Why would you want to subsidise a loss making industry,it just breeds inefficiency.
Agreed, but this is in isolation in that it has been left to boom without checks and balances. Our success to date has been a by product of derhulation and unchecked greed but it has worked. Whether we are in control of this system is yet to be seen, we could still send ourselves off the cliff but only due to our inability to comprehend the system we have created and how to peg back some of the overheated components.
What I can't see is why a country like the US can't look to build a decade of growth under the same system with a planned/controlled tapering learning from our trajectory. Given how sensitive the system is to supply and IRs it is certainly concur able they could actively control the market e.g. Accelerator, brake to benefit the economy and to remain in control.
That's what appears to be happening here, is it not?
I may not like the subsidy and yeah, unfortunately it has hindered my chances of ownership, but in its entirety it has been extremely successful in building wealth for individuals and the nation.
It is now working with FI to to keep us above the red line, we would be in recession now without property.
It then bewilders me that countries like the US and UK don't abandoned there investment schemes for middle and high income earners and take on a carbon copy of ours. I'm not being a smart arse I'm actually agreeing with the benefits of the system, there is collateral damage but given 70% of adults in this country own their own homes and millions have more than one then that damage is justifiable.
Why in the hell wouldn't the rest of the world, especially nations like the US who have relatively high wages but are floundering, adopt this approach?
I think there are three key issues:
1) The tax system in Australia leads middle and high income earners to become tax avoiders into reduce tax through things like Negative Gearing which has an upward impact on pricing, however also sees lower net rents. An Australian earning $180,000 pays over $4,000 more than an American on the same, and Americans can effectively "income split" to reduce their household income which Australians can not (unless running a family business where the wife and kids are all "employed" and drawing a wage of $18,199 each. If we had a more competitive marginal tax model then there would be less likelihood of the average investor looking at property
2) Compulsory Superannuation only coming into effect in 1992 sees many Boomers approaching retirement with insufficient savings who have taken the property path. This is less likely to be followed by the current new workers who will enjoy higher wages and more generous compulsory super schemes for their entire working life, and also be inheritors of property somewhere along their journey to retirement
3) State Governments are shit managers of public housing (to be honest shit managers of most things that they touch) and have better things to spend their money on, so would have a preference for affordable rentals that come into effect through NG, particularly in the lower socio-economic areas of our nation continue to be provided by the private sector.
I think the impacts of removing Negative Gearing on property prices are falsely held as the best hope of a price crash by the bears. The reality that the policy would be grandfathered out, so those holding before the change still hold the concession. Price growth would stabilise or fall, but rising rents will then switch affordability and prices will rise again.
The only way to crash house prices is to build a fuck-load too many of them. And as it stands that is not happening.
From a tax side of things, the more cash in the economy the more the economy can grow. That is why things need to change. We are not France, but there are too many taxes cumulatively leveraged on households and businesses holding back the country.
I may not like the subsidy and yeah, unfortunately it has hindered my chances of ownership, but in its entirety it has been extremely successful in building wealth for individuals and the nation.
It is now working with FI to to keep us above the red line, we would be in recession now without property.
It then bewilders me that countries like the US and UK don't abandoned there investment schemes for middle and high income earners and take on a carbon copy of ours. I'm not being a smart arse I'm actually agreeing with the benefits of the system, there is collateral damage but given 70% of adults in this country own their own homes and millions have more than one then that damage is justifiable.
Why in the hell wouldn't the rest of the world, especially nations like the US who have relatively high wages but are floundering, adopt this approach?
It is not creating wealth just taking it from somewhere else...
Matthew, valid points but number 2 erks me a bit. The notion that boomers only invest in property because they were short changed on super is just absurd. People young and old invest in property because it creates wealth, now anyone from Turnbull to the homeless will do anything if it created wealth. What you are saying is that if boomers had proper super they would be less inclined to buy property?!
Hardly, I think the DATA put forward by Peter and Shadow already prove the vast majority of FHB are buying investment properties and NG them, or are they both wrong? Why do FHB do this, simple they want wealth, they want the ability to tap into the wealth stream.
I think you are very misguided, gen y will want more wealth from property than the previous generation, it's only natural.
Matthew, valid points but number 2 erks me a bit. The notion that boomers only invest in property because they were short changed on super is just absurd. People young and old invest in property because it creates wealth, now anyone from Turnbull to the homeless will do anything if it created wealth. What you are saying is that if boomers had proper super they would be less inclined to buy property?!
Hardly, I think the DATA put forward by Peter and Shadow already prove the vast majority of FHB are buying investment properties and NG them, or are they both wrong? Why do FHB do this, simple they want wealth, they want the ability to tap into the wealth stream.
I think you are very misguided, gen y will want more wealth from property than the previous generation, it's only natural.
Mate sorry to irk you, it is just an observation I make form my experience. Let me tell you why.
When I was 24 our company "sold" our in house Super Fund to an industry fund, and this was sold to us "members" in groups. The groups were of people with comparable balances to me were largely in their 50's. Then when the numbers start being tossed around from the comments it was clear that 2 years into my career I had a super balance comparable to many of those coming to the end of theirs. In many cases, thanks to us starting contributions in the same year and with me on a higher salary I had more. I found it absurd then and still do now.
So they had 2 choices - accept the pension, or invest. Most of these guys got their PPOR incredibly cheap (by todays standards) and despite 18% interest rates (incredibly high by todays standards) managed to pay off the family home young. So they tossed their spare cash into an IP or 2.
That was about the only easy investment option. While eTrade was established, internet access was not easy and buying shares had barriers not present today.
I don't doubt that your generation is as hungry for wealth as any other, what they have is more wealth creation opportunities than their predecessors on an average wage who had to be honest 1.
Trading shares now is simple, as is foreign currency trades. The internet and global markets allow you to invest in anything in any country. Investment houses now offer easier access to foreign markets. There is access to 24 hour live data that did not exist.
Fuck even Dimbo, possibly the dumbest fuck on this forum if not the first world has apparently managed to make money trading online. If the Monkey can do it, the Organ Grinder is a moral.
Strong yields in property will become harder to come by (used to be like shooting fish in a barrel) yet the ability to capture upswings and avoid down with etrading I expect will see more of the younger generations shun property (which is highly illiquid) for shares (which are highly liquid) allowing them to embrace the Magpie Theory of wealth creation by rapidly avoiding one asset and moving to the next shiny object (much like Dimbo).
I is actually possible (and becoming more common) today to retire on an income higher than you earned while working. That is something that was not available in prior generations.
Quote:
Hardly, I think the DATA put forward by Peter and Shadow already prove the vast majority of FHB are buying investment properties and NG them
And this is the market change of the generation. Prior generations of FHB's purchased a home for them and their family. Current generation buy an investment, take NG and live at home or continue to rent while their "asset" costs are covered by the tenant.
Gen Y will get more wealth from property. Much inherited.
Like I said, just my thoughts, based on experience, observation and a reasonable amount of fact.
Agreed, but this is in isolation in that it has been left to boom without checks and balances. Our success to date has been a by product of derhulation and unchecked greed but it has worked. Whether we are in control of this system is yet to be seen, we could still send ourselves off the cliff but only due to our inability to comprehend the system we have created and how to peg back some of the overheated components.
What I can't see is why a country like the US can't look to build a decade of growth under the same system with a planned/controlled tapering learning from our trajectory. Given how sensitive the system is to supply and IRs it is certainly concur able they could actively control the market e.g. Accelerator, brake to benefit the economy and to remain in control.
That's what appears to be happening here, is it not?
I think the US were very successful in property investment until the gfc. All inefficient bubbles look attractive till they burst. The Auerbach housing market is just the latest.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
I may not like the subsidy and yeah, unfortunately it has hindered my chances of ownership, but in its entirety it has been extremely successful in building wealth for individuals and the nation.
It is now working with FI to to keep us above the red line, we would be in recession now without property.
It then bewilders me that countries like the US and UK don't abandoned there investment schemes for middle and high income earners and take on a carbon copy of ours. I'm not being a smart arse I'm actually agreeing with the benefits of the system, there is collateral damage but given 70% of adults in this country own their own homes and millions have more than one then that damage is justifiable.
Why in the hell wouldn't the rest of the world, especially nations like the US who have relatively high wages but are floundering, adopt this approach?
hmm... perhaps there are very good reasons the other countries do not rush to follow our model and abandon their own.
It's easy to think local systems work well while other countries don't ... nothing like talking to people who live, work, and invest overseas to understand that our system is not the best in the world.
When Australia has good times, almost any system can house and feed us... lets see how world class this system is when Australia has really terrible times.
I may not like the subsidy and yeah, unfortunately it has hindered my chances of ownership, but in its entirety it has been extremely successful in building wealth for individuals and the nation.
It is now working with FI to to keep us above the red line, we would be in recession now without property.
It then bewilders me that countries like the US and UK don't abandoned there investment schemes for middle and high income earners and take on a carbon copy of ours. I'm not being a smart arse I'm actually agreeing with the benefits of the system, there is collateral damage but given 70% of adults in this country own their own homes and millions have more than one then that damage is justifiable.
Why in the hell wouldn't the rest of the world, especially nations like the US who have relatively high wages but are floundering, adopt this approach?
This is one of the worst systems in the world. There's nothing productive about it and it starves the nation of real productivity.
This is one of the worst systems in the world. There's nothing productive about it and it starves the nation of real productivity.
Does it though, construction still adds to growth and like I said at the moment it is keeping us out of recession, right now without it we would be in the proverbial. On face value right now it is as close to a perfect capatalist system as has ever been created before. On the home stretch of 3 decades of growth, every decade seeing booming growth and the majority of the population benefitting from it.
The system is even so good it is not affected by things that collapsed other nations markets, primarily over supply. Melbourne has been heavily publicised about its oversupply issues and predictions that by 2018 Sydney and brissy will be the same. None of this has has made a shred of difference to prices apart from rents which in turn should have an even greater impact on prices but it didn't, in fact the opposite occurred.
Even the jump in unemployment towards the mid sixes didn't raise an eyebrow from anyone.
It has been an infallable system to date I really can't see why it can't be replicated in some form in other countries to allow them to emerge from the doldrums.
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