Time to ponder?

Since when was this ever a 'goal'? People set out to make life easier and better for themselves, NOT make life miserable for everybody else. Don't develop a complex here.

Depends on whether you currently own a house or not. If you scrimped, saved and invested your way into finally having the title to that roof over your head, no, it's NOT a good thing.

Affects some more than others. Has less effect on those in higher tax brackets. It affects the middle and lower income people the most. That means, the poor have less chance of improving their current situation. The richer have a better chance. Counterproductive to the rest of the measures you suggest.

You're joking, right? That's land tax of $5,250 pa on a $350K house and $12,000 pa on a $800K house. People are struggling with mortgage repayments and living expenses, and you want to slap them with a land tax of mega proportions?

So, you're against things that make life more costly for future generations and now you want to reduce their inheritance? By the way, $1 million is NOT a lot of money in today's terms. I say that when people die, let them be and they should pay no 'taxes' starting from the time of death. Estate tax should be 0%, not 20%. Just think about it. Each of us is ALREADY paying tax every time we earn money. Why should we pay tax again on assets that have already been taxed in the past?

Agreed. There's been some talk in the papers recently about this. Some murmurs are going around to suggest this should be scrapped. However the government is sure to introduce a separate tax under a different name to compensate for the loss of revenue from stamps, or to otherwise increase other taxes.

Counterproductive. This will cause investors to flood in and buy in the areas that are currently most affordable (house and land packages) and in demand from first home buyers.

Far out, I'm not putting my hand up for contributing towards INCREASED welfare payments. Maybe others may agree to such humanitarian efforts!

Hey, I'd be happy to be able to put up the rent by 5%. I only did a 1% increase in the past year.

And you'll get a situation where people take advantage here by getting education at markedly reduced fees before running away to work elsewhere and benefit a different country (before they come crawling back after their 6 year overseas stint). I disagree with this suggestion.

Flipside is, the easier the lives of people around you are, the easier yours will also become.

Imagine where everyone just worked a single job to afford their house and then imagine how much more pleasant service you would get from untired workers in customer contact/service roles.

Imagine where the primary investment oppurtunities for people with that bent, like yourself, were productive. Say you choose an inventor to invest 400k, who develops a product that benifits society as a whole.

Imagine an Australia not so occupied with property prices.

I'm gonna end up posting a John Lennon song:)

Still disagree. For the vast majority of Australians, most of their wealth lies in the home that they own outright. If house prices take a dramatic fall, many of the fellow Australians around you will be far poorer. Many Australians are unaware of how to release the wealth they have in their own home without actually selling. However, disregarding even this for a moment, it is possible for a retired older couple to sell their home and rent, and put the money towards a nice trip around the world or a great car. I do not even need to ask my parents if they would be concerned about their house value falling by 40%. It's obvious that they would be.

That's still $1,750 pa for a $350K house. I do not know of too many people who live in such houses and of that demographic who can pull an additional $1,750 out of their wallets for land tax. I've had some clients in tears just worrying about meeting their electricity and water bills. We have more deep-set problems than a land tax is going to resolve. Far from it, a land tax of such proportions only compounds the problem. Also, it kills the great Australian dream for even more people because we'd rather rent than contend with high land tax. With your other measures, property is going to become a very unfavourable investment. So who's going to provide all those properties for people to rent? The government. And guess who's going to be paying for this, the equivalent of rent assistance for not just a portion of the population, but the entire nation? That's right, you and I, in tax and by the bucket-load. Oh wait, you only pay tax if earning over $40K pa.

It is cheaper for the government to provide negative gearing benefits to property investors rather than to provide subsidised housing to the public. If it were the other way around, would they not have done so already?

If we do as you say (and also increase tax-free threshold to $40K pa, which would undoubtedly increase taxes for those above this threshold), we are not helping Australia to progress and prosper. We're simply creating a nation of underachievers. High flyers and overachievers who naturally earn a higher income will head overseas and tax evasion will be rife amongst those who do remain, just to stay under the $40K threshold.  

See above point regarding land tax and even our discussion immediately above regarding death taxes. The FHB class is officially dead if we go ahead with your proposal because nobody would want to own a house. Everyone would prefer to rent with the government providing our housing and with us all STILL paying for the said housing. And I doubt if the government can maintain rental properties as well as some landlords. Population will take a dive because the only people who will be staying away in droves are the more successful people in Australia. And yes, I mean they'll be leaving the country, not just refusing to invest in it.

Precisely correct. And so I'm bewildered…you still want to increase welfare payments? Bear in mind now that in this scenario, it wouldn't be long before the majority of the people in Australia will be those earning $40K or less and paying no taxes. So, who's going to supply the money for welfare payments? The politicians? The welfare system will spontaneously implode.

Look, laying down 'laws' these days is uncool. You got to find a solution. Obviously the rent increases in those areas so happened because of the lack of supply, and there's actually demand to support the said rental increases. What are we supposed to do about that? Someone provides the service and somebody else is prepared to pay for it too. Nobody is forcing renters there to pay those prices. They could live in a tent is they so choose, or take a flight in and out each day.

Define 'permanent'. What measures should we implement to ensure an Australian so returning will actually stay and work in Australia for the rest of their life? Also, do they necessarily need to be 'young'? Are there going to be age limits? What about a person who decides to come back, work for say, 2 weeks and then live of the massive welfare benefits that would now be present under this scenario with increased welfare payments?

Let's modify this a little and say that anyone with a HECS debt continues with their repayments regardless of how long they leave Australia and regardless of age. The payments cease only when they buy Australian property. That is, if you can convince them to buy property that could now either be in a slum that we know as Australia, or property that is now drastically unaffordable because landlords hold all the cards and you got to buy the right to rent from them.

Reminds me of that cartoon image I saw in the newspaper over the weekend. A rich tycoon holds up a sign saying something to the effect of, 'For the right to toil, suffer and die upon this planet, apply here.'

1. 32% of all homes, not 32% of the population.

OK, you're still dodging the point. I argue that people WILL definitely give a hoot if the house that they fully own falls in value by 40%. This is humorous, how can you claim people wouldn't care? Did you do a survey? That's 32% of households in Australia that you've got to survey before coming to a conclusion. After all, wasn't this the crux of your post, that "falling house prices are a very good thing"?

2. If I buy a car or a TV I expect it to be worth 30% less the moment I take possession

Let's add another ridiculous statement to this then: If I buy a house, I expect it to be worth double what I paid after holding it for 7-10 years. Look, it's the analogy I wanted to draw your attention to, just trying to drive home the point as above, and I'm underlining it this time just so that anybody who's reading can actually see it.

When I was using that analogy, I was referring to an item that is worth less than a couple of thousand bucks, and even then I see people who feel the pinch having bought it and then see it go for sale within the week. They're usually sore enough to return it and try to buy it back again at the reduced price. You're telling me you won't do the same? Therefore It's plain crazy to assume people won't care if their house which they now own outright, and was worth $1 million dollars previously suddenly is worth $600K within 7 years. What a ludicrous assumption to make.

Anyway, while we're on the topic of televisions versus houses, the reason why disposable goods decline in value the minute they leave the store is because an identical example exists in many stores the world over, or can be easily made again and even improved with technology. That's why these things depreciate. A piece of land in a specific location is solitary in its existence. Identical examples do not exist around the world, and neither can an identical one be ever made again. Locations also, generally improve over time, making the land in that area more valuable.

4. Housing will decline to its intrinsic value, or 3.5 times a single wage, or when the mortgage (90% LVR) payment is 1.5 times the rental yield.

Where did you draw those figures from? Perception of 'intrinsic value' of a house is subjective. Try and take those figures into places with mega-expensive property like Singapore or Hong Kong and they'd hold no water whatsoever. Obviously a house is worth more to those guys than your measures would suggest. Having lived in at least one of those places for half my life, I'd say that Australians are a truly blessed bunch. Head over to Singapore for example, and see what $350K would buy…you'd be lucky to get a shoebox apartment.

Besides, are you suggesting that housing in ALL locations and regardless of quality will decline to the same 'intrinsic value' as measured above? So a shack in an industrial slum will be worth the same as a mansion by the beach? Man, this is wrong on so many levels I don't even know where to start!

6. Did you miss seeing the information about the $5.6 billion spent on public housing? In June last year, half the building approvals for units were public units.
http://www.economicstimulusplan.gov.au/housing/pages/default.aspx

What I'm more keen to know is whether this effort going to be enough? How long exactly is the queue for public housing? How many units exactly are they building with $5.6 billion? And how do people qualify for said public housing?

7. At a tax free threshold of $40k, the average battler will pay $5500 less tax per year.

Only to be taken away by land tax of 1.5% on a property/ land value of $350K. Classic government strategy, taking with one hand and giving with the other. Besides, do you know how many average battlers are there in Australia? Lots of them! Have you calculated how much that would 'cost' at $5500 per person? Can Australia cover this 'deficit'? Put another way, even if the government taxed the snot out of everybody else, would they break even?

8. It is unclear as to if rents did not increase the last time NG was taken away.
http://www.macrobusiness.com.au/2011/03/calls-to-restrict-negative-gearing-grow-louder/
http://www.businessspectator.com.au/bs.nsf/Article/negative-gearing-property-prices-rent-investment-pd20110321-F66MY?opendocument

Let's counter that with two references from published books: 'Mastering the Australian Housing Market' by John Lindeman and 'Renton's Understanding Investment Property'. For good measure, I'm going to throw in a third: 'More Wealth from Residential Property' by Jan Somers, which also discusses the added strain on public housing during the two years that NG was abolished. I'm sure there's numerous other references that you and I can find on each side of the argument.

Constrained supply and excessive demand, both problems of which exist in the most desirable parts of the country, and for specific types of property. In Melbourne for example, it would be simplistic to say that there are an excessive amount of apartments springing up in the CBD and there will eventually be oversupply. Or, that vacancy rates in many suburbs of the outer Western municipality of Wyndham are recording in excess of 10%, therefore there are no supply issues. Both of these assumptions ignore two important points:

– living in the city, being close to amenities, cafes and being in the 'thick of the action' might be desirable to lots of people, but they may not necessarily desire to live in an apartment. Therefore, we are providing the 'wrong' kind of housing in an area where it's desired.

– living in various suburbs of Wyndham may be undesirable to potential buyers or renters, hence even if the type of housing is 'correct' and matches that of the demand, the location may not.

In conclusion, resolving supply issues does not rely on opening up new subdivisions and selling cheap house and land packages in the outskirts of the city. It relies on the provision of the 'correct' type of housing in the 'correct' locations, something which as you can see is not easy to do. We cannot wave magic wands to instantly create empty blocks of land amongst already established housing. Instead, what's required is decentralisation of businesses and amenities that concentrate heavily in the CBD. For better or worse, this could take decades to achieve. There is an ingrained mentality for people to still flock to the 'big smoke' and businesses cannot shift their operations to the outer suburbs or satellite cities overnight.

Furthermore, in a comparison with America and Ireland we are also ignoring the 'livability' of Australia and its current economic strength. Australia's claim to fame is its livability. If we look at the most recent ranking of the world's most livable cities, Australia has 4 spots in the top 10. Again, the equation is simple. Livability leads to an increase in cost of living, houses, food, petrol…just about everything else.

Back in the days when I first came to Australia, food and property (and just about most other things too) were cheap. Can't say the same these days. Also when I went to America for a vacation recently, it astounded me as to how cheap most things were in comparison…food, disposable goods. Housing prices, debatable. Comparatively speaking I'd say America and Australia are on par. When we look at a standard 4 bedroom detached house in the suburb of Buena Park, CA for example, it's no cheaper than a standard 4 bedder in a comparative outer suburb in Melbourne. Both Ireland and America are up to their eyeballs in hot water at the moment. They're 'livability' isn't improving any time soon.

Food cheap? Why, it used to be much cheaper. Also, let's read my original statement carefully once more: "A piece of land in a specific location is solitary in its existence." A piece of land is a piece of dirt which is the same everywhere around the globe. However the key words here are 'specific location'. I don't need to point out how different locations can be. But you'd need to tell me how different carrots can be!

Well, to be fair, there are for example, organically-grown carrots and ordinary carrots. They may look the same, but even then we pay the premium for the former.

Oversupply. Greed. Exploitation. Lack of a union and bargaining power. Are you now glad this doesn't happen in most parts of Australia? Well it does exist to a certain extent, but not as much as I've seen elsewhere.

Whether or not falling house prices is a good thing is subject to debate which I think will be even on both sides. However the claim here that people who own their house outright care not that house prices fall is downright crazy. That's the point I'm trying to make.

I'd be happy with 4 x average wage (68k or so) as the median house price country wide (270k or so).

Anti speculation laws may help but I'm still placing money on the thing correcting because of it's own debt burden.

Thing is, bottom end prices are still expensive compared to middle/upper prices. It's like every Australian is convinced that whatever their first housing purchase was it's the most valuable ever built – it really is different here – we are more full of ourselves:)

So fword, where are the undersirable parts of our country? Or is all Australian housing uniquely desirable?

Personally, I consider all of Sydney and Melborne extremely undesirable – too many people all clustered together for my liking.

Compelling figures, but let's not forget, the population of Germany is over four times that of Australia. The population of Germany is slightly over 80 million, versus little over 20 million for Australia. Australian residents are generating roughly 50% more GDP per person than a German resident. Even if we considered the over 65's in each country do not contribute at all to GDP, Aussies still generate 26% more GDP, on a person to person basis. And clue me in, is it better to get a greater or a lesser percentage of GDP from taxes and revenues? Personally, I think that there comes a point where tax stifles productivity. Go overboard with 'anti-speculation' measures and you'll get more than what you bargained for: a lack lustre economy.

Compare the population growth charts of Germany and Australia under Google's public data and you'll also see a startling difference: the enormous population growth in Australia versus the plateauing in Germany since 1995. The population is in fact little higher in 2010 than it was in the early 1970s. I have read articles that conclude that Germany has successfully implemented measures to ensure that their property prices do not increase, and that Australia needs to do the same. Really, I'm not a professor or a rocket scientist, but looking at the population growth charts, I'd say there's a very real reason why Australian property has become increasingly expensive.