MORE unbelievable. It's going to break soon. Has to.
I hope so. But in expressing such hope, i fear for the younger gen who have already committed to grossly inflated purchases.
 
Over past 12 months, my daughter has been searching to buy her first home. She constantly relays examples of vendors adjusting their expected sale price on same property upwards on a weekly basis. I find it frustrating that purchasers are ignoring the comparative sales estimates provided by agents and offering well overs. This is first time I’ve wished for rates to rise, in hope of correction.
Purchasers aren't obligated to offer within the comparative sales estimates, nor are sellers obligated to sell within it. There's a few different issues going at the moment, but it's not the fault of market dynamics that the market is flying.
 
People with their finger on the pulse are putting their wealth into lifeboats like property, unfortunately the threshold for entry is quite high - prohibitively so for many. Options such as crypto currency are being taken up because they theoretically have no threshold for entry. The goal would be to own one home worth of wealth regardless of what the figure attached says.

Unfortunately it won't need to go on for long before we have a distinct renter and distinct owner class of people.
 
Is it time to remove the CGT exemption for main residences?
If nobody can afford to buy existing property then it doesn't matter because nobody will be selling.

If property is something for the wealthy then they will just hold their existing assets, borrow against them and buy more then own more.
 
If nobody can afford to buy existing property then it doesn't matter because nobody will be selling.

If property is something for the wealthy then they will just hold their existing assets, borrow against them and buy more then own more.


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Christopher Skase likes this.
Indeed.

If you wanted to create a class divide you'd be pressuring the governments to not release new land while allowing your existing assets to be bulldozed and new apartments built on top giving you multiples on returns.

And if you really want to build your wealth once you've done that, you push your government mates to bring in rent control.
 
Restrict supply. If demand is high then new developments will also be priced out of the range of plebs.

Same effect for rent control by the way, make it unattractive to invest to build and people won't. It's just something that looks like it's fixing a problem and gets political points.
 
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