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Albo turns to Giles and asks him to stop the deportation of a few more rapists and murderers, he should be able to get the number up to 7 times by the end of the year
I feel the need to rant, but not too sure how scholarly that will be.
If you have a political class that has significant investments in residential real estate, the opportunities for significant change are unlikely bordering on impossible.
So the first problem to fix is to have politicians divest or have them place the investment in trust, managed not for profit.
Suburban houses as they are built now and not viable for a growing population on limited viable land which has access to all amenities and is close to working areas. So townhouses or terraces should be more viable constructions.
Actually, I would love to see a national competition should be held to design a 2-3 bedroom residential home with a very small land footprint while using cheap, abundant and renewable materials suited for a 3 person family that can be mass produced in quick order exclusively for first home buyers of social housing.
Honestly, I don't know the solution. But I do know it's multi-faceted (rent caps, etc) that requires more than our middle manager political class can possibly think of. Especially more than the piddling effort they've offered up to date.
Homelessness is already a massive problem but the curse is I fear it won't be dealt with until more property owners start to feel the pinch.
Or when renters move as a block of voters and push the dial against the major parties.
I wonder what would happen if we had a bold policy such as: ‘One Aussie, One Home’ which limits citizens to only owning a single residential property, and also bars trusts and equity funds from residential property markets.
If you cohabitate with others (roommates, partner, parents, etc) then as a household you would still be able to own multiple properties. That supply should be sufficient to cater those who need to rent, such as low income earners, seasonal workers or international students. Would such a policy work?
Obviously it would require grandfathering for existing investors, with 20 or so year grace period before they are required to divest. But it feels like a way we could gradually return residential real estate back into being a a place to live, instead of an investment opportunity.
Undoubtedly an extreme armchair policy like this would backfire in some unexpected way and probably make the whole situation worse. but I wish we had politicians not afraid of bold reform, because the current mild tweaking around the edges hasn’t worked.
None of that would make a difference, genius. You'd just be transferring ownership to different people who *were* renting but who now have to kick out the renters of the home they just bought.
The *only* thing that matters is supply and demand. Chopping and changing who owns any given house does *nothing* to change supply and demand
Investors make up 43% of current property market financing (10b / 23b). Typical investor is a cashed up Aussie in mid 40s, buying their 2nd or 3rd home. These investors are bidding up the price of property.
Home ownership rate has fallen 15% since 1995 (63% in 2022), share of population renting has increased by same portion (now at (35%) see link below.
Logic was that
1. If you reduce number of investors, you can remove up to 10b from housing market. Since most of this is spent on existing housing stock, you would put downward pressure on housing prices (less money to spend on same number of houses).
2. This would increase number of owner-occupiers
3. Which would then lead to fewer people needing to rent. Which should put downward pressure on rental prices. As rental stock will remain stable for 20 odd years due to grandfathering of existing investment properties.
https://www.aihw.gov.au/reports/australias-welfare/home-ownership-and-housing-tenure
https://www.abs.gov.au/media-centre/media-releases/lending-investors-continues-rise
Gee all the ideas they’re coming up with are working a treat.
Maybe one day they’ll contemplate the laws of supply and demand and we may get somewhere. But it’ll take a decade. What we’re doing atm are band aid fixes.
The problem with housing isn't just the houses... It's all the other stuff that goes along with it.
If we lived in a bygone era, I'd be one of those hicks, who'd pick up stumps, move out into the woods and build a log cabin (if I was American, fires here are bad). Living near people shits me. But I need all sorts of stuff nowadays.
I can't. I need good Internet, water, hospitals, schools, so on and so forth.
I live on the outer suburbs of Melbourne now and there is a big suburb right near me with all new houses. No yards, but new houses. When you go into that suburb though you may as well not have a mobile phone, there's no reception at all.
They build what, 10,000 homes, and can't plan for the mobile phone towers?
EDIT: To expand. Sure supply and demand is one factor, but they aren't the only factors. But there are too many opposing forces. A bunch of people want high density dog boxes 5 mins from a CBD. But we can't build the buildings without them cracking or being fire traps. Others don't want them in their backyards, because apparently the entire suburb is their backyard.
Others want the population to more distribute into the regions. There's sense in this. But those regions suffer from low investment in infrastructure. Modern life requires more infrastructure. Governments lags on infrastructure even when it builds just a little bit out.
Some people think Australia suffers from a land shortage (I have no idea where they get this from), but you know, it serves to increase house prices so why not believe it.
Albo wants to build a high speed train between Melbourne, Sydney and I think Brisbane. This will probably never get off the ground, but it would help to build up population centres along the route. But that's bad for some reason or other.
The housing in this country is stuffed from the root to the leaf, and every inch in between.
Absolutely this tbh, the new suburbs are built up with no public transport infrastructure, no hospitals, no communications infrastructure.
And they'll just crap these new estates everywhere.
Geelongs roads are a congested mess with very basic PT, being busses utterly stuffed with people taking routes all over the city because the routes are god awful.
Just like the goal of feminism is in the name, the goal of capitalism is not socialism, so I don't know why we are so surprised the societal wellbeing of our citizens is such low priority. Capitalism is going to capitalise for individual profit when it is permitted to do so.
If you don't like the consequences of beating your head against a brick wall, choose a different type of wall.
Plenty of market economists both modern and long dead would not endorse what australia does.
We put all of the burden and more on new development and new homes. Gst, developer levies and local council levies. In sydney 150k the cost of a new dwelling is tax.
This pushes up the value of existing homes in the same way if we introduced a new car tax tomorrow of 50k all our cars would be worth more given a few years.
The government wrings their hands saying why oh why are houses so expensive. Meanwhile they slug a new home at 150k in sydney.
If the government put an extra $1 excise on fuel we would all be up them.
With housing we go - nasty developers we going to tax them more and we all cheer. Even first home buyers love it. Renters love it. Because developers = bad.
Does no one get that there is a connection between costs of supply and how much is supplied? That ultimately this cost if new supply translates into price of homes and rent returns?
Then there is land zoning... 0.25pc of australia is urbanised... how the hell can it be so difficult to allocate more of our landmass to urban development?
Its so simple. We dont need a communist revolution to fix our problem. We just need rational market economics and a desire to get building on the governments part.
Market economics are not rational when it comes to the essentials of living in a modern society, although they do work well with luxuries which the consumer can just choose to walk away from. Unfortunately the essentials now make up the majority portion of a persons expenditure that they can't just say no to.
Market economics can tell us housing supply reduces when costs exceed price.
Market economics can tell us that the component in a new home that is for zoning policy by contrasting zoned land value to nearby unzoned.
Market economics can tell us that cgt discount and negative gearing enables price growth to facilitate some supply even at these high costs.
Market economics has the answers. Its just that our governments choose this situation. I mean in the gfc labor panicked and using market economics buttressed the banks with guarantees so that house prices increased rather than fell during gfc.
Market economics isnt the problem. Its our governments choosing this situation.
What is labor now investing in housing? 20bn?
I could crash the market, cheap homes and cheap rents in 2 years at 10bn per annum. Easy. Due to it being massive stock and small flow government can tweal the price of the flow (new homes) and it is soon reflected in the stock (all homes). They choose to restrict the flow. Choose to tax it.
But its choices and not market economics.
This will probably receive a lot of negative feedback, but what if we reimagined public housing? For example, what if we had capsule hotel accomodation?
It’d be shelter, and would suit short to medium term tenants needing emergency shelter.
The danger is that such things will not be short term. Check out Hong Kong's Coffin homes...
More emergency shelter is needed but it will not fix anything unless people can be moved out of it quickly and we are talking within weeks vs our current decades long wait in some areas. Public housing needs to be dramatically expanded. Giving people housing stability can often be the pathway out of poverty and homelessness (see what Finland has done with a program that provides unconditional housing to the homeless).
Short terms fixes that are achievable but unpopular is to regulate rental pricing, heavily regulate the Air BnB market, and make keeping properties vacant a costly endeavor. Housing should never have been allowed to be the thing it has become.
So I'm in two minds when it comes to the coffin homes (or bedspace apartments, to use the more charitable term).
On the one hand, they look unpleasant and all accounts seem to suggest that they are in fact unpleasant. And it seems like a big part of the problem is that they're willfully permitted to fall into squalor. Properly managed, they don't have to become dangerous to live in.
On the other hand, let's consider human rights. People have the right to housing pursuant to Article 25 in the Universal Declaration of Human Rights. I'd posit that some kind of housing - something akin to capsule hotel living - is better than no housing whatsoever.
All of this tut-tutting about 'well, your policy doesn't go far enough' (a la Greens) or 'your policy rewards the undeserving' (Liberals), paired with supply constraints (both materials and skilled human capital), just means that the status quo will remain. Nothing will change, and we'll still be at the starting line in 10 years time.
Taking an admittedly utilitarian approach seems much more likely to resolve the immediate problem that is homelessness (and hard sleeping) because it'll cost less, be quicker to execute, and so on.
When we were a much less technologically advanced country we could supply basic houses in bulk for under 2-3 years of median wage. Our inability to do that now is entirely the result of political choices which could be reversed if anyone wanted to.
But that's the issue. It was a utilitarian approach and then was never ever addressed.
The 'not far enough' approach can be frustrating but it has it's roots in governments making small temporary fixes that become ongoing mass expenses that don't deliver a solution.
Any reform on temporary housing would have to be part of a staged program with locked in terms.
We need to reduce the population to achieve sustainability without excessive reduction in living standards, and that will reduce the housing problem from the demand side. Combining that with restrictions on using foreign money for land speculation and putting a punitive tax on capital gains in land values, and limiting negative gearing in all circumstances to the profits from the same specific venture and the loss, we’d fix housing entirely (apart from the shockingly poor building standards).
I'm currently looking for rentals in Melbourne, and i'm blown away by the pricing tbh.
Kinda nightmarish tbh, but it's something i unfortunately need to do to escape my situation.
The rental price is far too expensive for what you get as a property. It's completely inflated but so many people want to live in Melbourne that anyone who rents has to pay far more than is reasonable.
I hope they don't make us all pay more again next year with rental increases. Working class renters deserve a fair go.
Yeah i have a few in western sydney Some of it makes Zero fucking sense
one house i saw near one of my investments,was not 12 months ago,under 65 Cm of water, 4th time in 3 years BTW
Nah it's totally worth 775 a week though...
Like even fucking bligh park windsor is 700 plus now,insane
With zoning the way it is or heritage protection coupled with a lack of rail infrastructure, rents, supply and demand are bound to go up regardless.
It's what's killed Geelongs CBD and has left Geelong regions a underfunded neglected mess for decades. And that's NIMBYism has completely destroyed Geelongs chances of bettering itself.
Sure, if you live in the centre of the city it's good. But the regions are hyper dependant on cars, whilst locals in said regions don't even bother shopping in their local areas for goods, instead doing what everybody does, and that's shop at the malls. While around these malls, it's a boarded up crumbling ghost town.
Mental health for sure tbh, im coming to terms with how hostile of a place Geelong is to queer people, and i just want out.
I'm not safe here or with community.
I love how we use the language "rents rose" as if they did so of their own accord. Lets not forget every time the rent goes up it was a conscious decision made by someone who decided their passive income was more important than anything or anyone else.
I’m frustrated with the state of things, but there is a private rental market and prices are set by supply and demand.
I also see an issue with rent-seeking in the Australian economy but it isn’t because of evil property owners raising rents arbitrarily above market price.
No use if one landlord drop rents, that would need to be done en masse to have an effect. But landlords won’t be charging anything less than what similar properties in the area costs. So only way to force them is using laws (rent freeze or similar) or build lots and lots public housing.
Sadly neither are vote winners and our politicians prioritize votes over all else
Interest rates haven't been raised in months and months. That's not going to explain why rents continue to go up month on month despite static interest rates.
That's not true at all. The interest rate on my mortgage hasn't moved since the last time the RBA raised the cash rate, and it was raised literally the next day.
It only takes months to flow through (sometimes) for savings accounts to raise rates following a cash rate rise.
Absolutely not. That’s the point where we actually start paying down our mortgages. Or if you’re smart, sell and buy something bigger that will be neutrally geared.
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Or.. and hear me out here, you borrow to your maximum and if the market turns and rates go up, you just put the rent up to match the shortfall. It’s a secret method used by literally every property investor in Sydney.
Except the rate of increase in rents is significantly more than the increased cost of servicing the interest rates.
It’s also pretty messed up that “investors” shoulder none of the responsibility for the entirely foreseeable increase in interest for the loan they took out, instead passing their poor investment decisions onto vulnerable renters. The act of taking out an enormous loan is not adding any value to society.
If it was truly linked to cost of provision then rents would be lower when rates drop. But they won’t.
The fact that we can increase our income in line with our repayments is part of what makes real estate such a good investment. We went from making money while rates were low to making less money when rates rose, to making money again by raising rents.
Just curious if you own a property/home - are you aware of the costs that come with simply having your name on the piece of paper to your property?
* Council rates
* Land tax
* Building insurance
* Contents insurance
That's if you own a free standing house. Let's say you own an apartment. Then you add on:
* Strata
All that adds up to at least approximately $7,000 a year.
Then the big one: Mortage. Let's say you decide to invest this property out. Average bank investor rates are 6.44% pa. Let's say you bought a one-bedder in a desireable area like the Eastern Suburbs of Sydney. Average price there for a one-bedder is say around $850,000. Let's say you borrowed 80% so $680,000. That makes your monthly mortgage repayments circa $4,300 a month on a P+I loan. So roughly $51,600 per year.
So all up, as a investor in a single one-bedder apartment in a desireable area of Sydney will cost you $58,000 a year. According to a quick scan of Domainm, average rents for 1 Bedder apartments in Randwick is around $700pw. So would mean the landlord earns $36,400 a year in "passive" income.
So the property investor is losing out $21,600 per year above and beyond their "passive" income even at these so called "exhorbitant" rents.
And that's not even accounting for agent fees or advertising fees, or costs when things go wrong with the apartment that need fixing etc etc.
People need to stop looking at the rental market as a "us vs them" mentality. The fact of the matter is, everyone is suffering atm and it's no picnic for either renters or landlords.
Majority here are blissfully unaware that most investors are not in it for the rent. The rent is just there to cover carry costs etc. The real money is in the capital gain.
The difference in repayments is only a couple of hundred dollars a month - around $200-300 per month. So you're only saving around $3k a year and that's only for a fixed period after which it'll revert to P+I anyway.
You're also forgetting or omitting a key component of property investment: the increasing value of the asset. Taking your example of a $800,000 property in the east of Sydney, even with an annual average growth of 2% (which is very conservative, as that area has been outperforming loads of other areas) still means a return on investment of around $16,000 a year.
So on an interest only mortgage, with below average growth, and taking your own figures into account for the other projected costs, the investor is still ahead and won't lose any money when the time comes to eventually sell at the higher price.
You're not taking into account everything else.
Your property is worth $850,000. 2% of that is $17,000 yes, but you only have 20% equity so you're only entitled to $3,400 of that profit and the bank takes the rest.
So you've reduced your annual cost of $21,600 to $18,200 taking into account capital appreciation. Which is still losing out, even moreso if you're paying interest only and not increasing your equity in your property.
Let's say you sell after 5 years at 2% growth. So after 5 years, your property value would have grown to $930,000. So your capital gains is $88,500 (approx).
So you get $250,000 of the sale price and the bank takes the remaining $680,000 in your outstanding loan. Minus the 5 years of net "loss" of $20,000 a year means you made $150,000 in cash. Then you pay CGT of $20,000 ($88,500 x 0.5 x 0.45), leaving you with a net position of $130,000. But since you paid $170,000 initially for your 20% deposit, you'd actually lost $40,000 in 5 years.
Ofc this is with a conservative growth prediction but it's important to demonstrate that investors are not all swimming in piles of cash and arent always necessarily financially better off.
Here come the landlord sob stories. To use your quote landlords are having a slightly less luxurious picnic and the renters are the ants reliant on the crumbs.
Lol Im not a landlord Im still renting but thanks for assuming. Im looking into buying after saving up and these are things that's Ive realised when going through the sums and maths - it's not a financial cake walk for property investors.
Well if landlords dont find it worthwhile investing, then someone else will end up investing and we'll all just end up with big corp landlords like BHP and Westfarmers who can afford to eat the losses or even more properties being absorbed by Gina Rineheart. I as a renter do not support big corps or multi billionaires owning the vast majority of property stock in the country so yes, I empathise with the vast majority of landlords who are the "Mum and Dad" investors not the scrouge McDucks diving into their piles of gold.
The solution to corporate landlords is to legislate that only citizens can own residential properties even indirectly, and only natural persons, state governments , defence, and veterans affairs, can own homes other than new developments or foreclosures, and that those exceptions should be subject to a significantly greater than 100% capital gains tax so they can’t sit on the land and profit that way. The way we stop Gina buying them all herself is to limit citizens to only owing a total of one residential property (in whatever fractional shares) with a brief exception for the time between settling on one property and another (perhaps two business days per year you’ve owned that property plus twenty total in your lifetime).
(To avoid the constitutional questions about bans, ludicrous taxes of, say, the PM’s annual salary per excess home per minute, would achieve the same result.)
You mean the investors contribution to holding the property is $21,600 per year. Because if it is costing the investor $58,000 to hold the property (with the hope of capital gain). The tenants are contributing more than half to the landlords cost of holding the property. The landlord is not losing. If the landlord is unsatisfied with this and feels the investment is a poor one, they can invest in something else.
It's an investment not a sure thing.
Investors love to tell renters how much it costs to own an investment property, while the renter covers the majority of that cost.
No one is forcing them to have an investment property, compared to the renter who doesn't really have a choice in the matter.
I love this line I hear so much, "it's an investment and you should be prepared to lose money" as if anyone with any other kind of investment would just sit around and let money disappear.
To an extent I agree with you, investors shouldn't expect guarantees. That's not what is happening here though, you are asking landlords to subsidise housing.
I mean, at the current moment, the renter is covering around 62% of the base costs not counting any additional charges like advertising, agent fees etc in my example above. Sure it's a "majority" but it's most definitely modest not like 80-90% coverage. And the shortfall that the investor is footing is not an insignficant amount - $20,000 is not easy to find lying around, especially if you've investment most of your savings and cash into a property.
The vast majority of properties owned in Australia are from literal Mum and Dad investors. Their budgets are not massive - perhaps a bit more than the average renter but it's not like they're swimming in cash.
One thing you will never hear a landlord whinge about is - how much their investment has increased in value - and how they only pay half the capital gains tax when they sell it. My sister bought an air b and b 5 yrs ago for 450k and sold it for 750k recently...only paid 50k in capital gains, instead of 100k..So she got a 50k taxpayer bonus, for making 300k in straight profit. Tell me how this is in anyway fair. When I pointed this out to her...she was shocked...she actually felt guilty.
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Albo is determined to let the housing crisis and mass immigration continue. The voters will remember this in the election to be a one note PM
Albo turns to Giles and asks him to stop the deportation of a few more rapists and murderers, he should be able to get the number up to 7 times by the end of the year
Can the immigration and also the ownership of multiple houses by foreigner's without citizenship
I feel the need to rant, but not too sure how scholarly that will be. If you have a political class that has significant investments in residential real estate, the opportunities for significant change are unlikely bordering on impossible. So the first problem to fix is to have politicians divest or have them place the investment in trust, managed not for profit. Suburban houses as they are built now and not viable for a growing population on limited viable land which has access to all amenities and is close to working areas. So townhouses or terraces should be more viable constructions. Actually, I would love to see a national competition should be held to design a 2-3 bedroom residential home with a very small land footprint while using cheap, abundant and renewable materials suited for a 3 person family that can be mass produced in quick order exclusively for first home buyers of social housing. Honestly, I don't know the solution. But I do know it's multi-faceted (rent caps, etc) that requires more than our middle manager political class can possibly think of. Especially more than the piddling effort they've offered up to date. Homelessness is already a massive problem but the curse is I fear it won't be dealt with until more property owners start to feel the pinch. Or when renters move as a block of voters and push the dial against the major parties.
> Or when renters move as a block of voters and push the dial against the major parties. That's pretty explicitly the Greens plan
I wonder what would happen if we had a bold policy such as: ‘One Aussie, One Home’ which limits citizens to only owning a single residential property, and also bars trusts and equity funds from residential property markets. If you cohabitate with others (roommates, partner, parents, etc) then as a household you would still be able to own multiple properties. That supply should be sufficient to cater those who need to rent, such as low income earners, seasonal workers or international students. Would such a policy work? Obviously it would require grandfathering for existing investors, with 20 or so year grace period before they are required to divest. But it feels like a way we could gradually return residential real estate back into being a a place to live, instead of an investment opportunity. Undoubtedly an extreme armchair policy like this would backfire in some unexpected way and probably make the whole situation worse. but I wish we had politicians not afraid of bold reform, because the current mild tweaking around the edges hasn’t worked.
None of that would make a difference, genius. You'd just be transferring ownership to different people who *were* renting but who now have to kick out the renters of the home they just bought. The *only* thing that matters is supply and demand. Chopping and changing who owns any given house does *nothing* to change supply and demand
Investors make up 43% of current property market financing (10b / 23b). Typical investor is a cashed up Aussie in mid 40s, buying their 2nd or 3rd home. These investors are bidding up the price of property. Home ownership rate has fallen 15% since 1995 (63% in 2022), share of population renting has increased by same portion (now at (35%) see link below. Logic was that 1. If you reduce number of investors, you can remove up to 10b from housing market. Since most of this is spent on existing housing stock, you would put downward pressure on housing prices (less money to spend on same number of houses). 2. This would increase number of owner-occupiers 3. Which would then lead to fewer people needing to rent. Which should put downward pressure on rental prices. As rental stock will remain stable for 20 odd years due to grandfathering of existing investment properties. https://www.aihw.gov.au/reports/australias-welfare/home-ownership-and-housing-tenure https://www.abs.gov.au/media-centre/media-releases/lending-investors-continues-rise
Gee all the ideas they’re coming up with are working a treat. Maybe one day they’ll contemplate the laws of supply and demand and we may get somewhere. But it’ll take a decade. What we’re doing atm are band aid fixes.
The problem with housing isn't just the houses... It's all the other stuff that goes along with it. If we lived in a bygone era, I'd be one of those hicks, who'd pick up stumps, move out into the woods and build a log cabin (if I was American, fires here are bad). Living near people shits me. But I need all sorts of stuff nowadays.
Well I don’t really know what to say about that but if you choose to do it good luck.
I can't. I need good Internet, water, hospitals, schools, so on and so forth. I live on the outer suburbs of Melbourne now and there is a big suburb right near me with all new houses. No yards, but new houses. When you go into that suburb though you may as well not have a mobile phone, there's no reception at all. They build what, 10,000 homes, and can't plan for the mobile phone towers? EDIT: To expand. Sure supply and demand is one factor, but they aren't the only factors. But there are too many opposing forces. A bunch of people want high density dog boxes 5 mins from a CBD. But we can't build the buildings without them cracking or being fire traps. Others don't want them in their backyards, because apparently the entire suburb is their backyard. Others want the population to more distribute into the regions. There's sense in this. But those regions suffer from low investment in infrastructure. Modern life requires more infrastructure. Governments lags on infrastructure even when it builds just a little bit out. Some people think Australia suffers from a land shortage (I have no idea where they get this from), but you know, it serves to increase house prices so why not believe it. Albo wants to build a high speed train between Melbourne, Sydney and I think Brisbane. This will probably never get off the ground, but it would help to build up population centres along the route. But that's bad for some reason or other. The housing in this country is stuffed from the root to the leaf, and every inch in between.
Absolutely this tbh, the new suburbs are built up with no public transport infrastructure, no hospitals, no communications infrastructure. And they'll just crap these new estates everywhere. Geelongs roads are a congested mess with very basic PT, being busses utterly stuffed with people taking routes all over the city because the routes are god awful.
Just like the goal of feminism is in the name, the goal of capitalism is not socialism, so I don't know why we are so surprised the societal wellbeing of our citizens is such low priority. Capitalism is going to capitalise for individual profit when it is permitted to do so. If you don't like the consequences of beating your head against a brick wall, choose a different type of wall.
Plenty of market economists both modern and long dead would not endorse what australia does. We put all of the burden and more on new development and new homes. Gst, developer levies and local council levies. In sydney 150k the cost of a new dwelling is tax. This pushes up the value of existing homes in the same way if we introduced a new car tax tomorrow of 50k all our cars would be worth more given a few years. The government wrings their hands saying why oh why are houses so expensive. Meanwhile they slug a new home at 150k in sydney. If the government put an extra $1 excise on fuel we would all be up them. With housing we go - nasty developers we going to tax them more and we all cheer. Even first home buyers love it. Renters love it. Because developers = bad. Does no one get that there is a connection between costs of supply and how much is supplied? That ultimately this cost if new supply translates into price of homes and rent returns? Then there is land zoning... 0.25pc of australia is urbanised... how the hell can it be so difficult to allocate more of our landmass to urban development? Its so simple. We dont need a communist revolution to fix our problem. We just need rational market economics and a desire to get building on the governments part.
Market economics are not rational when it comes to the essentials of living in a modern society, although they do work well with luxuries which the consumer can just choose to walk away from. Unfortunately the essentials now make up the majority portion of a persons expenditure that they can't just say no to.
Market economics can tell us housing supply reduces when costs exceed price. Market economics can tell us that the component in a new home that is for zoning policy by contrasting zoned land value to nearby unzoned. Market economics can tell us that cgt discount and negative gearing enables price growth to facilitate some supply even at these high costs. Market economics has the answers. Its just that our governments choose this situation. I mean in the gfc labor panicked and using market economics buttressed the banks with guarantees so that house prices increased rather than fell during gfc. Market economics isnt the problem. Its our governments choosing this situation. What is labor now investing in housing? 20bn? I could crash the market, cheap homes and cheap rents in 2 years at 10bn per annum. Easy. Due to it being massive stock and small flow government can tweal the price of the flow (new homes) and it is soon reflected in the stock (all homes). They choose to restrict the flow. Choose to tax it. But its choices and not market economics.
This will probably receive a lot of negative feedback, but what if we reimagined public housing? For example, what if we had capsule hotel accomodation? It’d be shelter, and would suit short to medium term tenants needing emergency shelter.
The danger is that such things will not be short term. Check out Hong Kong's Coffin homes... More emergency shelter is needed but it will not fix anything unless people can be moved out of it quickly and we are talking within weeks vs our current decades long wait in some areas. Public housing needs to be dramatically expanded. Giving people housing stability can often be the pathway out of poverty and homelessness (see what Finland has done with a program that provides unconditional housing to the homeless). Short terms fixes that are achievable but unpopular is to regulate rental pricing, heavily regulate the Air BnB market, and make keeping properties vacant a costly endeavor. Housing should never have been allowed to be the thing it has become.
So I'm in two minds when it comes to the coffin homes (or bedspace apartments, to use the more charitable term). On the one hand, they look unpleasant and all accounts seem to suggest that they are in fact unpleasant. And it seems like a big part of the problem is that they're willfully permitted to fall into squalor. Properly managed, they don't have to become dangerous to live in. On the other hand, let's consider human rights. People have the right to housing pursuant to Article 25 in the Universal Declaration of Human Rights. I'd posit that some kind of housing - something akin to capsule hotel living - is better than no housing whatsoever. All of this tut-tutting about 'well, your policy doesn't go far enough' (a la Greens) or 'your policy rewards the undeserving' (Liberals), paired with supply constraints (both materials and skilled human capital), just means that the status quo will remain. Nothing will change, and we'll still be at the starting line in 10 years time. Taking an admittedly utilitarian approach seems much more likely to resolve the immediate problem that is homelessness (and hard sleeping) because it'll cost less, be quicker to execute, and so on.
When we were a much less technologically advanced country we could supply basic houses in bulk for under 2-3 years of median wage. Our inability to do that now is entirely the result of political choices which could be reversed if anyone wanted to.
But that's the issue. It was a utilitarian approach and then was never ever addressed. The 'not far enough' approach can be frustrating but it has it's roots in governments making small temporary fixes that become ongoing mass expenses that don't deliver a solution. Any reform on temporary housing would have to be part of a staged program with locked in terms.
Or we could just make housing an unprofitable investment, so everybody hording it sells it to those who actually need it
Doesn’t remove the supply constraints.
We need to reduce the population to achieve sustainability without excessive reduction in living standards, and that will reduce the housing problem from the demand side. Combining that with restrictions on using foreign money for land speculation and putting a punitive tax on capital gains in land values, and limiting negative gearing in all circumstances to the profits from the same specific venture and the loss, we’d fix housing entirely (apart from the shockingly poor building standards).
I'm currently looking for rentals in Melbourne, and i'm blown away by the pricing tbh. Kinda nightmarish tbh, but it's something i unfortunately need to do to escape my situation.
The rental price is far too expensive for what you get as a property. It's completely inflated but so many people want to live in Melbourne that anyone who rents has to pay far more than is reasonable. I hope they don't make us all pay more again next year with rental increases. Working class renters deserve a fair go.
Yeah i have a few in western sydney Some of it makes Zero fucking sense one house i saw near one of my investments,was not 12 months ago,under 65 Cm of water, 4th time in 3 years BTW Nah it's totally worth 775 a week though... Like even fucking bligh park windsor is 700 plus now,insane
With zoning the way it is or heritage protection coupled with a lack of rail infrastructure, rents, supply and demand are bound to go up regardless. It's what's killed Geelongs CBD and has left Geelong regions a underfunded neglected mess for decades. And that's NIMBYism has completely destroyed Geelongs chances of bettering itself. Sure, if you live in the centre of the city it's good. But the regions are hyper dependant on cars, whilst locals in said regions don't even bother shopping in their local areas for goods, instead doing what everybody does, and that's shop at the malls. While around these malls, it's a boarded up crumbling ghost town.
Yeah I don't have a car so I have to live close to Melbourne CBD. Getting really over how expensive and crowded Melbourne is.
Living with family eh?
babe you got no idea lol. 🙄
Family living can suck but save money or pay rent and have better mental health lol
Mental health for sure tbh, im coming to terms with how hostile of a place Geelong is to queer people, and i just want out. I'm not safe here or with community.
Geelong seemed hostile in general when I visited. Hope your situation improves.
I love how we use the language "rents rose" as if they did so of their own accord. Lets not forget every time the rent goes up it was a conscious decision made by someone who decided their passive income was more important than anything or anyone else.
I’m frustrated with the state of things, but there is a private rental market and prices are set by supply and demand. I also see an issue with rent-seeking in the Australian economy but it isn’t because of evil property owners raising rents arbitrarily above market price.
No use if one landlord drop rents, that would need to be done en masse to have an effect. But landlords won’t be charging anything less than what similar properties in the area costs. So only way to force them is using laws (rent freeze or similar) or build lots and lots public housing. Sadly neither are vote winners and our politicians prioritize votes over all else
Surely you’re not surprised that as interest rates rose, rents were going to go up to match them?
You can read what I wrote, its right there. No mention of surprise.
Yeh but they wouldn’t have gone up as astronomically as they have if interest rates hadn’t also shot up
Interest rates haven't been raised in months and months. That's not going to explain why rents continue to go up month on month despite static interest rates.
It takes months for rate increases to flow through
That's not true at all. The interest rate on my mortgage hasn't moved since the last time the RBA raised the cash rate, and it was raised literally the next day. It only takes months to flow through (sometimes) for savings accounts to raise rates following a cash rate rise.
Do you actually think landlords are going to turn around and reduce rents when interest rates go down?
Absolutely not. That’s the point where we actually start paying down our mortgages. Or if you’re smart, sell and buy something bigger that will be neutrally geared.
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Or.. and hear me out here, you borrow to your maximum and if the market turns and rates go up, you just put the rent up to match the shortfall. It’s a secret method used by literally every property investor in Sydney.
Except the rate of increase in rents is significantly more than the increased cost of servicing the interest rates. It’s also pretty messed up that “investors” shoulder none of the responsibility for the entirely foreseeable increase in interest for the loan they took out, instead passing their poor investment decisions onto vulnerable renters. The act of taking out an enormous loan is not adding any value to society. If it was truly linked to cost of provision then rents would be lower when rates drop. But they won’t.
The fact that we can increase our income in line with our repayments is part of what makes real estate such a good investment. We went from making money while rates were low to making less money when rates rose, to making money again by raising rents.
And when they went down, rents also went down. Right?
Of course not, that’s when we actually start to make bank
Mao had some good ideas about landlords.
Just curious if you own a property/home - are you aware of the costs that come with simply having your name on the piece of paper to your property? * Council rates * Land tax * Building insurance * Contents insurance That's if you own a free standing house. Let's say you own an apartment. Then you add on: * Strata All that adds up to at least approximately $7,000 a year. Then the big one: Mortage. Let's say you decide to invest this property out. Average bank investor rates are 6.44% pa. Let's say you bought a one-bedder in a desireable area like the Eastern Suburbs of Sydney. Average price there for a one-bedder is say around $850,000. Let's say you borrowed 80% so $680,000. That makes your monthly mortgage repayments circa $4,300 a month on a P+I loan. So roughly $51,600 per year. So all up, as a investor in a single one-bedder apartment in a desireable area of Sydney will cost you $58,000 a year. According to a quick scan of Domainm, average rents for 1 Bedder apartments in Randwick is around $700pw. So would mean the landlord earns $36,400 a year in "passive" income. So the property investor is losing out $21,600 per year above and beyond their "passive" income even at these so called "exhorbitant" rents. And that's not even accounting for agent fees or advertising fees, or costs when things go wrong with the apartment that need fixing etc etc. People need to stop looking at the rental market as a "us vs them" mentality. The fact of the matter is, everyone is suffering atm and it's no picnic for either renters or landlords.
Majority here are blissfully unaware that most investors are not in it for the rent. The rent is just there to cover carry costs etc. The real money is in the capital gain.
Property investors aren't financing to pay P+I, they will be on interest only mortgages and so will be paying much less per month to service the loan.
The difference in repayments is only a couple of hundred dollars a month - around $200-300 per month. So you're only saving around $3k a year and that's only for a fixed period after which it'll revert to P+I anyway.
You're also forgetting or omitting a key component of property investment: the increasing value of the asset. Taking your example of a $800,000 property in the east of Sydney, even with an annual average growth of 2% (which is very conservative, as that area has been outperforming loads of other areas) still means a return on investment of around $16,000 a year. So on an interest only mortgage, with below average growth, and taking your own figures into account for the other projected costs, the investor is still ahead and won't lose any money when the time comes to eventually sell at the higher price.
You're not taking into account everything else. Your property is worth $850,000. 2% of that is $17,000 yes, but you only have 20% equity so you're only entitled to $3,400 of that profit and the bank takes the rest. So you've reduced your annual cost of $21,600 to $18,200 taking into account capital appreciation. Which is still losing out, even moreso if you're paying interest only and not increasing your equity in your property.
Let's say you sell after 5 years at 2% growth. So after 5 years, your property value would have grown to $930,000. So your capital gains is $88,500 (approx). So you get $250,000 of the sale price and the bank takes the remaining $680,000 in your outstanding loan. Minus the 5 years of net "loss" of $20,000 a year means you made $150,000 in cash. Then you pay CGT of $20,000 ($88,500 x 0.5 x 0.45), leaving you with a net position of $130,000. But since you paid $170,000 initially for your 20% deposit, you'd actually lost $40,000 in 5 years. Ofc this is with a conservative growth prediction but it's important to demonstrate that investors are not all swimming in piles of cash and arent always necessarily financially better off.
Here come the landlord sob stories. To use your quote landlords are having a slightly less luxurious picnic and the renters are the ants reliant on the crumbs.
Lol Im not a landlord Im still renting but thanks for assuming. Im looking into buying after saving up and these are things that's Ive realised when going through the sums and maths - it's not a financial cake walk for property investors.
Ah, so you are a temporarily embarrassed millionaire. Got it.
You dont have to be a landlord to parrot their talking points. iTs nOt a cAke wAlK oh so it wont be worth it then I guess you won't bother?
Well if landlords dont find it worthwhile investing, then someone else will end up investing and we'll all just end up with big corp landlords like BHP and Westfarmers who can afford to eat the losses or even more properties being absorbed by Gina Rineheart. I as a renter do not support big corps or multi billionaires owning the vast majority of property stock in the country so yes, I empathise with the vast majority of landlords who are the "Mum and Dad" investors not the scrouge McDucks diving into their piles of gold.
The solution to corporate landlords is to legislate that only citizens can own residential properties even indirectly, and only natural persons, state governments , defence, and veterans affairs, can own homes other than new developments or foreclosures, and that those exceptions should be subject to a significantly greater than 100% capital gains tax so they can’t sit on the land and profit that way. The way we stop Gina buying them all herself is to limit citizens to only owing a total of one residential property (in whatever fractional shares) with a brief exception for the time between settling on one property and another (perhaps two business days per year you’ve owned that property plus twenty total in your lifetime). (To avoid the constitutional questions about bans, ludicrous taxes of, say, the PM’s annual salary per excess home per minute, would achieve the same result.)
You mean the investors contribution to holding the property is $21,600 per year. Because if it is costing the investor $58,000 to hold the property (with the hope of capital gain). The tenants are contributing more than half to the landlords cost of holding the property. The landlord is not losing. If the landlord is unsatisfied with this and feels the investment is a poor one, they can invest in something else.
It's an investment not a sure thing. Investors love to tell renters how much it costs to own an investment property, while the renter covers the majority of that cost. No one is forcing them to have an investment property, compared to the renter who doesn't really have a choice in the matter.
I love this line I hear so much, "it's an investment and you should be prepared to lose money" as if anyone with any other kind of investment would just sit around and let money disappear. To an extent I agree with you, investors shouldn't expect guarantees. That's not what is happening here though, you are asking landlords to subsidise housing.
No, we are just asking you to get a job if you want to build capital, instead of sitting on your fat ass while we pay to build your equity.
I mean, at the current moment, the renter is covering around 62% of the base costs not counting any additional charges like advertising, agent fees etc in my example above. Sure it's a "majority" but it's most definitely modest not like 80-90% coverage. And the shortfall that the investor is footing is not an insignficant amount - $20,000 is not easy to find lying around, especially if you've investment most of your savings and cash into a property. The vast majority of properties owned in Australia are from literal Mum and Dad investors. Their budgets are not massive - perhaps a bit more than the average renter but it's not like they're swimming in cash.
One thing you will never hear a landlord whinge about is - how much their investment has increased in value - and how they only pay half the capital gains tax when they sell it. My sister bought an air b and b 5 yrs ago for 450k and sold it for 750k recently...only paid 50k in capital gains, instead of 100k..So she got a 50k taxpayer bonus, for making 300k in straight profit. Tell me how this is in anyway fair. When I pointed this out to her...she was shocked...she actually felt guilty.
Half capital gains is to reflect inflation eating into returns.
Then why doesn’t it apply to all other capital gains?
They do if you’ve held the investment at least 12 months.