Quantcast
Welcome Guest [Log In] [Register]
RSS












Welcome to Australian Property Forum. Please register here or log in below.

Username:   Password:
Reply
  • Pages:
  • 1
  • 8
Australian Housing Affordability Crisis
Topic Started: 23 Jan 2011, 10:00 PM (7,231 Views)
Oz Housing
Member Avatar
Housing Affordability
There have been several material trends over previous years, related to household income levels and household formation, that have worked together to excessively and unsustainably force up property prices to unfair levels.

1. Increased female workforce participation has led to far more dual-income families
2. Competitive bidding for property, driven by the amount banks are willing to lend based on joint income
3. Reduced family sizes, as a result of personal preferences and higher participation in the workforce

This factors are combined with unchecked commodification of shelter for the population. This is caused by misguided governments who omit to regulate house prices, while unfairly allowing over-leveraged bidders to force up housing costs so they, the government, can benefit from vast streams of land tax, stamp duty, and council rates revenue. Australia's dangerously unregulated property environment includes these elements:

Liberalization of debt at higher risk profiles for lenders.
The ascent of non-bank lenders and their reckless low-docs loans and non-conforming (sub-prime) loans
Dominance of interest-only loans among investors and speculators
Equalization of interest rates on credit for IPs and PPRs
Inappropriately low mortgage rates
Prevalence of spruikers' who promote 'get rich quick' rorts based on speculation and exploiting others especially renters
Unfair tax breaks, in particular negative gearing
Capitalization of interest and buying costs such as stamp duty
Desperate buyers, hysterically outbidding each other to get 'on the ladder'
Speculative irrational exuberance, faith that house prices can only go up and unending capital gains will bail out their ongoing losses
Greedy real estate agents, baby boomers, and developers cashing in on this hysteria
Low costs for property purchase compared to other nations
A rental market that favors landlords and unfairly gives few rights to tenants

Sadly these factors all mean that every spare dollar of household income is spent on overpriced housing and capitalized into ever increasing house prices as young families battle for decent shelter while speculators unfairly hoard the available housing stock.
Edited by Oz Housing, 23 Jan 2011, 10:03 PM.
Australian Housing Affordability Blog
Profile "REPLY WITH QUOTE" Go to top
 
Deleted User
Deleted User

Bubble up = ageing + easy available credit + affordability + consistent high population growth (1970 to 2010)
Bubble down = ageing + unaffordability + rapid population growth decline (2011 to 2020)
"REPLY WITH QUOTE" Go to top
 
SausageDog
Default APF Avatar

Oz Housing
23 Jan 2011, 10:00 PM
Unfair tax breaks, in particular negative gearing
This is the big one. Governments should be subsidising everybody or nobody. Both the investor and the owner-occupier are performing the same function, i.e. providing a dwelling to the community to house one of its residents. It makes no sense that I and a friend could buy properties and then rent to each other, giving us tax breaks so that we end up owning our homes faster than us both living in our own residences. The burdern (or lack thereof) to society is unchanged.
Edited by SausageDog, 24 Jan 2011, 11:54 AM.
Profile "REPLY WITH QUOTE" Go to top
 
Catweasel
Member Avatar


SausageDog
24 Jan 2011, 11:53 AM
This is the big one. Governments should be subsidising everybody or nobody. Both the investor and the owner-occupier are performing the same function, i.e. providing a dwelling to the community to house one of its residents. It makes no sense that I and a friend could buy properties and then rent to each other, giving us tax breaks so that we end up owning our homes faster than us both living in our own residences. The burdern (or lack thereof) to society is unchanged.
Catweasel say hmmmm.... What if all a mouse start to think out a box. Why it always the rely on a subsidy and govty? If it think and wonder why a property industry and local govt so the inefficient and productivity, then it a understand that a no incentive to be the productive. If govt, media, and industry say it a too expensive, then so the be it. Stop a interfere, let a property company and mouse die and let out-the-box thinker find solution (if can be done). If Australia richest country a world, but still the too expensive for mouse, need to look new solution. Mouse camps perhaps. Sound a stupid but it a same in another the country where the too expensive. Mouse live in camp or makeshift. Create its own the economy.
Profile "REPLY WITH QUOTE" Go to top
 
b_b
Default APF Avatar


Oz Housing
23 Jan 2011, 10:00 PM
There have been several material trends over previous years, related to household income levels and household formation, that have worked together to excessively and unsustainably force up property prices to unfair levels.

1. Increased female workforce participation has led to far more dual-income families
2. Competitive bidding for property, driven by the amount banks are willing to lend based on joint income
3. Reduced family sizes, as a result of personal preferences and higher participation in the workforce

This factors are combined with unchecked commodification of shelter for the population. This is caused by misguided governments who omit to regulate house prices, while unfairly allowing over-leveraged bidders to force up housing costs so they, the government, can benefit from vast streams of land tax, stamp duty, and council rates revenue. Australia's dangerously unregulated property environment includes these elements:

Liberalization of debt at higher risk profiles for lenders.
The ascent of non-bank lenders and their reckless low-docs loans and non-conforming (sub-prime) loans
Dominance of interest-only loans among investors and speculators
Equalization of interest rates on credit for IPs and PPRs
Inappropriately low mortgage rates
Prevalence of spruikers' who promote 'get rich quick' rorts based on speculation and exploiting others especially renters
Unfair tax breaks, in particular negative gearing
Capitalization of interest and buying costs such as stamp duty
Desperate buyers, hysterically outbidding each other to get 'on the ladder'
Speculative irrational exuberance, faith that house prices can only go up and unending capital gains will bail out their ongoing losses
Greedy real estate agents, baby boomers, and developers cashing in on this hysteria
Low costs for property purchase compared to other nations
A rental market that favors landlords and unfairly gives few rights to tenants

Sadly these factors all mean that every spare dollar of household income is spent on overpriced housing and capitalized into ever increasing house prices as young families battle for decent shelter while speculators unfairly hoard the available housing stock.
1. Liberlization of debt:
This has created a fairer Australia where people who can afford a loan are granted a loan. Try living in the 1970’s when you could only get a loan if you were “connected”. As far as the comment that lenders now have a higher risk profile…well that’s just not supported by the data. Aussie banks remain the strongest in the world by the ratings agencies and the bet price in the world (price / book) according to the equity market. They also generate superior ROE versus just about any other bank in the world.

2. Accent of non bank lenders?
Again not supported by the data. Traditional bank market share has increased during the GFC. Credit standards are tighter.

3. Dominance of interest only loans?
Source?

4. Equalisation of rates for IP’s and PPR.
What economic reason would justify a difference? IP’s offer the same security, but better cashflow.

5. Inappropriate low mortgage rates?
Inflation is targeted at 2.5%. Mortgage rates are circa 7.5%. That a 5.0% real rate of return to the mortgage provider. Not bad for a loan when real equity returns = 6.0% over the long run. By this measure, mortgage rates are inappropriately high.

6. Prevalence of spruikers
Any prevalence of spruikers are more than offset by the prevalence of Bear spruikers in the MSM. Seen the run that stupid Demographia report is getting today?

7. Unfair tax breaks?
These are the same tax breaks given to any share investor or business person. So on what basis are they unfair?

8. Capitalisation of Interest and buying costs such as stamp duty?
Why is this unfair. If I have an LVR of just 30%, why shouldn’t I capitalise some costs. Shouldn’t LVR, and serviceability be more important? This comment is a nonsense.

9. Deperate Buyers? On this forum all I ever hear about is desperate sellers.

10. Developers cashing in? Don’t make me laugh. Please, supply your evidence on this one!!!!

11. Low costs for property purchases compared to other counties? Source?

12. Rental market that favours landlords? Can’t comment. I don’t invest, and I don’t rent.


All in all, this post is just emotion. For the hard data please see link below. Housing costs as a % of income has not changed in 16 years.

http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/72A5703726A305B8CA25773700169C7C?opendocument
Profile "REPLY WITH QUOTE" Go to top
 
SausageDog
Default APF Avatar

b_b
24 Jan 2011, 12:29 PM
7. Unfair tax breaks?
These are the same tax breaks given to any share investor or business person. So on what basis are they unfair?
Because those same breaks aren't given to people buying their own property perhaps? Where is the inequity in the share market that you can see in the property market?

And why is lending to a bank in the form of buying their shares not treated the same as lending to a bank in the form of depositing all your savings? One is taxed more heavily than the other, although both serve the same purpose: providing capital to the institution to invest.
Profile "REPLY WITH QUOTE" Go to top
 
Ray White
Default APF Avatar
Gold Member
SausageDog
24 Jan 2011, 12:43 PM
Because those same breaks aren't given to people buying their own property perhaps? Where is the inequity in the share market that you can see in the property market?

And why is lending to a bank in the form of buying their shares not treated the same as lending to a bank in the form of depositing all your savings? One is taxed more heavily than the other, although both serve the same purpose: providing capital to the institution to invest.
No one, not one person, ever gets taxed on their savings or on shares that they own. There is no wealth tax in Australia like in some other countries. People get taxed on the income arising from those savings or shares. Both are treated in the same way.
Profile "REPLY WITH QUOTE" Go to top
 
b_b
Default APF Avatar


SausageDog
24 Jan 2011, 12:43 PM
b_b
24 Jan 2011, 12:29 PM
7. Unfair tax breaks?
These are the same tax breaks given to any share investor or business person. So on what basis are they unfair?
Because those same breaks aren't given to people buying their own property perhaps? Where is the inequity in the share market that you can see in the property market?

And why is lending to a bank in the form of buying their shares not treated the same as lending to a bank in the form of depositing all your savings? One is taxed more heavily than the other, although both serve the same purpose: providing capital to the institution to invest.
I can see no inequity between a property owner and a share investor. The issue of inequity was raised by the original post, not me.

People buying their own property get the best tax break fof all. No CGT.

re your question lending to a bank. Not sure I can answer that one. As I said, the issue of inequality was raised by the original post. This issue is moot for the reasons outlined.
Profile "REPLY WITH QUOTE" Go to top
 
Catweasel
Member Avatar


b_b
24 Jan 2011, 01:06 PM
I can see no inequity between a property owner and a share investor. The issue of inequity was raised by the original post, not me.

People buying their own property get the best tax break fof all. No CGT.

re your question lending to a bank. Not sure I can answer that one. As I said, the issue of inequality was raised by the original post. This issue is moot for the reasons outlined.
Why it a "best" tax break of all? If all the white shoe do a argue that a buy house is a best inflation a hedge, then a future house price carry a relatively same real value as a today (with a assume that house price not outpace inflation in a long run). In fact, it not a tax "break" at a all.
Profile "REPLY WITH QUOTE" Go to top
 
SausageDog
Default APF Avatar

Ray White
24 Jan 2011, 12:50 PM
No one, not one person, ever gets taxed on their savings or on shares that they own. There is no wealth tax in Australia like in some other countries. People get taxed on the income arising from those savings or shares. Both are treated in the same way.
I didn't say you pay tax on your savings, I said the activity of investing in shares and depositing your cash is taxed differently. There is no concept of CGT and associated discount for cash unlike the sale of shares. There is no opportunity to claim a loss if your cash depreciates in real terms unlike shares.
Profile "REPLY WITH QUOTE" Go to top
 
1 user reading this topic (1 Guest and 0 Anonymous)
Go to Next Page
« Previous Topic · Australian Property Forum · Next Topic »
Reply
  • Pages:
  • 1
  • 8




Find us on Google+

Follow OzPropertyForum on Twitter


Australian Property Forum Housing Market Snapshot


Australian Property Forum focuses on Australian and global real estate markets, economics, and finance, including house prices, housing affordability, macroeconomics, and the likelihood of an Australian property crash. Does Australia have a housing bubble? Will house prices crash, boom or stagnate? Is it a good time to buy property using a home loan, or better to rent and save the difference? Is rent money dead money? Is the Australian property market a pyramid scheme or Ponzi scheme? Can property values rise keep rising forever? These are the types of question we address on Australia's premier real estate chat site for property bears, bulls, investors and speculators. Whether you're a property investor, first home buyer (FHB) or a happily renting tenant, this site has content for everyone. Additional topics debated on APF include politics, modern monetary theory (MMT), debt deflation, precious metals, generational divides, climate change, sustainability, alternative energy, environmental, human rights and social justice issues, whether or not Australia has a critical housing shortage, versus a glut (oversupply) of dwellings, negative gearing, capital gains tax, land tax, macro prudential regulation, reverse mortgages, debt consolidation, debt management, home insurance, landlord insurance, auction results, auction clearance rates, and all the latest house price news. Forum members also regularly review and and analyse the latest blogs and trending topics from sites like Business Spectator, Property Observer, Macrobusiness, Somersoft, Demographia, Steve Keen's Debtwatch, as well as MSM (mainstream media) articles from well known economists, reporters and commentators such as Ross Gittins, Neil Jenman, Michael Pascoe, Alan Kohler, Shane Oliver, Catherine Cashmore, Philip Soos, Louis Christopher (SQM Research), Mike (Mish) Shedlock, Leith van Onselen, Chris Becker, David Llewellyn-Smith, Chris Vedelago and more. APF is the first forum to report and debate the latest auction results and house price data releases from APM (Australian Property Monitors), Residex, RP Data Rismark, REIV (Real Estate Institute of Victoria), REINSW (Real Estate Institute of NSW), REIA (Real Estate Institute of Australia), HIA (Housing Industry Association), RBA (Reserve Bank of Australia), API (Australian Property Institute), and the ABS (Australian Bureau of Statistics).

Australian Property Forum complies with ASIC Regulatory Guide 162 regarding Internet Discussion Sites. Australian Property Forum is not a provider of financial advice. Australian Property Forum does not in any way endorse the views and opinions of its members, nor does it vouch for for the accuracy or authenticity of their posts. Posts on Australian Property Forum may contain links to other websites operated by third parties. These websites are not under the control of Australian Property Forum and APF management is not responsible for their content.

It is not permitted for any Australian Property Forum member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor. Australian Property Forum members are solely responsible for the accuracy and authenticity of their posts, including any alterations made to posts. It is not permitted for Australian Property Forum members to ask for or offer specific buy, sell or hold recommendations on particular stocks, as a response to a request of this nature may be considered the provision of financial advice.

Views expressed on this forum are not representative of the forum owners. The forum owners are not liable or responsible for comments posted. Information posted does not constitute financial or legal advice. The forum owners accept no liability for information posted, nor for consequences of actions taken on the basis of that information. By visiting or using this forum, members and guests agree to be bound by the Zetaboards Terms of Use.

This site may contain copyright material the use of which has not always been specifically authorized by the copyright owner. Such content is posted to advance understanding of environmental, political, human rights, economic, democratic, scientific, and social justice issues. This constitutes 'fair use' of such copyright material as provided for in section 107 of US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit for research and educational purposes only. If you wish to use this material for purposes that go beyond 'fair use', you must obtain permission from the copyright owner. Such material is credited to the true owner or licensee. We will remove from the forum any such material upon the request of the owners of the copyright of said material, as we claim no credit for such material.

For more information go to Limitations on Exclusive Rights: Fair Use

Privacy Policy: Australian Property Forum uses third party advertising companies to serve ads when you visit our site. These third party advertising companies may collect and use information about your visits to Australian Property Forum as well as other web sites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, click here: Google Advertising Privacy FAQ

Australian Property Forum is hosted by Zetaboards. Please refer also to the Zetaboards Privacy Policy