Australia going down the tubes.

[Shannow]

Today it was announced that Australia's biggest, most profitable "industry" is real estate.

exponential price growth with the well to do's selling to each other so that they can negative gear themselves into wealth at the taxpayer's expense.

Productivity Commission (who are listened to when it comes to abolishing penalty rates etc.) have stated that the practice of claiming interest on your second, third, forth property has distorted the market and made housing unaffordable.

They have suggested that the home owner should be given the ability to claim their own interest (we can't), or investors should be stripped/limited in their ability to claim on their investment houses.

So now the most profitable sector in the economy produces absolutely nothing...Yay.

 

[Eddie]

Sounds like a US congresses idea to me. We have so much corruption with our the tax payers supporting those already rich and those who can work but, chose to life on welfare. Ed

 

[wemay]

Have you seen or listened to our political campaigns this election cycle???? Australia shows us there is still hope...

 

[PandaBear]

In the age of zero to negative interest, this is going to be the norm. If you can't fight inflation, the way to go is to borrow as much as you can for investment.

I'd say the ideal way go to forward is to rent out your home as an investment and rent a house elsewhere.

 

[KGMtech]

Well the worlds best steel making coal (coking coal) still comes from your area.

Resource Industry is not sexy compared to RE I guess

 

[Joe90_guy]

It sounds like Oz is following the UK's (bad) example.

I don't think houses, property and land are the primary problem. The real problem is our wonderful Bank Of England keeping interest rates at 0.5% and clever people borrowing essentially 'free' money, pumping it into property, driving up prices and in doing so, encouraging global players to pile into property thus driving up prices even more and the cycle goes on...

London isn't a proper English city anymore because great swathes are owned by Russians and the Chinese!

It will all end in tears. It always does...

 

[Dave Hess]

Originally Posted By: Shannow
Today it was announced that Australia's biggest, most profitable "industry" is real estate.

exponential price growth with the well to do's selling to each other so that they can negative gear themselves into wealth at the taxpayer's expense.

Productivity Commission (who are listened to when it comes to abolishing penalty rates etc.) have stated that the practice of claiming interest on your second, third, forth property has distorted the market and made housing unaffordable.

They have suggested that the home owner should be given the ability to claim their own interest (we can't), or investors should be stripped/limited in their ability to claim on their investment houses.

So now the most profitable sector in the economy produces absolutely nothing...Yay.


If thats the case.... you need to invest in property.

 

[Win]

Originally Posted By: Shannow


So now the most profitable sector in the economy produces absolutely nothing...Yay.


Not directly, but if you are building something from scratch, or gutting and rehabbing, a lot of manufactured items are installed, or involved in construction. And not just stuff like sinks, but high value stuff as well - if no one has a need for tools or heavy earthworking equipment, no one will bother to manufacture them.

An "industry" that is a large market for another industry's output, is not something to be scorned, imo.

 

[CT8]

No ism like socialism. What is making the real estate rise in value? Chinese investment?

 

[uc50ic4more]

Originally Posted By: CT8
No ism like socialism. What is making the real estate rise in value? Chinese investment?


Not quite.

 

[Smokescreen]

I think you could take the title of this thread and substitute Australia with nearly any other country on earth and it would still be accurate.

 

[hatt]

Originally Posted By: uc50ic4more
Originally Posted By: CT8
No ism like socialism. What is making the real estate rise in value? Chinese investment?


Not quite.
LOLOLOL. Should be renamed Utopianism.

Quote:
In socialism, everybody would have free access to the goods and services designed to directly meet their needs and there need be no system of payment for the work that each individual contributes to producing them. All work would be on a voluntary basis.

 

[jimbrewer]

Kind of like the US. Used to be 4% of the economy was finance. Now it's 8% and we don't have a blessed thing to show for the difference.

 

[Silk]

The same thing is happening here, house prices in Auckland are crazy, and they just keep going up and up. Young people trying to get on the property ladder are being forced out and into renting....and rents are too expensive by the same ratio. Good news for everywhere else is that they are moving to other regions, and pushing up prices. As Shannow says, some people are getting very rich by not contributing.

 

[HTSS_TR]

Originally Posted By: Mr Nice
Originally Posted By: Shannow
Today it was announced that Australia's biggest, most profitable "industry" is real estate.

exponential price growth with the well to do's selling to each other so that they can negative gear themselves into wealth at the taxpayer's expense.

If thats the case.... you need to invest in property.

My BIL bought the third house couple months ago. The second house he bought 6-7 years ago appreciated more than 40-50%, and his rent is more than enough to pay mortgage + tax + insurance + maintenance. The investment was the down payment of 30%, so the gain from his down payment is more than double in less than 10 years.

PS My BIL lives in So Cal too, the housing market here is still hot.

 

[Shannow]

Originally Posted By: Mr Nice
If thats the case.... you need to invest in property.


Great, except the whole process of getting tax breaks on a house that the tenants would never be able to save for is immoral.

 

[Shannow]

Originally Posted By: PandaBear
I'd say the ideal way go to forward is to rent out your home as an investment and rent a house elsewhere.


See above post...two grads the I worked with bought each other houses, and landlorded the other.

When I was at Uni, a Lawyer's son I knew "bought" a house in 10th year of school, rented it for 3 years, the booted the tenant when he went to live in it near university. Having "worked" three years, he lost his "income" to go to Uni, and got full study assistance.

Former workmate recently sold a Unit in Sydney (it's one of a dozen+ properties), then had to buy two more, or pay some huge tax bill...as to the two that he bought, he "didn't care what he paid, as the interest is a tax deduction, and the rent is linked to the purchase price".

 

[Dave Hess]

Ultimately people will take advantage of any financial loopholes in the rule book.

 

[crinkles]

Originally Posted By: Shannow
Australia going down the tubes.


yup.

and we're trusting politicians to 'solve' what they benefit from. its [censored].

 

[hpb]

Originally Posted By: Mr Nice
Ultimately people will take advantage of any financial loopholes in the rule book.


This. I don't have a problem with negative gearing on investment properties - I exploited it when I was younger, rented a house to my sister, and was able to pay it off in 5 years thanks to all the tax concessions I received. It certainly helped to set me up financially.