Forum Replies Created
- Dmichie we have reached concensus before on how to fix this – taxation reform.
It depends. If we do get a nasty recession, and the blame gets pinned on the taxation system for encouraging rampant speculation, we might yet be rid of negative gearing, CGT concessions etc.
The only time a politician of any flavour would have the courage to do this is when the property market is in the doldrums and very few people are investing.
Ok, its unlikely but I live in hope. Unfortunately if our pro-cyclical tax system remains as is, the boom/bust cycle will intensify in Australia.
you should be happy dmichie – if the CAD blows out you will get your much anticipated destruction of the AUD. then painful recession.Hey knucklehead, don’t shoot the messenger!
I am not the cause of our economic problems. I’m an exporter. I export software developed by my company in Australia to the rest of the world. 98% of our sales are overseas.
Australia has wasted the fruits of the 14 year economic boom by investing it all in real estate and spending the rest on imported consumer goods. Very little has been invested in the productive enterprises (yes, like mine) that will secure our economic future.
FYI: the CAD has blown out, the AUD will fall to correct this imbalance, and there may well be a recession because so much of our economy now revolves around real estate. If this does eventuate it sure as hell won’t be my fault.
I’d love to hear your thoughts on how we dig ourselves out of this giant pile of debt.
but I do like the taxable aspects of investing, and would probably still chuck the bucks into IP’s instead of a ppor.It almost makes you think there’s something wrong with a tax system that encourages property investment but not home ownership.
As John Garnaut put it today:
Most economists agree that the current account deficit has been inflated by the housing bubble, which, in turn, has been partly fuelled by taxes and other policies that divert investment away from productive enterprises and into real estate.http://www.smh.com.au/news/National/The-ball-is-in-Costellos-court/2005/05/31/1117305622815.html
But don’t worry, be happy, lets all be positive, there’s absolutely nothing to worry about [biggrin]
Borrowing just to fuel consumption ?????Yes, we’re borrowing from East Asian countries to buy goods made in East Asia. Our banks are also borrowing from overseas to fund our appetite for housing debt. Very little of our overseas borrowings are going into business investment.
err.. It was a tongue in cheek reference to this gemSorry, missed that one. I was struck down with the ‘flu yesterday, and I’m a bit slow on the uptake today. Perhaps God is punishing me for not being positive enough?
F and David – are you backing the 10% forecast interest rates? There really will be blood on the streets in this event.There would have to be some pretty serious inflation in the next few months for the RBA to get anywhere near 10% by next year. Australians are so heavily in debt at the moment that even the tiniest move in interest rates will knock the heat out of the economy … and I agree, there would be blood on the streets.
So, no I can’t see it happening. In the near term I see a continuing stalemate in the property market and a grinding slow decline.
I guess it’s all about the spin.I thought I tried that with my “Why a House Price Crash is GOOD for your Wealth!” thread. I obviously need to work on my language and make liberal use of the word “positive” throughout futute posts.
PS Happy birthday for yesterday!Sorry … dunno what you’re on about there.
Foundation, why is when I post something like this I cop an avalanche of abuse, but when you do everyone agrees that a fall in prices is a good thing?
Anyway, here is the Sydney angle on the same story:
http://smh.com.au/news/National/Interest-rates-tipped-to-rise-to-9-next-year/2005/05/29/1117305503675.htmlInterest rates tipped to rise to 9% next year
By Wendy Frew and AAP
May 30, 2005Sydney house prices could fall by up to 7 per cent over the next three years because of higher interest rates, economic forecaster BIS Shrapnel has said.
That would mean Sydney’s June median price of $500,000 would fall to $465,000 by June 2008, BIS said in its latest property report.
The forecaster has based its predictions on expectations the standard variable home loan rate will rise to as high as 9 per cent by the second half of next year, from 7.3 per cent now.
bob the worker wrote:
However, all I know is that after a property cycle peak, it often takes years for prices to recover, after a healthy correction.For example, after the 1980 peak, there was a drop, and it took 7 years to get back to the highs. After the 1989 peak, there was a drop, and it took about 10 years to get back to the highs. Thats a long time to wait to get a return.
I couldn’t have put it better myself.
The Mortgage Adviser wrote:
The best time to buy is NOW.You really can’t argue with that logic can you.
I’m 100% with AUSPROP on this one (yes, I think this is a first!).
IMO, personal income, companies, and capital gains should all be taxed at more or less the same rate (say 37%). This would remove the distortions from the tax system that encourage people to corporatise and capitalise their personal income.
As for encouraging people to save, super is taxed when you contribute, the earnings of the super fund are taxed, and you get slugged again when you retire. Something should be done about that.
Also, regular savings accounts are taxed twice; you pay tax on the money you save, and then you taxed again on the interest.
No wonder household savings rate has collapsed in the past decade. There are far more tax incentives (like negative gearing) to borrow than to save.
We live in debt bubble! Look at these charts for the past 10 years…
Current account deficit blows out to $16B.
http://203.26.51.178/cracker/54029_1.jpgHousehold savings collapse:
http://203.26.51.178/cracker/54029_2.jpgHousing credit explodes:
http://203.26.51.178/cracker/54029_3.jpgYesterday the Syd Fin Review, had on its front page, “Property Developers are dumping developments sites”Really? I must pick that up…
Wednesday’s Fin ran this story:
http://afr.com/premium/articles/2005/05/24/1116700707338.htmlWorld property prices on a knife-edge
“World property prices on a knife-edge” reports Corinne Lim. “The private sector is polarised about the global real-estate juggernaut. Bubble or no bubble? Gentle descent or crash? Safe bet or ticking bomb? Most economists have steered clear of disaster scenarios. But the froth in many markets refuses to subside despite the best efforts of policymakers, and some observers are rightly sweaty-palmed about a recent flare-up in speculative activity.”Here’s chart I scanned from the printed version:
http://203.26.51.178/cracker/56061_1.jpg
The LHS of the Australian chart looks very similar to the LHS of the Japanese chart circa 1990.Agree completely. My guess is REI turned those figures inside out to find some angle indicating that “now is a good time to buy”Yes, we desperately need an independent regulatory authority in this country where actual sale prices are accurately (and promptly) recorded, and statistics made freely available to the public.
See the “Where to get actual sale prices?” thread:
https://www.propertyinvesting.com/forum/topic/17572.htmldmichie, have you heard of refinancing and debt consolidation?Of course, but you can’t tell me a lot of your (former) business isn’t people buying new properties.
look for ways to make money whichever ways markets are moving at the time.But the market isn’t moving that’s the point. Its a standoff between vendors who want too much and buyers who won’t pay enough.
Well one thing’s for sure, if turnover has dropped 27% the agents won’t be happy, the banks won’t be happy, the mortgage brokers won’t be happy … no-one’s making money if the market ain’t moving.
1Winner wrote:
I have yet to hear a more pitifull statement then “I feel guilty about the money I made”. It not only defies all logic but it screems of anti-values and limiting beliefs so loud that it is deafening.Clearly I have a very different value system to your own, so lets leave it at that shall we.
Mr Car(stro) from New South Cuba may be interested in your ideas dm.Why? My comments on tax (in response to Robert’s question) were restricted to federal taxes. Why would the premier of NSW be interested?
HotRod wrote:
Reading what the last couple of posts have been it appears that what this site and its subscribers are trying to do are work less and earn more through RE and then to enjoy life.Seems that there is another view here that you have to work hard to then enjoy the fruits of your labours.
You misunderstand. Everyone is entitled to save for their retirement and enjoy life. My point is that our tax system is skewed so it rewards speculation and discourages hard work. You can’t run an economy like this forever, you end up with … well, what we have now, a real estate bubble, huge indebtedness and a massive trade deficit.
Yes, Qld tried to abolish this a few years ago and it was reinstated within 12 months as it was so detrimental to the state govt.Really?! its a deduction from federal income tax, how is that possible?
Hey Robin Hood (dmichie), what are your views on taxing everyone equally?I’m not an advocate of flat tax, I have no problems with a progessive income tax system, but I’d prefer the top rate was lower than 48.5%
The GST is essentially a flat tax (i.e. everyone pays the same) and I’d prefer there were no exemptions.
my biggest complaint about the tax system is the tax rates are different for companies, capital gains and personal income tax. I reckon they should all be taxed at the same (maximum) rate around 40%.
Negative gearing is a rort that’s unique to Australia and should have been abolished years ago.
Oh, and stop feeling guilty about making money.I don’t feel guilty about making money when I’ve worked hard for it. I feel guilty about making money from sitting on real estate.
If you do feel guilty … start a business and employ people to be productive.I did, long ago.
1Winner:
It seems that you believe achieving a high value in asset’s accumulated by (in your view) “passive” means, is a sin and must be punished. Whoever has not suffered and worked hard to achieve a large capital portfolio is a parasite and must be stripped from his ill- gotten gainIn a word “yes”. I believe our tax system favours speculation (sorry, investment) through negative gearing and CGT concessions over honest labour, with our high marginal tax rates. I think our taxation desperately needs reform so Australians spend more time creating productive businesses and working hard rather than speculating on property.
I assure you I am no “Johnny come lately”. I have done reasonably well out of property over the past 12 years and actually feel quite guilty about it.
The Mortgage Adviser wrote:
dmichie, READ IT…. I am referring to the majority of people WHO ACTUALLY CARE!!!!Robert, there’s no need to shout, I simply misunderstood what you meant by “majority” that’s all. I now understand what you meant.
bruham wrote:
The trouble with having a property down turn,is that all other segments of industry follow.
The building game supports more side industries than all other industries put together.
Suppliers of all types of building accessories. Baths,taps,nails,paint,timber,bricks etc
Tradesmen out on their ears would be plumbers,carpenters,painters,electricians,roof tilers,truckies etc.
In your “down turn” people would be retrenched.Yes I already made the point that so much of the Australian economy now revolves around real estate that a house price crash would probably result in a general economic down turn. Can I respectfully suggest that the real problem is the Australian economy should be more diversified and not be so reliant on property.
BTW, interesting anecdote about the phone calles from bank and mortgage broker. Thanks.
