Australia housing bubble

[Polyal]

Originally Posted by fordomatic

The agent charges 5.8% including GST, so it's definately in their interest to get more rent.

I looked at rent in that area and I could have easily got more, im happy though. Remember this is all business mate, you don't make friends in business. Agents are there to make money, not help people, it's just reality.

It is but RE is the grubbiest business getting around...sorry I have no love for the industry.

Interested in peoples thoughts, this is just one example.

https://www.realestate.com.au/proper...arne-139905691

So rental income is $560 per week, but the weekly repayment calculator on the same page notes $714p/w using $150k.

Am I missing something? How is it good to lose $8k per year as an investment, and thats just the repayments.

[fordomatic]

That's not a good example of an investment property. Also, most investors are using property as a tax break as well. No smart person that is earning big $ is paying any tax. It's why middle income earners hold up Australia and not the rich or the poor.

I'm taking all my emotions out of these replies by the way. Reality is hard but the smart person doesn't pay any tax, it's all about playing the system to make it work for you.

[b0son]

Originally Posted by fordomatic

It's why middle income earners hold up Australia and not the rich or the poor.

It's also why we need to look beyond income and also consider wealth when it comes to taxation. If the wealth divide between rich and poor continues to widen, it's reasonable to use the tax system to address it. Will never happen while politicians have a vested interest in the status quo.

[fordomatic]

Originally Posted by b0son

Will never happen

This for truth, like i said, no friends in business

[Polyal]

Originally Posted by fordomatic

That's not a good example of an investment property. Also, most investors are using property as a tax break as well. No smart person that is earning big $ is paying any tax. It's why middle income earners hold up Australia and not the rich or the poor.

I'm taking all my emotions out of these replies by the way. Reality is hard but the smart person doesn't pay any tax, it's all about playing the system to make it work for you.

Perhaps but thats how its advertised to most? Why is it not good?

I guess my point is that housing shouldn't be used for tax breaks or any incentives.

No doubt this is a case of hate the game not the player, its just so core to so many functions of our society...its rather sad, not sure how you change that as you say without the top end cry poor. But its got to change.

Originally Posted by fordomatic

This for truth, like i said, no friends in business

Evil circle isnt it...look after society so it looks after you are make sure during your life/time in office you are looked after...our system is too short sighted unfortunately.

[T3rminator]

Originally Posted by Polyal

It is but RE is the grubbiest business getting around...sorry I have no love for the industry.

Interested in peoples thoughts, this is just one example.

https://www.realestate.com.au/proper...arne-139905691

So rental income is $560 per week, but the weekly repayment calculator on the same page notes $714p/w using $150k.

Am I missing something? How is it good to lose $8k per year as an investment, and thats just the repayments.

Losing money is not good of course. But let's say 8k negatively geared. You get back say 30 to 40% at tax time, don't forget depreciation. So let's say you lose 5k a year. Using $700k as the value, it just has to go up 1% a year and you come out on top on paper. I think that's right?

Oh and another thing, paying off principle can a form of forced saving for the undisciplined, and yep I'm speaking from experience

[Polyal]

Originally Posted by T3rminator

Losing money is not good of course. But let's say 8k negatively geared. You get back say 30 to 40% at tax time, don't forget depreciation. So let's say you lose 5k a year. Using $700k as the value, it just has to go up 1% a year and you come out on top on paper. I think that's right?

Oh and another thing, paying off principle can a form of forced saving for the undisciplined, and yep I'm speaking from experience

So thats the rub, how did we approve a system to benefit loss?

Anyway, ill get off my low horse, it just pains me that housing in this country is used in such a way.

[Syndrome]

Originally Posted by Polyal

It is but RE is the grubbiest business getting around...sorry I have no love for the industry.

Quoted for truth

[BENT_8]

Originally Posted by fordomatic

I don't think the rise in rent will see more people buy. Most the people renting can't get a loan to buy a house, hence why they are renting. Even with a sizeable deposit, you wont get a loan easily, even if your rent is more per week, that doesnt even come into the banks decision to approve or not.

I just did, so has my Daughter.
She's done it on a single wage, its really not that hard, just got to be realistic about what 'entry level' is.
Both of us did it as sole borrowers on sub $30ph.

People will still get loans for first homes, they'll just have to rethink their expectations on what a 'first home' actually looks like and where its situated.

[zilo]

Originally Posted by T3rminator

Losing money is not good of course. But let's say 8k negatively geared. You get back say 30 to 40% at tax time, don't forget depreciation. So let's say you lose 5k a year. Using $700k as the value, it just has to go up 1% a year and you come out on top on paper. I think that's right?

Hmmm...yeah...but the elephant in the room is if you lose your job.
Or lose your job and get one that pays less..and less tax to claim.

Then..the situation deteriorates really quickly.

[T3rminator]

Originally Posted by zilo

Hmmm...yeah...but the elephant in the room is if you lose your job.
Or lose your job and get one that pays less..and less tax to claim.

Then..the situation deteriorates really quickly.

Yep, its a risk vs reward scenario. Same as traders taking out loans to play the stock market.

Interesting that stage 3 tax cuts will affect quite a few people's neg gearing "returns" on the higher bracket, make it less appealing, wonder what affect that might have on the market.

Neg gearing also assumes capital growth. If it turns the other way and you got in at the wrong time, I can imagine it would get quite depressing paying interest on a depreciating asset.

Originally Posted by Polyal

So thats the rub, how did we approve a system to benefit loss?

Anyway, ill get off my low horse, it just pains me that housing in this country is used in such a way.

I believe there are less than a handful of countries in the world that allows neg gearing on housing. We are one of them. Use the system that is given to you I say, no point complaining about it.

[fordomatic]

Originally Posted by BENT_8

I just did, so has my Daughter.
She's done it on a single wage, its really not that hard, just got to be realistic about what 'entry level' is.
Both of us did it as sole borrowers on sub $30ph.

People will still get loans for first homes, they'll just have to rethink their expectations on what a 'first home' actually looks like and where its situated.

You are a minority though mate, that's what im saying. People, especially the youth of today are not content with compromising. I see it all the time. If it was easy like you say, everyone would own a home, but they don't.

It's the very reason why rent has continued to rise. As long as people pay the asking price for rent, it'll keep rising.

Here in Canberra finding a rental is difficult, with 30 plus people at each inspection and people bidding big. I rent here, I live in a complex. Next door just got re-leased and speaking with the owner they got 20% more than the asking rent price and were given 12 months rent in advance.

That's $40,000 they had straight up front for a years rent. double that and you have a deposit. These people clearly don't want to buy. There will always be a market for renters, history has proved that.

Originally Posted by zilo

Hmmm...yeah...but the elephant in the room is if you lose your job.
Or lose your job and get one that pays less..and less tax to claim.

Then..the situation deteriorates really quickly.

Yep, but that's a risk, as with all investments. You win some you lose some. You don't get comfortable in life without taking any risks.

Originally Posted by T3rminator

I believe there are less than a handful of countries in the world that allows neg gearing on housing. We are one of them. Use the system that is given to you I say, no point complaining about it.

Exactly. I still don't think the housing market will go down past pre-COVID prices. If it does, i'll be there waving cash around to scoop up some bargains. It will always recover, just have to play the long game.

[BENT_8]

Originally Posted by fordomatic

You are a minority though mate, that's what im saying. People, especially the youth of today are not content with compromising. I see it all the time. If it was easy like you say, everyone would own a home, but they don't.

It's the very reason why rent has continued to rise. As long as people pay the asking price for rent, it'll keep rising.

Here in Canberra finding a rental is difficult, with 30 plus people at each inspection and people bidding big. I rent here, I live in a complex. Next door just got re-leased and speaking with the owner they got 20% more than the asking rent price and were given 12 months rent in advance.

That's $40,000 they had straight up front for a years rent. double that and you have a deposit. These people clearly don't want to buy. There will always be a market for renters, history has proved that.

A lack of available rental properties and huge asking prices will entice young people to stay home longer which could lead them to the same realisation that my 2 eldest came too, tip that unused money in to a deposit and buy whatever it affords.
Living in the north of Adelaide has its advantages in this respect, a 5k deposit can buy you a brand spanking new 2bdrm, 2.5bth townhouse for under $270k @ $320pw.

They're commanding that to rent them in the same area.

[Polyal]

Ahh I was going to write something up about investing in things that help society and not make it harder but its a free world. There are shares I could buy and make a buck but choose not too. So many issues, so little time.

[asagaai]

Negative gearing is used in Australia to induce the private marketplace to fund and provide rental properties to the population unable/unwilling to buy their own properties.

The Government wanted to transfer this responsibility from the Government to the private sector, as the provision of public housing was as far as the Government wanted to take on, especially as public housing rents are as a matter of public policy artificially lowballed to the detriment of the taxpayer.

[zilo]

Let's hope we get a decent interest rate rise next week.

At least 0.75% ... and even that is a pussy amount compared to what other parts of the world are getting.

[Polyal]

Originally Posted by asagaai

Negative gearing is used in Australia to induce the private marketplace to fund and provide rental properties to the population unable/unwilling to buy their own properties.

The Government wanted to transfer this responsibility from the Government to the private sector, as the provision of public housing was as far as the Government wanted to take on, especially as public housing rents are as a matter of public policy artificially lowballed to the detriment of the taxpayer.

Interesting, I have heard similar and can understand but here we are with the Gov essentially wiping their hands of it and letting the market sort it out. Great leadership. Then they think they can balance it with flicking the interest rate around...

So what did we do prior and how do the other 99% of countries seem to manage?

So far it does just seem to be the upper end thats cooled down. Will see where its all ends up I guess.

[T3rminator]

CPI data updated as at yesterday. Would be interesting to know if furniture were imports or local made. Does "housing" in this bucket represent the increase in cost to build? or cost to purchase?

https://www.abs.gov.au/statistics/ec...ralia/jun-2022

Key statistics

• The Consumer Price Index (CPI) rose 1.8% this quarter.
  
• Over the twelve months to the June 2022 quarter, the CPI rose 6.1%.
  
• The most significant price rises were New dwelling purchases by owner-occupiers (+5.6%), Automotive fuel (+4.2%) and Furniture (+7.0%).

Originally Posted by Polyal

Interesting, I have heard similar and can understand but here we are with the Gov essentially wiping their hands of it and letting the market sort it out. Great leadership. Then they think they can balance it with flicking the interest rate around...

So what did we do prior and how do the other 99% of countries seem to manage?

So far it does just seem to be the upper end thats cooled down. Will see where its all ends up I guess.

Different countries will have different unique schemes that allows their tax payers to get breaks. You should see some of the dodgey contracting schemes they have had over in the UK, take home 80-90% regardless of income level. Bring that here and I'll gladly swap it for the negative gearing. We pay plenty of taxes day to day as it is, which is why I'm of the view, use the schemes given to you.

If people are worried about affordable housing, they are available, just not in the desirable areas.

[Citroënbender]

I don’t think there is much standard consumer grade furniture made here anymore, T3. Apart from artisan tables (there is an essay in this alone!) and possibly cheap pine-framed upholstered foam sofas.

The UK were big on leases, lots of 99-year leases on property that I understand offer the tenant much more latitude in terms of maintenance or capital works. Plus many cars seem to be bought on lease plans as well. I expect these trends to come here so that people can continue to “live the dream”. Even if they no longer own that dream, but are paying to pretend.

This week, I’m feeling the frustration mooted by other posters here about tradespeople thinking they’re worth a mint. Can’t get anyone qualified to quote and (likely) proceed on a $2-3K job of 10% thinning plus deadwooding on some large trees. Because it involves effort in quoting and then professional liability. They’re full of ego, but gutless.

[roKWiz]

Originally Posted by Citroënbender

I don’t think there is much standard consumer grade furniture made here anymore, T3. Apart from artisan tables (there is an essay in this alone!) and possibly cheap pine-framed upholstered foam sofas.

Cheap maybe but they're made here. I bought a nice Aussie made one recently.

Fantastic Furniture started manufacturing Australian made sofas and lounges in 1992. Today, the Sydney-based factory is the largest manufacturer of sofas in the Southern Hemisphere and produce and deliver over 130,000 sofas and lounges each year.

[Citroënbender]

I knew Fantastic still made some upholstered stuff here - and quite a few mattresses are made in Australia - not sure if the bulk foam is, though.

[BENT_8]

Originally Posted by BENT_8

I just did, so has my Daughter.
She's done it on a single wage, its really not that hard, just got to be realistic about what 'entry level' is.
Both of us did it as sole borrowers on sub $30ph.

People will still get loans for first homes, they'll just have to rethink their expectations on what a 'first home' actually looks like and where its situated.

Hate to quote myself but listening to the Roo and Ditz show this morning and they had Adelaides no1 auctioneer on to discuss the market.
They asked him about how rate rises were influencing the market.
He said all its done is push expectations down, so a $450k buyer has become a $350k buyer etc
They're still buying, just that 'all in' isnt achieving what it was 4 months ago.

[Yellow_Festiva]

Rates just up another .5%

[fordomatic]

It's interesting all this doom and gloom though, read a report today that even with the national house price average coming down 2.5%, we are still 21% up from March 2020. Not so bad when you look at it that way.

[Citroënbender]

The “doom and gloom” of this latest rise - on a $1M mortgage, 25 year term it’s poised to be about another $10/day (or less).

Without sounding flippant, surely most people affected that far, could face up to a challenge like this?

[Giant Cranium]

Originally Posted by Citroënbender

The “doom and gloom” of this latest rise - on a $1M mortgage, 25 year term it’s poised to be about another $10/day (or less).

Without sounding flippant, surely most people affected that far, could face up to a challenge like this?

Especially since fuel is 1.65 now. Saving $70 a week in fuel

[Romulus]

Originally Posted by Giant Cranium

Especially since fuel is 1.65 now. Saving $70 a week in fuel

Don't worry, the 22cpl excise goes back on end September.

[Citroënbender]

How far up are term deposit interest rates likely to go? It’s been a quantum shift in twelve months, can get 3,25% on $5K or more without trying - compared to barely 0,25% a year back.

[hackney]

Originally Posted by Romulus

Don't worry, the 22cpl excise goes back on end September.

Maybe, that is still uncertain @ this stage.

[Yellow_Festiva]

Originally Posted by Citroënbender

The “doom and gloom” of this latest rise - on a $1M mortgage, 25 year term it’s poised to be about another $10/day (or less).

Without sounding flippant, surely most people affected that far, could face up to a challenge like this?

That depends on if they were honest in their application. I assume people with such a high mortgage are also now paying more across the board like everyone else.

Once the pain becomes in the hundreds and soon thousands extra per month that's when we will see the true impact of these rises.