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Sydney house prices to rise 15-20% in 2014; Chistopher's 2014 housing boom and bust report now out
Topic Started: 17 Sep 2013, 06:27 PM (18,872 Views)
Strindberg
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sylvester
21 Sep 2013, 01:47 PM
Hardly an internet bear porn site. It was in Business Spectator. http://www.businessspectator.com.au/article/2013/9/6/economy/big-budget-bucks-down-property-drainpipe

Here is the paragraph: "According to Treasury, the cost of this concession is around $30 billion each year. This makes negative gearing the single biggest concession in the budget (superannuation is a close second). The size of this concession, or ‘tax expenditure’ is equivalent to the entire forecast budget deficit for 2013-14. In simple terms, if we removed negative gearing, our ‘budget emergency’ would rapidly disappear."
Thanks for that, I see you didn't get it from a bear porn site but it is a bear porn article and the $30billion cost quoted is totally and absolutely wrong. The Treasury have never given that estimate. The author made it up.

There is no way the cost to the government of negative gearing can be $30b. The total losses claimed as deductions by property investors for the year 2010/11 (the latest ATO figures available) were ~$13b. But even that is not the cost to Treasury. The typical marginal tax rate is 30% which means that the $13b losses claim perhaps resulted in $5b less tax for the Treasury. $5b is the figure usually suggested by people like Scott Pape as the cost of negative gearing. I know of no media tart (other than the author of that BS article) who has ever claimed the loss to be $30b or anything like that.

All the ATO data is in the following link, or you can go direct to the ATO site and see for yourself that the $30b is made up fantasy.
http://blog.rpdata.com/2013/05/there-were-1213595-individuals-with-a-negatively-geared-property-over-the-201011-financial-year/

Not surprisingly, the BS article received comments from a wave of housing bears and not one of them queried the invented $30b figure. All were revealed to be suckers fed with what they wished to believe regardless of the truth. I suppose it will now become another widespread bear myth.

The estimated loss of $5b for 2010/11 occurred when interest rates were much higher than now. Investors losses will now be much less and the cost for the current year will be much lower than $5b. Then of course there is the issue recognised in the Henry Report of the implications on the rental market of the removal of negative gearing, which would likely require more expenditure on housing by the government. The Henry Report did not recommend the removal of negative gearing.


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
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The top Sydney suburbs to watch

By Christina Zhou
Friday, 20 September 2013

Sydney may be on track for a bullish housing recovery, but it will be the properties in the middle and outer rings of the capital city that will outperform, according to SQM Research’s Louis Christopher.

Speaking yesterday at the SQM Research’s annual Afternoon of Property seminar, Christopher said the recovery has been “fairly broad based”, but has not yet taken place in the top end of the market.

“There seems to be a bit of a threshold there that once you get over $2 million, buyer demand falls away rather quickly,” he said.

“The outperformance is going to be those properties under that threshold and most likely be in the middle and outer rings of Sydney.”

The demographics of these areas are also expected to change on the back of a shortage of new housing in Sydney’s eastern suburbs.

“We’re going to see the wealthy people start to move out to middle ring because the very rich are staying in Sydney’s east and the lower north shore,” Christopher said.

“I think [middle-income earners] are going to be pushed further out into the west - into the outer ring - and I think that’s already been happening.”

While the same types of bullish growth rates are not expected for the prestige market next year, Christopher believes it will pick up slightly.

“We still think Sydney’s east is going to perform, but I think it’s going to be all the stocks under the $2 million mark in east Sydney where you’re going to see strong performance,” he said.

Rental yield was identified as another consideration for investors who are weighing up where to park their money.

Christopher warned that investors would be buying into a low yield environment, especially at the top end of the market.

“The higher up you go, the lower the yield, and as an investor, the lesson from that is to consider maybe buying at the mid-level,” he said.

“It just seems to be more cost effective if you buy properties roughly around the $500,000 mark than $1.5 million.”

Interestingly, Christopher also pointed out that properties in Sydney’s east and Sydney’s west have been performing in line in the last few years, despite the significant gap in price difference.

Read more: http://www.propertyobserver.com.au/new-south-wales/the-top-sydney-suburbs-to-watch/2013091965163
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Danger signs for housing market

September 24, 2013
John Collett

Sydney and Melbourne property markets are running hot with Sydney auction clearance rates just shy of 90 per cent and Melbourne's clearance rates just under 80 per cent.

Experts say house prices are not in bubble territory yet, but there are danger signs. The international Monetary Fund (IMF) says it is concerned about rising house prices around the world but it did not single out Australia.

But house prices are expected to be on the agenda when the IMF economists have their scheduled meeting in Australia in November.

According to RP Data, house prices have risen by more than 5 per cent in Sydney over the past three months and by more than 6 per cent in Melbourne over the same period.

Whether those prices will continue to rise at an annualised rate of more than 20 per cent remains to be seen.

The problem is that Australian house prices are already high by world standards. Most analysis compares prices with median income or rental yields. The result of those calculations is that Australian house prices are about 20 per cent higher than overseas house prices. The big boom in prices occurred between 1996 and 2003 when prices doubled.

Since then, Sydney house prices have moved only a little bit higher but the risk is the same as it has been for the past 10 years: unemployment rises sharply and overcommitted households become forced sellers. The level of housing debt to income remains high. In 1996 it was about 70 per cent, now it's about 150 per cent.

But unemployment, although rising, remains low and the banks report low levels of defaults. There is no obvious trigger that would cause house prices to crash. And the Australian housing market is different to most overseas markets.

Australia's population lives in a few relatively large cities. The release of land on the outskirts of our cities is constrained and immigration and demand remains strong. And the rules by which foreigners can buy real estate are relatively liberal. There is also the aspiration of Australians for home ownership. That means our market is dominated by lifestyle factors rather than purely investment factors, making buyers more prepared to pay more for a house than would a hard-headed investor.

Read more: http://www.smh.com.au/business/danger-signs-for-housing-market-20130924-2ubv7.html
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