I still think negative gearing and tax breaks for property investors, and even just the idea that property has become a source (or aspiration for) of massive profits, has changed the dynamic between rich and poor in Australia. I still think these factors, along with population growith has caused increased rents, and reduced the quality of housing standards, like no other era in Aus before. I'd like to commission a major stufy into it if I could, non-biased, all sides of the story, and see what the figures said.
Wynyard wrote:I still think negative gearing and tax breaks for property investors, and even just the idea that property has become a source (or aspiration for) of massive profits, has changed the dynamic between rich and poor in Australia. I still think these factors, along with population growith has caused increased rents, and reduced the quality of housing standards, like no other era in Aus before. I'd like to commission a major stufy into it if I could, non-biased, all sides of the story, and see what the figures said.From what I've read, negative gearing was once abolished back in 1985, only to be reinstated two years later. The attempt to remove negative gearing actually led to a rise in house prices and rent. When negative gearing was restored in 1987, house prices and rent increased yet again!
Considering what an epic fail it was in the past, I challenge the government to do it again.
Wynyard wrote:I still think negative gearing and tax breaks for property investors, and even just the idea that property has become a source (or aspiration for) of massive profits, has changed the dynamic between rich and poor in Australia. I still think these factors, along with population growith has caused increased rents, and reduced the quality of housing standards, like no other era in Aus before. I'd like to commission a major stufy into it if I could, non-biased, all sides of the story, and see what the figures said.Wynyard, sometimes a group doesnt realise how good things are.
First the historic reality. Over the past 400 years the historic average for rent has actually been TEN percent of the properties value. So you've been living in a society that now has its rent/value closer to a 4% for the property. Heck, historically you are doing very well. And you are getting a lot of property for that buck. The average house size has moved from just under 15 SQ to a whopping 22 sq, so sit back .. you are getting more house for your buck.
Now with the tax advantages for factoring in renovations .. you are living in better houses than was possible 30 years ago. Most houses are linked up with cheap affordable natural gas, which reduces your overall bills. Wow .. so spoilt. Most of the places out past the 50km zone in Melbourne built over 30 yrs ago have nothing but electric. Simply .. gas connections were not available.
And the rents are so high? Firstly, if you are unemployed, on disability or aged pension, you are getting a subsidy from the public purse to your rents. Guess what this does to rents? It makes them rise ! So you can thank that sedicious welfare system for ramping up your rents. I think we should just cancel that and see how many people make it .. DONT YOU ? (sarcasm)
Thanks to the great government decision to cut back on building public house in large congregate blocks and spread it across the suburbs with the purchase of housing, there are no real ghettoised areas of Melbourne. Sure its increased housing prices as this has taken up otherwise used utility house stock, but you dont have heavily ghettoed areas of Melbourne.
By the way, the answer to most of the housing price rise is commodity stock. For almost 30 years now there hasnt been anywhere NEAR enough replacement stock built proportionate to the growth rate in population. What will happen eventually is .. the housing requirements will be met, there will be enough stock to go around and prices will regulate themselves.
Finally, the real answer to rental issues is demand. As long as there are those evil landlords getting rich .. they are out there developing more stock for you to sit in and complain about how high those rents are. When there arent any, you'll know about it. You wont be able to get housing without knowing someone .. prices will not only be for the rent .. there will be a price to pay just to GET a property. That happens in other countries, I'm sure you are aware of that.
And to end the idea of the evil landlord once and for all, there is nothing wrong with doing legal means that are WRITTEN IN LAW to minimise your tax burden. It means you have citizens providing a housing service that the government isnt .. hasnt and wont EVER be willing to support. I am an evil landlord, I provide housing for people who cant buy it themselves, so be it.
When there are no profits in housing .. you will get a housing market where no-one has any incentive to upgrade maintain or renovate their house. This leads to crummy housing stock, decaying housing, and eventually loss of tenancies. No-one .. even tenants want to live in crap. Crime rates soar, and the cost to maintain the houses is more than the houses are worth. Houses just rot.
<Moderator: delete flame>
hmmm… To my knowledge;
'negative gearing and tax breaks' means the property is actually COSTING the investor money over and above what the poor tenant is paying…
the government put these tax systems in place to encourage those who could afford to buy to supply housing for those who can't or chose not to pay a mortgage…
the increase in mortgage repayments are far greater than the increase in rent over the past few years AND it is still cheaper to rent over the course of a lifetime than to buy…
AND, if investors stopped buying then there would be nowhere for renters to live and basic 101 Supply and Demand dictates that fewer properties for rent means higher rents, so Wynard, I am not the most highly educated person around but I would dare to suggest that higher house prices and higher rents come from a shortage of both.
I would also like to push the friendship to suggest that higher interest rates are part of the reason for less investors buying homes for renters, and possibly for some rent increases and that maybe those who AREN'T under mortgage stress were running around out there last year with their credit cards in a spending frenzy, prompting the Reserves Bank to try and rein in the big inflation monster by increasing said rates….
So who is really to blame here??!?Seriously, there will always be tenants, there will always be landlords, and there will be good and bad apples in both. There will always be those people with a bit of 'get-up-n-go', looking for a better life, as there will always be the victims, looking for someone to blame for their lot in life…
I am a Property Investor, and yes, a Landlord. I have worked harder than most to get here and I am proud of what I have achieved thus far and excited about what else there is to come. I am a good, no, FANTASTIC Landlord – going above and beyond to ensure my tenants are comfortable and happy and it costs me. I have also been totally taken advantage of on a few occasions and had to walk in to properties that look like those roach-infested nightmares they show on current affairs programs from time to time with human excretea smeared on the walls. But I clean up and keep going. I am highly passionate about property – I love it!
So please forgive me Wynyard, if I took your original post personally and may I suggest to you that slamming Property Investors and blaming them for ruining our great country, and for your lot in life, on a Property Investment forum was a little bit … well, rude!
And I won't even get started on the Entrepreneurial "go-getter' spirit that built this great Country…If you'll excuse me, I have to go research some companies to put a new carport on my Broken Hill Property to thank my tenant for being so great and paying her rent on time. She pays $130 per week by the way, even though I could charge her the market rate of $160…
Good Luck finding somewhere to live – I hope your new Landlord gives you a reason to feel a bit more friendly towards us Investors.
I realised starting a topic like this here was like blowing smoke in a hornets nest. The inherent overstatement of the thread title/first post was a point taken to its extreme. While I figure that profiteering from property does make it harder for everybody on middle-income to afford a home, its a capitalist society, so it's no great surprise that prices increase, people want to make money, and supply and demand plays a factor in that.
But, as its turned out, expressing such a point of view has been quite educational. I get extremely passionate about modern day (un)affordability, and wish there was something I could do to make the government address the issue (I'd like to work in the area, if I only knew more!). So its great to hear all the different view points, its changed the way I think about certain aspects of my uneducated, emotional response to the issue. I'm not sure what the best solution is but I hope some experts are trying to figure it out.
Increasing stock seems obvious, which makes me wonder why its not happening at the rate it could. Perhaps there is a vested interest from someone who wants to keep stocks low, in order to keep prices high. That may be getting a bit conspiratorial. Then again, a large influx of property could cause prices to drop and many people who bought at premium prices could be burned. It would be harder for the RBA to moderate the effect they play in peoples lives, and could even unstabilise the economy.
The only thing I really know, is that on the surface, Australia appears to be doing very well – people are singing its praises for surviving the GFC – but almost everyone I know in my social circle (mostly creative types, true – although many older people I know who are teachers and nurses are in a very similar boat) are struggling to pay rent, keep on top of their mortgage (I only know a couple of people who have even got that far), and to be able to afford to live in the city, or even the far flung suburbs of the city (or even regional cities in 1.5hr commutable distances), let alone feel secure in asking for minor repairs to their home in case it causes a rent increase and pushes them out.
So what I am really saying is, under the surface, I think we're struggling, and I'm worried. I'm constantly trying to figure out a way to get ahead (by which I mean some small level of security). I'm not just sitting around doing nothing about it. I am taking 8hr round trips to inspect property in my price range, looking at any option that might set me up for the future. Working and saving, and trying to get informed. This post was a bit of a vent/rant, but its turned me on to some new ideas, so that's great.
Anyway, my apologies, I was being cheeky/rude. Take it with a grain of salt, a serious issue expressed in an outlandish way (hence linking to such an entertaining youtube video). But as I said, the food for thought you have all offered has been very interesting/informative. And Sonia, we had pretty great private landlords (8years), but eventually their kids made them get a real estate agent, jack up the rent, and its lead to a break in contact. The agent started well, but once they switched property managers, the new young guy is hopeless, rude, lies, and doesn't return calls, even when the back fence blew down in a gust of wind, he treated us like <moderator: delete language> for asking for a repair (slightly dodgy neighbourhood/metal was blowing around putting people on the footpath out back in danger of being cut/hit etc). I wish there was a way for tenants to alert the landlords to the way some real estates 'manage' a property. it should be part of the six-month inspection – provide a feedback form to your tenant, make sure you are getting value for money!
This has been a very interesting thread.
Increasing stock is an issue in itself. I'm not sure where you live but if you have ever had to get something approved by a local council it is on the watching grass grow level of speed. Our three unit development took 18 mths to complete. 3 new dwellings, 18 mths.
The time frame for introducing new stock into the market is very long. In one way there are good reasons for this. Adhering to building codes and consultation with neighbors, ensuring that buildings fit within schemes etc so that neighborhoods are not overcrowded, overshadowed and not full of buildings ready to fall down.
I am hugely passionate about trying to supply low cost housing. Yeah I need to make money off it so I can buy food for me and my kids and have the power on so I can cook dinner etc. You know greedy things like that
That's why I'll keep trying to build houses/units/apartments/shop top apartments anything that is practical and habitable.There are plenty of countries where corruption and deceit get dwellings built that are a hazard to the occupants to I would consider us lucky in that respect.
But the time line is huge.
Developers are competing, trying to get land that people want to live on. Supply and demand. Price goes up.
And once again it comes down to transport and jobs. The Victorian Govt is sitting on $450mil worth of land set aside for future release. There is nothing there. Paddocks. No water or power or gas. Wanna live there? What developer is going to develop it tomorrow to provide more housing when they would not get any sales and go broke trying to build it.
The private rental market does need some work. Private landlords often don't know how their tenant is going if they live interstate and rely on the agent. This makes it hard for the tenant to voice concerns.
As far as your landlord getting an agent, they may have been really old or had some medical condition. You may have been paying under market rent and they may not have been meeting any of their costs. It is pretty hard to get a straight answer to anyones satisfaction in these cases.
I think it is great that you have posted this and many other threads. Become active, listen and learn. Not everything is cut and dried. This is why we elect officials and have debate and lobbying and the right to send letters to politicians and the like. We live in a very lucky (often pretty hard work to get that luck) country and Wynyard you have as good a chance as anyone here to make a go of your life and buying a house.
I would consider the people around you. Are you talking about property/money with people who are frightened of it or have none, you get a very different response from different people. Stick around and keep trying to make your hopes and dreams come true. You are the only one who can get it done.
Good luck
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email MeWynyard, I appreciate that you are viewing this all from a certain perspective. I think you should be aware that the system we have now is creating better quality living conditions for a lot of people. Sure its coming in at a price, but i'm sure that poor living conditions are the feeding grounds for bad thoughts, anger, resentment and envy. We are creating an atmosphere of housing that even by world standards is pretty darn ok. Take a look through the lists of property sales agents. Most of our houses are reasonably up to date, have nice clean enamel and tile bathrooms with good looking cabinets and shower fittings in them.
Our country is splitting down social lines that have never been in this country before. We are losing out on our middle class, largely due to the fact that it exists and survives on local manufacturing and local services. It spells disaster in the longer term, both in laws that will be written for 'the rich' and taxes and levies that will be placed on the large revenue streams of land holders. Its not unusual, the property wagon is still a gravy train for most countries, and it will change our mindthink towards property and our social behaviours and norms towards it.
I believe firmly in the idea of property being a commodity like any other, and not a bag of instant riches. It has an undervalued status, an overvalued status, and a median where it rides along with inflation. I think the current price movement is because any usual investment stream for spare capital doesnt exist so people are turning to property and collectibles. Its a shame because in days gone past that money would have gone to something solid like stocks or small business investment. I'm really not sure how long our reliance on a cheap China can exist, but i'm 100% sure that the lack of manufacturing base here will kick us in the future.
I agree about a lack of manufacturing will come back to haunt us. As will selling off our assets and companies, our fossil fuels, 50% of our new properties, as will farming out our basic services. But on the issue of houses, I suggest you read the ‘Demographia International Housing Affordability Survey: 2011’ (http://www.demographia.com/dhi.pdf) Or at least read the executive summary. I think it confirms my concerns re housing affordability.
Yes, there are some decent standards around but its not always the case – I saw some shockers when I first moved to Melbourne and the prices were sky high for some of them, even then, ten years ago. I remember reading this article in 2009, and I doubt much has changed for the better since then, for some people: http://www.theage.com.au/national/slumlord-millionaires-cash-in-on-hard-times-20090613-c6su.html – "In some cases, The Sunday Age has been told, tenants have been threatened with violence for complaining about the poor standard of accommodation, which typically costs $175 a week for a single room, $250 for a room with a double bed, and $30 a week extra per child." And even so, the then State Housing Minister Richard Wynne told The Sunday Age that the Government was still only "considering setting minimum standards for shared accommodation." There's still a lot of these rooming houses about, even if they look ok here: http://www.realestate.com.au/property-house-vic-richmond-405026630 – I'd guarantee there are slums charging the same rates. Some people just get knocked back from every other option, and have to take it, or go on the streets. $250pw per room! Thats considered normal now. I can afford a little bit more than that, not much more, and I'm hoping to house a family.
Here's another side to the supply and demand angle: http://www.debtdeflation.com/blogs/2010/05/11/is-it-all-%E2%80%9Csupply-demand%E2%80%9D/ – I'm still not sure if there is a housing shortage 'myth', but when you consider the government is being pushed to open up at least 55,000 empty houses in WA for "cheap housing for the poor and for key workers such as police, teachers and nurses" – I guess there could be (http://au.news.yahoo.com/thewest/a/-/breaking/8742290/greens-empty-house-plan-backed/). In fact there are three empty houses on my block within inner Melbourne (which have been empty for over five years). I have even done title searches and offered the owners to renovate the houses in exchange for discounted rent while repairs are carried out, in order to establish a long term residence, but they are held up by planning permits – so this is all very odd, and not getting us anywhere.
And this, from the Demographia survey: "Pervasive House Price Increases: Further, the house price escalation has occurred in large markets or small and where demand is strong or weak. Markets like … Adelaide have severely unaffordable housing, despite their relatively modest growth rates or even loss rates. A small market like Wallan (VIC), Australia, with a population of only 5,000, also has severely unaffordable housing". Something is wrong. I'm sure its not investors, but something is very very wrong.
And just to add one more article for now, I think this is a more thorough piece than the supply and demand article above (although I did like the cornflakes comparison), the reader comments are worth reading too: http://seekingalpha.com/article/227083-the-great-australian-housing-bubble
"The data, therefore, strongly suggests that the Australian housing market is being underpinned by Ponzi finance, whereby investors and owner occupiers are leveraging up to buy property in the hope of achieving continued rapid capital growth (in the case of investors) or ‘getting in’ before prices increase further (in the case of owner occupiers) … the only way that house prices can continue to increase faster than incomes is if buyers believe that prices will continue rising and that large capital gains can be made by selling the same asset to other buyers (the ‘greater fool’ theory). Such a scenario also requires ever-increasing debt levels, which is clearly unsustainable … While there are many factors that have increased the demand for housing … the extra demand for housing could only have fed into higher prices if credit was readily available, enabling buyers to borrow large sums and pay high prices. Put simply, the supply of credit is the crucial ingredient to Australia's booming housing market."
Which gives us the unsustainable debt, especially considering "77% of these investors [are] earning less than $75,000 per year". So its the banks, the greater fool theory, and the promise of security or financial freedom that suckers us in – like a lotto ticket. Mystery solved (in part, I'm sure there will be much more debate on all this, and perhaps rightly so). Now, if that is all true, how to lobby for a solution?
So if you are looking for commuting distance to the city.
http://www.realestate.com.au/property-unit-vic-boronia-405023545
Can you work in Geelong? or Do you have an inner city job?
http://www.realestate.com.au/rent/in-norlane/list-1?source=location-search
There are rentals for 3 bedrooms all in and around the suburbs of Melbourne for under $300 you just have to look for them.
If you are looking to pay a mortgage on that money per week you may have to get creative. Maybe try to find some where that has enough space and get a boarder for $100-$150 p/week.
The houses you mentioned above being held up in planning – maybe they are building a few more dwellings…..
Good luck with this. It is really hard when you have to scrap together money to fix cars, pay rent, get to work etc. I know, I've been there. There's a reason I lived in Frankston North years ago…..It was cheap!
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email MeThis thread has been so interesting and informative. Thanks guys for sharing your views to us newbies.
If appears you don't appreciate how IMPORTANT investors play in our economy in general. They provide community housing that the goverment failed as its responsibility. You also need to blame those people who are not discipline enought to save their hard earned money for deposit of IP but rather too busy keeping up with the joneses (e.g., buying depreciating assets like fancy car, elec gadgets etc). If you want to get on our side, do the opposite of the MAJORITY, that is, spend less than what you earned, buy incoming producing asset to built your wealth…it's that simple.
The main reason that investing in housing has a much smaller risk than other asset class is that the majority of players are owners and not investors.
That's why I'll keep trying to build houses/units/apartments/shop top apartments anything that is practical and habitable.
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