The House Price Thread

[RupieDupie]

The same argument could be made for food, clothes, transport, education and medicine etc

Should we tell teachers, they are greedy and seek a profit (a wage) to perform a service? Are insurance companies greedy for seeking a premium on assets we insure.......essentially assest we can't afford to lose, therefore assets we can't afford to own?

If it is overpriced.........don't buy it. If the whole city is overpriced........move. There are far more opportunities in this world than trying to live in the rat race of Sydney and Melbourne.

Absolutely, if it is essential and not commensurate with salary it should not be exorbitant. Why aren't clothes, all clothes, for example (all clothes that are accessed in a city) not priced at $10,000 for a shirt (some are of course)?

Yep, that's what a lot of plebs on this forum keep on telling me, that it is the Australian public's fault that they cannot afford a house (they are not working hard enough, and not eating enough catfood etc), and everyone at median income (and above) who cannot afford a house, ergo >50% of the working population should move to the country...

 

[Power Raid]

I believe I have answered this, the government regularly builds infrastructure, one part of infrastructure is housing, as the current people running the housing market have demonstrated that housing only exists for their personal profit and not for actually housing people (they had their chance), the government needs to make the decision to step in and build houses for people who need housing (they can build them to they are sustainable, solar etc). The price of this housing should be commensurate with salary, and the people who buy these houses pay the government back at CPI, therefore, at ~20 odd thousand per year, people on a median income could pay this back within ten years, there would also be substantial growth for the building of this housing and because people will have more income after paying tax and their mortgage with less cost of power (due to solar etc) to invest in what they feel is important, other businesses will also grow (also building these industries).

But this presumes that the people in power actually give a s**t about Australia and Australians - hint: they don't

What difference does it make whether the government provides housing stock or private enterprise?

What difference does it make whether people chose to borrow from a bank and lock in the price they buy the house for and be charged very low interest rates, borrow from the government at equally as low interest rates or borrow from an islamic bank and pay NO INTEREST?

What are your thoughts on replacing stamp duty with a property tax to lower entry costs? How would you deal with foreign investment? What would you do to increase supply, if government locked out private enterprise from supplying funding and supply housing?

How would you deal with beast that you create by having thousands of now government workers who would then undermine democracy? Would you go all Eastern Block and use brute force to keep them in check or would you allow the nation to go full "1970s" into grid lock? The same grid lock that lead to massive financial crisis, massive swings between growth and recession and 20+% interest rates?

I dare say ~25 years of growth has proven we have the right model. Tweaking the model is required but calls for wholesale returns to the 1930s-1970s, can only come from people who didn't experience the negative aspects of this time.

 

[RupieDupie]

What difference does it make whether the government provides housing stock or private enterprise?

What difference does it make whether people chose to borrow from a bank and lock in the price they buy the house for and be charged very low interest rates, borrow from the government at equally as low interest rates or borrow from an islamic bank and pay NO INTEREST?

What are your thoughts on replacing stamp duty with a property tax to lower entry costs? How would you deal with foreign investment? What would you do to increase supply, if government locked out private enterprise from supplying funding and supply housing?

How would you deal with beast that you create by having thousands of now government workers who would then undermine democracy? Would you go all Eastern Block and use brute force to keep them in check or would you allow the nation to go full "1970s" into grid lock? The same grid lock that lead to massive financial crisis, massive swings between growth and recession and 20+% interest rates?

I dare say ~25 years of growth has proven we have the right model. Tweaking the model is required but calls for wholesale returns to the 1930s-1970s, can only come from people who didn't experience the negative aspects of this time.

Cost (but I am making the assumption of a government that will have the best interests of Australians in mind, this is evidently untrue, but you did ask for how I would solve the issue). Which, one again answers your second question, even with zero interest rate a person is paying ~3.5 times the actual value for a house. The first part of your third sentence is also answered in the above, the house prices are too high, say if the government gave people free money to buy a house, in your opinion what will happen?

The middle part of your third sentence I read as how would I deal with foreign (and national) parasites - I care exactly as much them as they do me, therefore it would be nice to flush out the system with some combantrin every now and then. If you are asking how to deal with foreign and national parasites under my ideal solution (with a caring government?), if so they can invest in as many houses, outside of the government built infrastructure I was discussing, that they like, they could go nuts, have 1,000 houses if they want to.

The increase in supply is generated through this increase in infrastructure, that is the whole point of it, building houses to meet the housing needs, the people who want to stay in a private run industry and pay ~3.5x the value of housing can still do so.

I don't know what this beast that undermines democracy is? Any relationship to the current one, which the plebs accept? As I stated before, people are more than welcome to stay within the private market if they want, and they can pay as much as they want for a house and eat as much catfood.

The time I'm talking about is waaaaay waaaaay back in the 80s and 90s... Incidentally with all this growth etc, how come nothing innovative is coming out of the property industry with regards to cheap housing? How come buying a dilapidated house in Sydney for over $1M does not lead to any innovation?

 

[Power Raid]

If free money was given out.......just like we see with the first home owners, property prices increase meaning the wealthy get rich and the buyer gets a bigger mortgage.

I’ll get back to you on the rest when I’m near my laptop

 

[Scotland]

I dare say ~25 years of growth has proven we have the right model. Tweaking the model is required but calls for wholesale returns to the 1930s-1970s, can only come from people who didn't experience the negative aspects of this time.

Wat?

 

[Run n Spread]

What's everyone's take on the Land Tax option? Been mooted recently.

While I'm not the biggest fan (it would just be another tax grab and send too many people to the wall unfairly) it would certainly reduce the incentive to own 1 let alone multiple properties. It would also result in a huge number of homes going on the market.

Only way it could possibly work is if both conditions are met:

a) Not for Primary Residence
AND
b) Foreign ownership has to be stopped (otherwise the cashed up will buy Australia and the problem will blow right out of control to a whole new level).

Even then am not convinced but worth a thought.

 

[Power Raid]

What's everyone's take on the Land Tax option? Been mooted recently.

While I'm not the biggest fan (it would just be another tax grab and send too many people to the wall unfairly) it would certainly reduce the incentive to own 1 let alone multiple properties. It would also result in a huge number of homes going on the market.

Only way it could possibly work is if both conditions are met:

a) Not for Primary Residence
AND
b) Foreign ownership has to be stopped (otherwise the cashed up will buy Australia and the problem will blow right out of control to a whole new level).

Even then am not convinced but worth a thought.

I really like the idea of a land tax but it must be structured properly to deliver the right outcome (not penalising the poor, target foreign ownership without breaking international treaties, generate tax revenue, etc).

Firstly by removing stamp duty, this gets rid of a major barrier to entry in property and an unfair transaction tax. By replacing it with a property tax, you spread the burden over years and effectively create a "socialist" policy where governments essentially lease land.

The tax should be slightly higher than "fair" but a % could be offset against Australian income tax. That way the net outcome is a fair property tax but hit foreign ownership hard in the case they don't hold out the property for rent. Thus guaranteeing foreign ownership doesn't reduce supply. Discounts to the property tax would apply to welfare recipients.

To achieve this, without adjusting the constitution, the tax would have to be done by the states or signed over to the feds like the GST. The tax would need to be asymmetric by jurisdiction, to be fair and flexible, thus state control is required but administered by a co-operative body.

 

[Pessimistic]

I once saw some figures about the level of annual tax which would cover removal of stamp duty
Very high and would be electoral poison considering everyone gets stung every year.

Best we can hope for is housing stamp duty gets some guarantee that a proportion gets invested in infrastructure
I fortunately it's grown into a huge earner and governments are hooked on that level

 

[Nuggs Bunny]

I once saw some figures about the level of annual tax which would cover removal of stamp duty
Very high and would be electoral poison considering everyone gets stung every year.

Best we can hope for is housing stamp duty gets some guarantee that a proportion gets invested in infrastructure
I fortunately it's grown into a huge earner and governments are hooked on that level

Stamp duty is a deterrent to short-term investors who'd intend to flip properties in the space of 12 months from purchase. First home buyers don't pay it and long term investors will have the equity gains to cover it. There's no reason to change it further.

 

[Pessimistic]

Stamp duty is a deterrent to short-term investors who'd intend to flip properties in the space of 12 months from purchase. First home buyers don't pay it and long term investors will have the equity gains to cover it. There's no reason to change it further.

its a deterrent to home owners moving to more economic or suitable home. its a drag on the efficiency of the economy as a whole

 

[Nuggs Bunny]

its a deterrent to home owners moving to more economic or suitable home. its a drag on the efficiency of the economy as a whole

If home owners move once every 5 years, the amount they pay in stamp duty will probably be 20% of their equity gains in that same time period given the rate of house price growth in the post GFC climate. I don't really care for the rich crying poor.

 

[Pessimistic]

If home owners move once every 5 years, the amount they pay in stamp duty will probably be 20% of their equity gains in that same time period given the rate of house price growth in the post GFC climate. I don't really care for the rich crying poor.

My point is the economy isn't as flexible as it could be

I haven't moved for 25 years but if you moved every five you pay lots of stamp duty and the first lot you pay another four times, the second lot another three times

If you sell at a loss (hello 1990) you don't get anything back. If they just taxed your capital gain it would be fairer

 

[Scotland]

The changeover costs in moving from one median priced home to another (i.e. just life, for no commercial gain) are in the tens of thousands. I don't know how real estate agents still exist and earn massive commissions in 2017.

It's ridiculous. Friends bought a place recently in Ireland and the stamp duty was 1%, so about EUR3,000 on a EUR300,000ish place. Here it would be EUR12-13,000.

 

[The Edukator]

The changeover costs in moving from one median priced home to another (i.e. just life, for no commercial gain) are in the tens of thousands. I don't know how real estate agents still exist and earn massive commissions in 2017.

It's ridiculous. Friends bought a place recently in Ireland and the stamp duty was 1%, so about EUR3,000 on a EUR300,000ish place. Here it would be EUR12-13,000.

i was listening to a property podcast about the american market and the guy mentioned that they pay way less stamp duty up front but over the life of a property they make up for it with a number of other property taxes (for home owners). i can't specifically remember what they were but it could be something similar.

 

[DianaQueen]

I like how in London it works, basically everyone asks why it is so expensive to live there!? The Queen holds everything in her hands, the land is hers, you can rent and have property but no one wants you to know that there is a list of things if they happen, land comes under her influence, and she can expel you outside easily. You purchase a house at max, for materials and work, land never! That’s why I decided for my parents to live at a dementia care Minneapolis community because of senior age and me to live with my wife and kids at an American dream house. The Best choice so far.

 

[Bunk Moreland]

There’s two issues, and they’re stupidly obvious. Everybody already knows them.

- sale of residential property to foreign buyers

- the widespread use of residential property as investment, which is not only condoned but actually encouraged by our governments.

It’s been happening for 20 - 30 years and neither side of politics has done anything to stop it.

That’s it. Everything else is just fiddling at the edges. Until something is done about those factors then nothing changes.

And you’ll need a decent majority of people to not be homeowners before it’s politically attractive to actually do something. So nothing is changing any time soon.

 

[hamohawk1]

There’s two issues, and they’re stupidly obvious. Everybody already knows them.

- sale of residential property to foreign buyers

- the widespread use of residential property as investment, which is not only condoned but actually encouraged by our governments.

It’s been happening for 20 - 30 years and neither side of politics has done anything to stop it.

That’s it. Everything else is just fiddling at the edges. Until something is done about those factors then nothing changes.

And you’ll need a decent majority of people to not be homeowners before it’s politically attractive to actually do something. So nothing is changing any time soon.

At the moment there appears to be a lot of FOMO in the market. People that pre-covid may have had their deposit but haven't pulled the trigger, have done now.

Extremely risky when economic conditions could turn next year after job keeper/ seeker go and borders are still shut

 

[Ned_Flanders]

At the moment there appears to be a lot of FOMO in the market. People that pre-covid may have had their deposit but haven't pulled the trigger, have done now.

Extremely risky when economic conditions could turn next year after job keeper/ seeker go and borders are still shut

its mixed

if you have a pretty property in a good area, they are being snapped up at good prices

if you have a property with flaws, people are sitting on their hands until they get massive discounts

its friggin weird right now (was a seller and a buyer last six months)

 

[Bunk Moreland]

At the moment there appears to be a lot of FOMO in the market. People that pre-covid may have had their deposit but haven't pulled the trigger, have done now.

Extremely risky when economic conditions could turn next year after job keeper/ seeker go and borders are still shut

Not really. Neither will impact the major factors. We can see the odd fall of 5% or so here and there and it doesn’t make much difference, there’s still those who are cash or asset rich waiting to pounce.

 

[Gavin Excell]

Get the impression with confidence back in the market, prices in Melb will surge next year

 

[Nuggs Bunny]

Have they crashed yet? Been hearing it's gonna happen for about 5 years now so it's gonna happen soon, right?

 

[Pessimistic]

The COVID economy was never about confidence

most of the ‘stimulus’ is ill advised and a waste of money. I find it incredible that people who have spent political lives sfellowing about keynsism are now applying it in a totally ****ed up way

 

[Pessimistic]

Have they crashed yet? Been hearing it's gonna happen for about 5 years now so it's gonna happen soon, right?

the other thing is commentators discussing boom or bust (and it’s never as good/bad as made out) can still be confidently publishing about boom or bust months after the market has clearly turned.

it’s almost as if they want to bet against the market themselves...... remember Rene rifkind? Had an army of disciple investors and he used them to steer the share market in a way he could clean up on...by doing the opposite to what he was recommending

 

[Bunk Moreland]

Have they crashed yet? Been hearing it's gonna happen for about 5 years now so it's gonna happen soon, right?

Won’t happen. If there’s proper reform then they’ll level off in price as incomes catch up. But that reform is decades away.

 

[hamohawk1]

rental yields have been sh*thouse for years, pretty much stagnating whilst prices have marginally rose.