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Get Up! End Negative Gearing & Property Buyer / First Home Buyer FHB Strike; 40,000 First Home Buyers On Strike - David Collyer
Topic Started: 16 Mar 2011, 08:59 AM (25,072 Views)
Shadow
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Rastus2
1 Apr 2011, 12:05 AM
Why do I need to answer your question of " why do you believe NG was reintroduced, if not because its removal led to upward pressure on rents?" when you 1/2 answer it yourself... you already admit that there is no strong evidence that removal caused a rise in rents.. and you admit it certainly did not occur Australia wide anway...
Upward pressure on rents is not the same as a rise in rents. I could place upward pressure on a falling object but that wouldn't necessarily prevent the object from continuing to fall, depending on the weight of the object.

I believe NG places downward pressure on rents and upwards pressure on house prices, if the population is growing, because it encourages people to invest in property, thereby encouraging existing and new dwellings to move out of the homeowner pool and into the rental pool - i.e. lower supply of property for sale, higher supply of property to rent.

As the population grows, there are always people looking to buy and rent. If there is a greater supply of rentals and a lower supply of property for sale, then the growing population will be exerting a greater demand relative to supply on the sales market, and a lower demand relative to supply on the rental market. Therefore - NG results in upward pressure on prices, and downward pressure on rents.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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Rastus2
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Shadow
1 Apr 2011, 12:17 AM
Upward pressure on rents is not the same as a rise in rents. I could place upward pressure on a falling object but that wouldn't necessarily prevent the object from continuing to fall, depending on the weight of the object.

I believe NG places downward pressure on rents and upwards pressure on house prices, if the population is growing, because it encourages people to invest in property, thereby encouraging existing and new dwellings to move out of the homeowner pool and into the rental pool - i.e. lower supply of property for sale, higher supply of property to rent.

As the population grows, there are always people looking to buy and rent. If there is a greater supply of rentals and a lower supply of property for sale, then the growing population will be exerting a greater demand relative to supply on the sales market, and a lower demand relative to supply on the rental market. Therefore - NG results in upward pressure on prices, and downward pressure on rents.

Lets not forget that you are talking about -ve gearing on all IP's (regardless of age) and against all income...


In your example you can cite that you are applying upward pressure on a falling object, but you don't forget to mention that you are also pushing it down with the other hand...


It's easy to say that -ve gearing applies downward pressure on rents... and If the speculation is removed from your equation then it's more likely to be correct, however we do not live in the Pollyanna world.

By your own words again -ve gearing (as applied in Australia) applied upwards pressure on house prices... thus speculation rather than channeling directly into construction of new dwellings.

This speculation meant that any possible downward pressure on rents is countered by the reduced yields of the rising house prices (for the new Investors that bought)... Those reduced yields mean that rents have had to increase, and house prices were required to keep rising to keep the IP business models viable.

We have covered Yields on property before and as franks keeps pointing out, rents keep rising despite the fact that his properties don't cost that much more to keep from year to year...

So no, it's not realistic or very honest to talk with authority of the pressure applied by -ve gearing to rents when you forget to include the upwards pressure being also applied...
Edited by Rastus2, 1 Apr 2011, 12:32 AM.
Shadow - Defrauded his Bank ? 2015 I have 9 different loans and my bank had no idea which ones were personal and which were investment. They had half of them classed incorrectly. When this change came in they asked me to tell them if any personal loans were incorrectly classed as investment, which I did, and they switched them to personal for the lower rate. They also had a couple of investment loans incorrectly classed as personal. They didn't ask me about those. So they stay on the lower rate too. Worked out pretty well. :)
Shadow - 2008 Sydney Median House Price 1.25M by 2014-2015

Shadow : I think this boom has already begun in several cities. My prediction :
Peak of boom: 2014-2015. Sydney Median Price: $1,250,000 Bottom of bust: 2017-2018. Sydney Median Price: $1,100,000

Shadow's Original 2010 House Boom and Crash prediction http://s836.photobucket.com/user/rastus22/media/shady-orig-2010-chart.png.html?sort=3&o=0

Shadow's attempt to edit his 2010 chart in 2015 and replace it with one that does not show a crash in 2013 http://s836.photobucket.com/user/rastus22/media/Screen%20Shot%202015-06-06%20at%207.12.52%20pm_1.png.html
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Yorke
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Rastus2
31 Mar 2011, 08:13 AM


yes, lets hope..

and then lets hope the -ve gearing GETUP campaign grows legs eh York ? :beer:
That would be fine with me, not looking at selling any IPs and with a rebalanced portfolio of median purchased prices in mid $100Ks and median rents of $450pw I wish they did scrap NG. I'd rather have the higher rents then higher valuations (and higher rates) :laughing:
I've been around long enough to see for myself what removing NG did last time and doing it again would only mean more rent $ in my pocket. Unfortunately the government didn't have the balls to stick to their guns and reintroduced the NG before we could see the full results of the removal of NG. I believe that different states had different results simply because different variables like rental vacancy rates, properties on the market, price to rent ratios, etc and given more time the market forces would have sorted out both house prices and rents. I think that without government interventions like NG and FHOG we would now have less houses and more high density properties , much higher house prices and higher rents across the board as less OO would afford to buy and no IP would be rented at a loss so investors would not buy or build IPs unless the rent would cover expenses plus a 10%+ profit (assuming no CG ) or rents at least twice as high as mortgages.
For eg. someone looking to invest $300k in a basic H&L rental package on the outskirts would have to make sure he could get at least $1000 pw. in rent or couldn't justify the investment.
Investors may cope the initial shock from the removal of NG but eventually its the renters who would end up getting shafted and have to pay the price for it.

Anyway its all academic since I don't believe the government will ever remove the NG.

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Rastus2
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Yorke
1 Apr 2011, 12:37 AM
That would be fine with me, not looking at selling any IPs and with a rebalanced portfolio of median purchased prices in mid $100Ks and median rents of $450pw I wish they did scrap NG. I'd rather have the higher rents then higher valuations (and higher rates) :laughing:
I've been around long enough to see for myself what removing NG did last time and doing it again would only mean more rent $ in my pocket. Unfortunately the government didn't have the balls to stick to their guns and reintroduced the NG before we could see the full results of the removal of NG. I believe that different states had different results simply because different variables like rental vacancy rates, properties on the market, price to rent ratios, etc and given more time the market forces would have sorted out both house prices and rents. I think that without government interventions like NG and FHOG we would now have less houses and more high density properties , much higher house prices and higher rents across the board as less OO would afford to buy and no IP would be rented at a loss so investors would not buy or build IPs unless the rent would cover expenses plus a 10%+ profit (assuming no CG ) or rents at least twice as high as mortgages.
For eg. someone looking to invest $300k in a basic H&L rental package on the outskirts would have to make sure he could get at least $1000 pw. in rent or couldn't justify the investment.
Investors may cope the initial shock from the removal of NG but eventually its the renters who would end up getting shafted and have to pay the price for it.

Anyway its all academic since I don't believe the government will ever remove the NG.



glad to hear you are onboard...

I hope you have voted for the getup campaign then :c)

(As you point out, it's going to be a huge boost to your income stream).


btw... Obviously, someone who is investing in a basic H&L rental package could afford to do it cheaper than $1000 pw if the cost is not $300k :beer:
Edited by Rastus2, 1 Apr 2011, 12:45 AM.
Shadow - Defrauded his Bank ? 2015 I have 9 different loans and my bank had no idea which ones were personal and which were investment. They had half of them classed incorrectly. When this change came in they asked me to tell them if any personal loans were incorrectly classed as investment, which I did, and they switched them to personal for the lower rate. They also had a couple of investment loans incorrectly classed as personal. They didn't ask me about those. So they stay on the lower rate too. Worked out pretty well. :)
Shadow - 2008 Sydney Median House Price 1.25M by 2014-2015

Shadow : I think this boom has already begun in several cities. My prediction :
Peak of boom: 2014-2015. Sydney Median Price: $1,250,000 Bottom of bust: 2017-2018. Sydney Median Price: $1,100,000

Shadow's Original 2010 House Boom and Crash prediction http://s836.photobucket.com/user/rastus22/media/shady-orig-2010-chart.png.html?sort=3&o=0

Shadow's attempt to edit his 2010 chart in 2015 and replace it with one that does not show a crash in 2013 http://s836.photobucket.com/user/rastus22/media/Screen%20Shot%202015-06-06%20at%207.12.52%20pm_1.png.html
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bullorbear
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Mahamed
30 Mar 2011, 11:28 AM
Red Symon interviews David Colyer from Prosper on ABC 774 Melbourne about the First Home Buyers Strike !

http://blogs.abc.net.au/files/david-colyer-1.mp3
Thanks, just had a listen, Red sounded panicky.
I'm neither bull nor bear
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Sherlock
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The campaign, is a failure!!

"GetUp's deputy national director Sam McLean says the organisation does not currently have any plans to campaign for the buyers' strike or against negative gearing."

Link -- http://au.news.yahoo.com/a/-/australian-news/9109383/the-homebuyer-strikes-back/

Quote:
 
A tiny land tax lobby group has sparked a storm by suggesting first home buyers go on strike to force property prices lower.

Prosper Australia is an organisation devoted to promoting the ideas of 19th-century political economist Henry George, who suggested that income and company tax should be replaced by land tax.

It launched its call for an Australian first home buyer strike on March 15 - since then the idea has gone on to become the number one suggestion on GetUp's campaign ideas forum with 5,644 votes, followed by another housing-related campaign idea to abolish negative gearing.

The online interest has translated into coverage in major daily newspapers and breakfast television, but Prosper Australia spokesman David Collyer says thousands of Australians were already boycotting home purchases before the campaign launched.

"The aim of the campaign is to make first home buyers who are locked out of the market aware that they're not alone, and that their private economic decisions are actually being made by all of their peers at the same time," he told ABC News Online.

Mr Collyer says two average incomes, even with significant savings for a deposit, are no longer enough to secure many prospective home buyers a property, even on the urban fringe.

"The housing market has spiralled off into ridiculous pricing that nobody can possibly afford, and it gets to the point where if nobody can afford it the prices must change," he added.

Mr Collyer says first home buyers have been duped into entering the bottom rung of a nationwide property ponzi scheme.

"The first home buyers are the greater fools of the real estate market - that is, the entire edifice of land prices in particular depends upon this constant influx of new first home buyers naively entering into outer suburbs, into lower-priced housing to boost the price of everybody else's housing up the chain," he explained.

"Now, when you remove that first stage of real estate pricing, the whole edifice collapses - it's the end of the game."

Prosper says government policies have also fostered the creation of a real estate bubble in Australia, through allowing tax benefits for people who choose to invest in property rather than bank savings, shares or other asset classes.

Mr Collyer singles out negative gearing on investment properties, where investors can offset their property losses against their other income for tax purposes, as one of the key problems.

"That's what's actually driven up this bubble that we're now experiencing is the competition between people who must have a home to live in and people who feel like reducing their tax burden," Mr Collyer said.

However, he does not think it is likely any government would have the courage to take on the large number of Australians who are negatively geared on property, especially given the fierce reaction from a much smaller group of investors and real estate lobby groups when negative gearing was temporarily removed in the 1980s.

"There's 1.5 million Australians, most of them middle-income earners, usually with only one [investment] property, who are negatively geared," he said.

"In an election campaign, to swing such a large group from one side to the other would be poison. I think the ALP Government would leave it alone, even if GetUp did run a campaign on negative gearing."

GetUp's deputy national director Sam McLean says the organisation does not currently have any plans to campaign for the buyers' strike or against negative gearing.

"We're looking into the suggestions - but they are some fairly complex economic issues so we'll need to spend some time doing research," he said.

"We don't have any intention to run a campaign on the issue in the immediate future."

When asked whether GetUp may steer clear of a campaign on negative gearing to avoid upsetting any investment property owners who donate, Mr McLean replied that particular issue had not crossed his mind.

"Haven't given any thought to that. Our donors are a pretty diverse group - over 50,000 donors with a small average donation of $42," he responded.
Edited by Sherlock, 1 Apr 2011, 02:06 PM.
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matthew_50
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there is no reason for them not to pursue the Negative gearing one...

hell, just for a start they could look at the HENRY TAX REVIEW to see what he had to say about it...

(incidentally... what did he have to say about it?)


and Sherlock, it's not a failure.

"The online interest has translated into coverage in major daily newspapers and breakfast television"

it has already succeeded...

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asya
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Sherlock
1 Apr 2011, 02:06 PM
The campaign, is a failure!!


"GetUp's deputy national director Sam McLean says the organisation does not currently have any plans to campaign for the buyers' strike or against negative gearing."

The property lobby tentacles are long, but I wouldn' t call the campaing a failure. It is achieving what it intended: To draw attention to the bubble problem.
I would rephrase it: Get up is a failure if they don't listen to people: The home buyers strike is the most voted by far of all the campaing suggestions. Oh and the NG is the second most voted.
Get up will loose all credibility.

Edited by asya, 1 Apr 2011, 02:53 PM.
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Strindberg
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asya
1 Apr 2011, 02:47 PM


"GetUp's deputy national director Sam McLean says the organisation does not currently have any plans to campaign for the buyers' strike or against negative gearing."

The property lobby tentacles are long, but I wouldn' t call the campaing a failure. It is achieving what it intended: To draw attention to the bubble problem.
I would rephrase it: Get up is a failure if they don't listen to people: The home buyers strike is the most voted by far of all the campaing suggestions. Oh and the NG is the second most voted.
Get up will loose all credibility.
What are the campaigners campaigning for?

Most houses, and all those that are for sale, are privately owned. Are the campaingers asking the government to make a new law which will force sellers to sell for a lower price than the buyers will pay? The price paid for a house is the result of an agreement between consenting adults. Why would you wish anyone to intervene in that process? If you want a house you have to compete with everyone else who wants a house. Are you too piss weak to accept competing with others? Do you want some favourable treatment so you can get something for nothing? The government already gives FHBs a big advantage. They give them MONEY towards a deposit and some states waive stamp duty. They don't even have to pay CGT when they sell.
The whole idea of a campaign is potty and appeals to the idle losers who are not prepared to put in the effort for their own home like everyone else does. You are either asking for government interference to make sellers sell for less than the market price or you are somehow imagining in your cuckoo world that this appeal will be heard by the house sellers who will respond with:
"Oh Jack, look at this campaign. I really think they are good people and deserve cheaper housing. Let's sell our house to them for half price. I know we had a firm offer last week of $1m but let's not be greedy. Let us sell it for $500k."


PS - there is no bubble. Incomes have risen faster than house prices since December 2003. Even Alan Kohler stated that on the ABC news. Australians are rich and prices are very affordable for working Australians. Brand new 3 bedroom detached places are available around Melbourne for under $300k. Detached houses which most of the world can only dream about are available in regional Australia for much less than $300k. Many suburbs of Sydney have detached houses available for less than $300k. Some people however think they deserve to live on Sydney harbour with a mooring.
Edited by Strindberg, 1 Apr 2011, 04:19 PM.
Housing costs to Income broadly unchanged since 1994 - re-ratified here
The People of Australia have the highest median wealth in the World
2002-2012 10 year house price growth the SLOWEST since 1952-1962
"There are two kinds of people in this world: ones that fiddle around wondering whether a thing's right or wrong and guys like us." (Hugo to Gagin in Ride the Pink Horse)
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asya
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Strindberg
1 Apr 2011, 04:17 PM

[/i]

PS - there is no bubble. Incomes have risen faster than house prices since December 2003. Even Alan Kohler stated that on the ABC news. Australians are rich and prices are very affordable for working Australians. Brand new 3 bedroom detached places are available around Melbourne for under $300k. Detached houses which most of the world can only dream about are available in regional Australia for much less than $300k. Many suburbs of Sydney have detached houses available for less than $300k. Some people however think they deserve to live on Sydney harbour with a mooring.


OMG, please post the links for those bargains and I will quit the strike! What? Oh they don't exist. I didn't think so.
I for one am sick of looking at overpriced dumps.
Oh and by the way the nobody believes the old " there is no bubble " anymore. You should change strategies.[/quote]
Edited by asya, 1 Apr 2011, 05:20 PM.
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