the housing bubble

[Scratcher Gillespie]

Fingers are crossed in my house hold atm, this combined with a state election later in the year could mean a lot of much needed relief for first homebuyers.

'releif' for first home-buyers in the form of a grant or reduction in stamp duty simply has the effect of further inflating the market.

 

[Faithful Hawk]

'releif' for first home-buyers in the form of a grant or reduction in stamp duty simply has the effect of further inflating the market.

So what is your proposal to help first homebuyers maintain a presence in the current market enviroment ????

 

[Scratcher Gillespie]

So what is your proposal to help first homebuyers maintain a presence in the current market enviroment ????

Get rid of negative gearing benefits for investment properties.

Realistically, all markets move in cycles. This market APPEARS to be at the top of the cycle - perhaps it's better if first home-buyers don't buy into this market and end up with negative equity.

As far as I am aware there is no law that says people 2 years out of uni NEED to be able to afford to buy a home straight away.

Government intervention in markets only causes distortions.

 

[Rob]

Get rid of negative gearing benefits for investment properties.

Realistically, all markets move in cycles. This market APPEARS to be at the top of the cycle - perhaps it's better if first home-buyers don't buy into this market and end up with negative equity.

As far as I am aware there is no law that says people 2 years out of uni NEED to be able to afford to buy a home straight away.

Government intervention in markets only causes distortions.

Not that i'm completely opposed to the abolition of negative gearing, but won't that also just cause rents to go up like a bitch as well? That would be a bit counterproductive given that's the group of people you're trying to help.

 

[bunsen burner]

They've previously tried abolishing tax breaks for negative gearing with adverse consequeces. One of the great things about our country is the opportunity for the average investor to make a quid.

 

[Leper]

Not that i'm completely opposed to the abolition of negative gearing, but won't that also just cause rents to go up like a bitch as well? That would be a bit counterproductive given that's the group of people you're trying to help.

Exactly. It would scare investors away even more. Renters are already bleeding.... and investors are already hesitant to jump in at the moment due to high costs; low rental yields and "where we are in the cycle".

The rent issue is being discussed in a this thread on the Lifestyle board.

 

[Scratcher Gillespie]

Changing the negative gearing rules is unfeasible not because it is a bad idea, but because many people have made investments in property based on current rules, and the upheaval would be political suicide.

The only way the government should intervene in this market is by ensuring that supply of land comes online quickly enough, and that we encourage as much of our work-force to become skilled.

There is no reason why we should legislate that young people should be able to afford to buy a house, and then try to manipulate the market in order to do this. It simply creates distortions, and depending how it is done, forces the bubble up further.

If people can't afford to pay current prices for houses, they shouldn't try and stretch, as many people are finding at the moment with the prospect of another interest rate rise.

 

[Scratcher Gillespie]

They've previously tried abolishing tax breaks for negative gearing with adverse consequeces. One of the great things about our country is the opportunity for the average investor to make a quid.

How is Australia different from any other industrialised country in this respect? Do you know investors in the US get a tax break for interest paid on their principal residence? And prices for a city comparable to Perth are around half of what they are here?

One of the big problems is not a lack of supply of land, but the actual cost of building. My old boss had a house built, with a couple of alterations, the price was double what they budgeted for. The tiling bill alone came to $11,000 (40%) more than what they had been quoted 6 months ago.

 

[bunsen burner]

How is Australia different from any other industrialised country in this respect?

Who said anything about any other country? I was just saying that negative gearing is good.

 

[Scratcher Gillespie]

Who said anything about any other country? I was just saying that negative gearing is good.

Ok, fair enough.

However on this point negative gearing actually disadvantages lower income earners for the simple reason they don't get as many tax benefits from the system.

Removing negative gearing would drop the prices and benefit lower income earners more, however, I accept that it is unfeasible to do this, and if it was taken away, CGT would need to be reviewed as well as negative gearing into shares. It would be too much for the system to handle.

 

[chooke]

Government intervention in markets only causes distortions.

Nonesense, Govt intervention can also correct distortions - ever heard of market failures, studied the Theory of the Second Best, etc etc?

They've previously tried abolishing tax breaks for negative gearing with adverse consequeces. One of the great things about our country is the opportunity for the average investor to make a quid

This is also nonsense, yes negative gearing was abolished for a while in 1985 and yes rental accommodation did shrink but they were not related, the latter was already happening before the policy change. It is only vested interests in the real estate industry that perpetuate this urban myth. Also, IMHO the Government has no right to assist (read subsidise) people making money at taxpayers expense. Having said that, I support negative gearing on property while it is available on other investment classes, but it should be abolished altogether.

 

[bunsen burner]

Ok, fair enough.

However on this point negative gearing actually disadvantages lower income earners for the simple reason they don't get as many tax benefits from the system.

Bad luck basically. Those investors getting NG tax breaks are paying large amounts of CGT.

Removing negative gearing would drop the prices and benefit lower income earners more,

Not everything has to geared towards the LCD. Can't hold back because some people spend their money on beer, ciggies, or pokies.

I agree that housing affordability is a problem, and although we have moved into an era where we will never go back to cheap housing affordability, it is cyclical and relative. Those people who do get into the housing market will be rewarded with growth.

I continuously hear people say stuff like "this is f***ed, I grew up in St Kilda and can't afford to buy a house here!" No f***ing s*** you arsewipes. Go out and buy a place at Noble Park and do the hard yards you ungrateful take-it-for-granted ****.

however, I accept that it is unfeasible to do this, and if it was taken away, CGT would need to be reviewed as well as negative gearing into shares. It would be too much for the system to handle.

 

[bunsen burner]

Nonesense, Govt intervention can also correct distortions - ever heard of market failures, studied the Theory of the Second Best, etc etc?

Market failures and distortions not the same thing.

A market is a market. As soon as you add artificial measures to "correct it" you distort it.

This is also nonsense,

No it's not.

yes negative gearing was abolished for a while in 1985 and yes rental accommodation did shrink but they were not related, the latter was already happening before the policy change.

So you think if NG was abolished that investors wouldn't turn away and reduce the number of rental properties available and not be able to cope with the building growth that is needed to accomodate our increasing population?

Rents would go through the roof.

It is only vested interests in the real estate industry that perpetuate this urban myth.

Also, IMHO the Government has no right to assist (read subsidise) people making money at taxpayers expense.

You seemed to have conveniently dismissed the fact that these investors that are "profiting at the expense of the taxpayer" provide the taxpayer revenue through CGT.

Having said that, I support negative gearing on property while it is available on other investment classes, but it should be abolished altogether.

And prevent people from being able to accumiulate their own retirement fund?

You always need to have an opportunity available for normal people gain wealth.

You seem to have a chip on your shoulder.

 

[chooke]

Market failures and distortions not the same thing.

A market is a market. As soon as you add artificial measures to "correct it" you distort it.

Either you don't understand basic economics or we've gone to different schools. A distortion is a distortion regardless if it is a result from private individual or corporate behaviour (eg cartels, abuse of mkt power), govt intervention or market failure!

No it's not.

Yes it is.

So you think if NG was abolished that investors wouldn't turn away and reduce the number of rental properties available and not be able to cope with the building growth that is needed to accomodate our increasing population?

Rents would go through the roof..

Maybe in the short run as the market readjusts itself following the removal of the distortion. If you believe in markets then following a period of adjustment a new equilibrium will be restored with the likely result of cheaper rents and housing prices and as a previous poster observed, a gain to less well off amongst us. Again, all basic economics, I suggest you go to a good bookshop and pick up an introductory year 12/1st year Uni eco text book, you might then understand this.

You seemed to have conveniently dismissed the fact that these investors that are "profiting at the expense of the taxpayer" provide the taxpayer revenue through CGT..

Oh yeh, so why not then double the NG subsidy so the Govt makes even more CGT? why not triple it? There would be so much revenue for the Govt that we can live in a fool's paradise and won't have to work anymore. We all pay taxes but some of us winge more than others. I actually enjoy paying CGT because it means I'm making money.

And prevent people from being able to accumiulate their own retirement fund?

You always need to have an opportunity available for normal people gain wealth.

You seem to have a chip on your shoulder.

No one is suggesting that. Normal(?) people have plenty of opportunities to accumulate for retirement and should be encouraged to do so. However, people should be discouraged from always looking to the Govt to subsidise their lifestyle as it is personally demeaning and becomes a negative sum game for society as a whole. In any event there are far superior ways of accumulating wealth for retirement than investing in residential property (the so called Bogan investment strategy). The only people seemingly with chips on their shoulders are those always looking for Govt handouts like NG subsidies rather than using their own initiative, wingers and those also suffering the "govt owes me" syndrome.

 

[bunsen burner]

Either you don't understand basic economics or we've gone to different schools. A distortion is a distortion regardless if it is a result from private individual or corporate behaviour (eg cartels, abuse of mkt power), govt intervention or market failure!

HD and D in university level econmics. But thanks for your concern.

I repeat: Govt intervention distorts markets.

Not sure why you don't undertand that? Fancy you telling someone else to get economics 1.1.

Maybe in the short run as the market readjusts itself following the removal of the distortion. If you believe in markets then following a period of adjustment a new equilibrium will be restored with the likely result of cheaper rents and housing prices and as a previous poster observed,

Please explain why rents will lower in the long run?

No NG = less investment in housing = fewer places to rent = higher rents.

a gain to less well off amongst us.

Why should we cater for the poor at the expense of the average person and middle classes who want to get ahead. I would have thought our social security, health, and education system caters for them.

Again, all basic economics, I suggest you go to a good bookshop and pick up an introductory year 12/1st year Uni eco text book, you might then understand this.

Champagne comedy.

Oh yeh, so why not then double the NG subsidy so the Govt makes even more CGT? why not triple it?

diminishing returns = not worth it.

There would be so much revenue for the Govt that we can live in a fool's paradise and won't have to work anymore.

Stop being a pathetic whiner. No one's advocating that. You're just being a twat.

We all pay taxes but some of us winge more than others.

Which in this case is you. I suspect you can't see it though.

I actually enjoy paying CGT because it means I'm making money.

I'd be very surprised if you had any assets that will ptentially result in CGT.

No one is suggesting that. Normal(?) people have plenty of opportunities to accumulate for retirement and should be encouraged to do so.

Not without NG. Negative gearing attracts a lot of investors.

However, people should be discouraged from always looking to the Govt to subsidise their lifestyle as it is personally demeaning and becomes a negative sum game for society as a whole.

What a knob.

In any event there are far superior ways of accumulating wealth for retirement than investing in residential property (the so called Bogan investment strategy).

such as?

The only people seemingly with chips on their shoulders are those always looking for Govt handouts like NG subsidies rather than using their own initiative, wingers and those also suffering the "govt owes me" syndrome.

I've never met anyone who takes advantage of NG benefits who has a "the govt owes" attitude.

You don't have your head screwed on right. You're as idiotic as Dr Alf Andrews.

 

[Leper]

I like and agree with your sentiments BB.

You've saved me the job disecting all this drivel.

On on.

 

[chooke]

HD and D in university level econmics. But thanks for your concern.


You don't have your head screwed on right. You're as idiotic as Dr Alf Andrews.

What the hell is your problem? You are right DH and and so obviously typical of the down in character, "govt owes me" welfare/winger type. I nearly fell out of my chair if your econs degree claim - did you dowload it from the net? Your writing shows total ignorance of the subject. Don't bother replying cause I won't be botheing reading any emails from scum like you.

 

[chooke]

I like and agree with your sentiments BB.

You've saved me the job disecting all this drivel.

On on.

And who are you, ingoramus' side kick?

 

[bunsen burner]

What the hell is your problem? You are right DH and and so obviously typical of the down in character, "govt owes me" welfare/winger type. I nearly fell out of my chair if your econs degree claim - did you dowload it from the net? Your writing shows total ignorance of the subject. Don't bother replying cause I won't be botheing reading any emails from scum like you.

eeeeeediot.

 

[Scratcher Gillespie]

Nonesense, Govt intervention can also correct distortions - ever heard of market failures, studied the Theory of the Second Best, etc etc?

Where is the current market failure?

 

[bunsen burner]

I smell Fullerton Powers.

 

[National]

buy it now or 3 years later it will be even more difficult

 

[Scratcher Gillespie]

buy it now or 3 years later it will be even more difficult

Hmm, if everybody buys now, who will be left to buy in 3 years time?

 

[chooke]

Where is the current market failure?

None in the housing market, that's the whole point why the Govt should get out! I agree with your observation that that there is only a distortion arising from NG and its removal would improve the functioning of that market.

 

[GoOsH1]

Hmm, if everybody buys now, who will be left to buy in 3 years time?

the people still at uni? the people who can't afford to buy right now? the people who don't listen to his advice?