Society/Culture Australian Property Prices to Crash?

Frank Grimes

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WoW I thought my 2.29% til end of 23 was decent.

Good one

Ive deliberately increased my fortnightly payments, by a decent amount... not a crazy amount, over the last few months so by the time my fixed loan tuns out Im used to the amount Im gonna end up paying and also smash it down a bit.

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I'm going by vague memory and I may be wrong on details but about 15 odd years ago I looked at paying down one of my fixed loans but there is a limit on how much you can pay down during the fixed period. I think they said $20k is the most, but that may be dependent on the size of the loan.
 
Aug 18, 2006
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Ive deliberately increased my fortnightly payments, by a decent amount... not a crazy amount, over the last few months so by the time my fixed loan tuns out Im used to the amount Im gonna end up paying and also smash it down a bit.

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Everyone should have been putting more into their loan account with interest rates so low. Get an offset account and have a buffer for when times get tougher.

If they couldnt afford to put more in then there is sfa chance they can afford to pay the loan when rates get back up to the 4-5% range (if not higher) and they shouldnt have a loan
 
Aug 18, 2006
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I'm going by vague memory and I may be wrong on details but about 15 odd years ago I looked at paying down one of my fixed loans but there is a limit on how much you can pay down during the fixed period. I think they said $20k is the most, but that may be dependent on the size of the loan.
they'll always have fees for paying off loans or part there of in a lump sum - they're in the business of making money and are losing on interest for the agreed term of the loan if you pay off a lump sum or all of the loan

i dont know how much but it i presume it wouldnt be much compared to the interest you'd pay if you didnt pay off a lump sum etc
 
I'm going by vague memory and I may be wrong on details but about 15 odd years ago I looked at paying down one of my fixed loans but there is a limit on how much you can pay down during the fixed period. I think they said $20k is the most, but that may be dependent on the size of the loan.

depends on your bank.

We are with ING and we paid an extra 60k last year on our fixed mortgage.

I think ING allow an annual extra was 10K payment and then you had to make a "admin" payment for anything above 10k. For some reason when we paid the 60k we were waived the additional payment. May have just been a COVID thing cant remember.
 
depends on your bank.

We are with ING and we paid an extra 60k last year on our fixed mortgage.

I think ING allow an annual extra was 10K payment and then you had to make a "admin" payment for anything above 10k. For some reason when we paid the 60k we were waived the additional payment. May have just been a COVID thing cant remember.

The banks at the time were trying to raise capital for security so it could have been right at the right moment they really wanted the money.
 
The banks at the time were trying to raise capital for security so it could have been right at the right moment they really wanted the money.

yeah possibly worked out for both of us then.

I mean you could always just set up an offset account. You don't really need to make a payment against the mortgage, just have it in the offset account. Same thing really.
 

Brad Goodman

His name isn't important
Oct 7, 2002
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Yeh na
If you strongly believe something is wrong it’s nonsensical to partake in that act as it just perpetuates the problem

Even if it doesn’t change the world you know you are doing the right thing by your own standards

Agree with you in principle, but I support Newcastle United and I want that sweet, sweet taste of football glory.
 

Madas

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Kinda seems like you doing something just because everyone else is doing it, go live off renewable energy, its there for you. Just way more expensive. Pot.Kettle.Black. that's exactly why I'm saying investment properties should not be allowed to be claimed as a tax deduction...i suppose you get it now?

it seems your main issue is just because i think myself getting a benefit its not the right thing, than i should be ghandi and give it up immediatley? Rather than say i would be supportive of policy changes to fix the issue. I'm literally saying I'm happy for it to be changed, but because i don't just give it up straight away I'm somehow wrong?

A very odd stance by you.
I don’t think it’s odd at all and I’m not sure why I’m even wasting time replying

If you don’t think something is right don’t partake in it
 
I don’t think it’s odd at all and I’m not sure why I’m even wasting time replying

If you don’t think something is right don’t partake in it

Your wasting your time being wrong, doesn't bother me really.

So basically, its black and white for you? if you don't like it stop. We aren't allowed to talk about changing policies etc you know, for the betterment of the actual economy? I should just be a white knight and stop? Say i did, what change will that make holistically, as opposed to me supporting policy change.

That's how you live in the real world?
 
Mar 28, 2006
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No, it isn't.

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

That doesn't show the true picture.

The richest tenth of households owns almost half Australia’s private wealth followed by a “comfortable middle" of 30 per cent with 38 per cent, leaving the lowest 60 per cent - who tend to be younger – with 16 per cent of household wealth.

Income is more equally distributed than wealth. The best-paid 20 per cent of households had an average pre-tax income of just under $300,000 a year, the middle 20 per cent $116,000, and the bottom 20 per cent $41,000.

neg.PNG

The rich, the comfortable middle and the rest: Australia’s wealth and income ladder revealed


The "comfortable middle" love a bit of negatively gearing because it's all that they can do to bring down their taxable income - as opposed to the wider tax minimisation strategies that those in the "rich" category have access to. Those in the top 5% aren't pissfarting around with Negative Gearing.
 

HirdyLannister

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They wealthy households like HirdsTheWord who are on 300k+, removing negative gearing won't impact them so he is happy to remove the tax exemption. Means less competition to buy more properties with the minnow fish dead in the water.

Me personally, Luckily these rate rises won't impact us financially, our debt to income is 2:1 not including the rental which service's itself (positively geared).
I just hate paying interest which is dead money.
We live a pretty frugal lifestyle already, enjoy cooking at home and have no kids while enjoying plenty of holidays.
 
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hamohawk1

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If you're on the average Aus salary or there about negative gearing is simply not worth your while. The ROI is incredibly mediocre at best when compared to what can be achieved through much less risky trading i.e. blue chip stock. One of the biggest con's that have been sold to 'mum and dad' (apart from those who were bloody lucky getting on mid-late 90's to now.

Conversely, if you're a high net income earner it can be a very useful way of lowering your tax, which again is the way it definitely works in their favour.
 
May 5, 2006
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If you are on $300k a year Whats the point of having 50 properties. Might as well have your dream house and pimp it out exactly how u want it

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$300k is $190k after tax. Everyone has their own definition of dream house but that sort of money while life changing isn't a golden ticket. At the marginal tax rate of 45% above $180k you are better off putting some of that money into some kind of investment that will pay off with future capital gain.
 
They wealthy households like HirdsTheWord who are on 300k+, removing negative gearing won't impact them so he is happy to remove the tax exemption. Means less competition to buy more properties with the minnow fish dead in the water.

Me personally, Luckily these rate rises won't impact us financially, our debt to income is 2:1 not including the rental which service's itself (positively geared).
I just hate paying interest which is dead money.
We live a pretty frugal lifestyle already, enjoy cooking at home and have no kids while enjoying plenty of holidays.

Why would high household incomes like mine want to buy additional properties without things like NG?

The only reason i have an Investment property is for Tax Reduction. AND keep it for my Daughter for when she is older.

If NG and other housing tax rorts are removed and property is cheaper i would be less inclined to keep it as capital growth would be a lot less, thus Housing as an investment would be less attractive to me. I would probably sell and move money to more lucrative investment propositions with better returns to create a better nest egg for my daughter.

People forget that if you remove investment from housing, yearly growth wont be anywhere near what it is now thus its much more sustainable for future housing affordability. hence my major support for removing investment.
 
That doesn't show the true picture.

The richest tenth of households owns almost half Australia’s private wealth followed by a “comfortable middle" of 30 per cent with 38 per cent, leaving the lowest 60 per cent - who tend to be younger – with 16 per cent of household wealth.

Income is more equally distributed than wealth. The best-paid 20 per cent of households had an average pre-tax income of just under $300,000 a year, the middle 20 per cent $116,000, and the bottom 20 per cent $41,000.

View attachment 1419542

The rich, the comfortable middle and the rest: Australia’s wealth and income ladder revealed


The "comfortable middle" love a bit of negatively gearing because it's all that they can do to bring down their taxable income - as opposed to the wider tax minimisation strategies that those in the "rich" category have access to. Those in the top 5% aren't pissfarting around with Negative Gearing.

not sure what you are getting at. What you have shown is income brackets, not the proportion of which income uses negative gearing.

I already showed you those stats, which back up that the general people that benefit from negative gearing is top 25% of income earners.
 
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.
You should have some sympathy though, because the people who will hurt the most from this are people who have borrowed recently and have borrowed the maximum amount of money they could get with a 90:10 loan to deposit ratio. Generally the people that fall into these categories are first home buyers who are buying houses well below the average house price in Melbourne, the sort of properties that a lot of people here are offering up as "affordable". It's incredible how perceptions have turned because not more than 6 months ago, the general sentiment in this thread was that first home buyers should be doing everything they can to buy their first house as quickly as possible because property is always a great investment and you should take a risk to get on the ladder. Lots actually took that advice. I truly feel sorry for any first home buyer that pulled out all the stops and borrowed to the hilt to get their first property only to be stuck with two big rate rises now.

The point about banks is also interesting, perhaps if Australia had non-recourse loans for mortgages then banks would also have some obligation to ensure that people have a 2-3% buffer. Yes, the individual should wear some responsibility for the loans they take out, but I don't quite understand why we don't also ask the question of banking corporations with 10,000+ employees as to why people will be ending up with loans they cannot afford after only a couple of rate rises. I don't understand why we're content to absolve them for the consequences of negligent and unethical business practices while financially illiterate, poorly educated and impressionable private citizens are expected to take 100% of the liability.
 
You should have some sympathy though, because the people who will hurt the most from this are people who have borrowed recently and have borrowed the maximum amount of money they could get with a 90:10 loan to deposit ratio. Generally the people that fall into these categories are first home buyers who are buying houses well below the average house price in Melbourne, the sort of properties that a lot of people here are offering up as "affordable". It's incredible how perceptions have turned because not more than 6 months ago, the general sentiment in this thread was that first home buyers should be doing everything they can to buy their first house as quickly as possible because property is always a great investment and you should take a risk to get on the ladder. Lots actually took that advice. I truly feel sorry for any first home buyer that pulled out all the stops and borrowed to the hilt to get their first property only to be stuck with two big rate rises now.

The point about banks is also interesting, perhaps if Australia had non-recourse loans for mortgages then banks would also have some obligation to ensure that people have a 2-3% buffer. Yes, the individual should wear some responsibility for the loans they take out, but I don't quite understand why we don't also ask the question of banking corporations with 10,000+ employees as to why people will be ending up with loans they cannot afford after only a couple of rate rises. I don't understand why we're content to absolve them for the consequences of negligent and unethical business practices while financially illiterate, poorly educated and impressionable private citizens are expected to take 100% of the liability.

Not my sentiment.

I have no issues admitting that Investment is the main driver of housing prices and it should be fixed to ensure housing affordability long term.

BUT people still need to live within their means. Buying a house with that high of an LVR is extreme risk territory, and its the purchases risk if they buy it. I feel sorry for homebuyers that they don't get a fair chance at affordable housing, but i certainly have zero sympathy for someone who buys something they inherently cant afford.
 
Not my sentiment.

I have no issues admitting that Investment is the main driver of housing prices and it should be fixed to ensure housing affordability long term.

BUT people still need to live within their means. Buying a house with that high of an LVR is extreme risk territory, and its the purchases risk if they buy it. I feel sorry for homebuyers that they don't get a fair chance at affordable housing, but i certainly have zero sympathy for someone who buys something they inherently cant afford.
Similarly, I have no sympathy for a bank that sells an extremely risky financial product to somebody only for the bank to pursue the purchaser for losses due to mortgages in Australia being full-recourse. When a risky loan is issued, there are two parties that know what they're getting into. One party can be from any walk of life and have no financial knowledge at all aside from what is explained to them by the other party. They wear the full liability of the deal. The other party has dedicated teams of people to assess markets, risk and need financial licenses to sell these products to the public. They're free to chase the first party to get the full amount of their loss back.

And telling people to live within their means is seriously hollow after the last ten years of encouraging people to hustle into the property market with risky s**t like "rentvesting", 5% deposits and buying off the plan because nothing is more important than owning your own house and "getting ahead".
 
Similarly, I have no sympathy for a bank that sells an extremely risky financial product to somebody only for the bank to pursue the purchaser for losses due to mortgages in Australia being full-recourse. When a risky loan is issued, there are two parties that know what they're getting into. One party can be from any walk of life and have no financial knowledge at all aside from what is explained to them by the other party. They wear the full liability of the deal. The other party has dedicated teams of people to assess markets, risk and need financial licenses to sell these products to the public. They're free to chase the first party to get the full amount of their loss back.

And telling people to live within their means is seriously hollow after the last ten years of encouraging people to hustle into the property market with risky s**t like "rentvesting", 5% deposits and buying off the plan because nothing is more important than owning your own house and "getting ahead".

I don't really know what you want me to say about banks, that's how they work.

As per the bolded bit i get it, The housing system in Australia is absolutely ****ed. There are things that need to be done to fix it, that people don't want to do. But that's life, people need to assess their risks and live within the risk profile they want to. An LVR of 90% is high risk and if you do it than you bear the brunt of that.

The sentiment that you should buy a house to get ahead is in fact the total issue. society needs to stop seeing housing as a vehicle for investment, it is the governments responsibility to fix it. Housing should be place you live. This is entirely the issue of why the market is out of control. We are culturally skewed that we need to buy housing to "get ahead". Until investment changes in housing, nothing else will.

I own an investment property and i can see it as an issue. The problem is that the tax minimisation is so good, you'd be dumb not to do it. As selfish as that is.
 
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hamohawk1

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Its a bit of a finger point exercise but when you break it all down both major parties have pretty much cooked the housing market and there is every chance its going to bust in the next year, 5 years, 10 years or 50 years.

Shame on both parties for not having the guts to try and fix this up when they both had the chance. If it all goes to s*it its the reason voters will probably continue to drift away from both parties.
 
Apr 12, 2010
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Its a bit of a finger point exercise but when you break it all down both major parties have pretty much cooked the housing market and there is every chance its going to bust in the next year, 5 years, 10 years or 50 years.

Shame on both parties for not having the guts to try and fix this up when they both had the chance. If it all goes to s*it its the reason voters will probably continue to drift away from both parties.
Political poison unfortunately.

States are complicit too with Stamp Duty.
 
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