Do they Shadow, shit your scaring me now, I didn't realise you know all of my peers
I know 4 people my age that have a mortgage but the terms are so ridiculous I would hardly call it as such, interest only over. 35-40 yrs their not even renters in real terms they are financially fucked. The rest have investment properties ALL of which are negatively geared and IO, we discuss property semi regularly and the main reason why they have brought is because 'mum and dad were like, you gotta get into property, you can't beat bricks and mortar, you can't go wrong'.
I have family who have reasonable wealth and some have done it through property. They did it primarily through the 80's and. 90's and they pushed me not to buy in 2009 when we first started looking. They were adamant that the term should be no more than 25 yrs principal and interest and if you couldn't afford based on these terms THEN YOU DONT BUY, because reality is you can't afford it.
NG , low doc/ no doc brokerage, interest only loans have seen people who can't afford it buy, you call these people home owners but I don't share the same view.
Without it investing would still exist but prices would not be so disproportionate to wages and investors would have to revert to more traditional means e.g. adding significant deposits to ensure the property they buy neutral or positively geared.
I doubt it. The price of new builds would not be impacted in the slightest, and the price of all dwellings is pretty-much determined by the boundary conditions of replacement cost and desirability of location.
I'd expect low-end dwellings to suffer a short-term dip in price and maybe some very low-end stuff that nobody wants to buy to live in might see a permanent drop in price relative to higher-end stuff. But they'd rent for the same or more.
The truth will set you free. But first, it will piss you off. --Gloria Steinem AREPS™
I doubt it. The price of new builds would not be impacted in the slightest, and the price of all dwellings is pretty-much determined by the boundary conditions of replacement cost and desirability of location.
I'd expect low-end dwellings to suffer a short-term dip in price and maybe some very low-end stuff that nobody wants to buy to live in might see a permanent drop in price relative to higher-end stuff. But they'd rent for the same or more.
Rents are already dying in the arse, people can't pay an unlimited amount. Wages need to keep up and they are not, you like all 'investors' believe that rent is dictated by your expenses but the costs to you is irrelevant. The only thing that matters is what people can pay followed by what they are prepared to pay.
You can't borrow money to pay rent. Rents are dictated by the ability of people to earn and pay at a particular point in time.
Try to squeeze out higher rents and people will start moving back in with their parents.
Let me assure you that this isn't one of those shady pyramid schemes that you've been hearing about. No sir, our model is the Trapezoid which guarantees each investor an 800% return within hours. Those who can, do. Those who can't, teach. "It's an itchy blanket, it's designed to remind you how lucky you are"
Rents are already dying in the arse, people can't pay an unlimited amount. Wages need to keep up and they are not, you like all 'investors' believe that rent is dictated by your expenses but the costs to you is irrelevant. The only thing that matters is what people can pay followed by what they are prepared to pay.
Anything is possible. But unless a place is as far out as you can get, people that can't afford it can always move another suburb out and unless it is the closest suburb in, there will always be other people prepared to pay the market price. You are indulging in a bit of wishful thinking, I believe.
vdmruss
22 Aug 2014, 12:01 AM
You can't borrow money to pay rent. Rents are dictated by the ability of people to earn and pay at a particular point in time.
Try to squeeze out higher rents and people will start moving back in with their parents.
They are already doing that, but rents have been pretty solid, except in areas of oversupply.
I suspect that rents and unemployment have a close relationship as would wage rises. It's interesting that much of the new building going on is inner city apartments but the rent in these places is quite high. I don't think there is an overwhelming demand for this accommodation at this price point. I'm not sure what sort of margins they are making on these apartments but it must be reasonable because they keep building them. What is the replacement cost of these apartments? If the demand drops away does it affect the price of inner city land thus further reducing replacement cost? Land price is highly variable. If there was a radiation leak in the CBD, suddenly the replacement cost of inner city properties would plummet.
Do they Shadow, shit your scaring me now, I didn't realise you know all of my peers
Don't know them all personally, but I know from this ABS table that 64% of households where the reference person is between 35-44 years of age are home owner households.
Quote:
they pushed me not to buy in 2009 when we first started looking.
Don't know them all personally, but I know from this ABS table that 64% of households where the reference person is between 35-44 years of age are home owner households.
Ouch. Have they apologised?
I couldn't thank them enough, financially I am in much better place than most even though I am renting. If I was going to buy in 2003 and was given that advice I would be looking to go postal on people but it was a matter of timing. I couldn't buy until 2009 and at that time the landscape was very different for the reasons I mentioned.
What you don't realise is I can take out a mortgage, a very significant mortgage but I will possibly never own a home outright if I did. I realise it's a gamble Shadow, prices now need to fall about 15-25% for me to be utilise my savings and be in front but I am confident that the greed will cook the golden goose.
I can see the cliff face but what I see as an inevitable drop you and all other Ip owners see as a good view.
No, I've been over that back on page 324 but I don't blame you for not reading every post. I understand what you are saying. However, the ability to make the tax deduction immediately helps the investor to carry the property through the early expensive years. Additionally, some investors sell without making a profit and many investors have no plan to ever sell, and instead live off the retirement income.
The point is that the "average" NG investor claims $200 per week in deductions. I'm guessing the average first year investor would be up around the $400 per week mark. You don't think that's an incentive?
No one is denying NG makes a tax deduction immediately helps the investor in the early years. However, I still disagree that removing negative gearing will be "$10,000 per year tax deduction foregone". I'll say it again.
It is not foregone. It does not disappear. It doesn't cease to be a tax deduction. It is merely postponed.
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