Sir lastnail wrote on Jan 7^th, 2014 at 3:16pm:

An interesting point, considering that people out of work with a mortgage get nothing, not even a loan scheme. Rent assistance is also inadequate, for singles it maxes out at a weekly rent of about $138. It hasn't kept pace with the actual rent increases.

Rent assistance is just an admission that welfare payments are inadequate.

Mr. Grappler and Mr. Smith, remember what REALLY fueled the real estate market in these last few short years, what really set the prices to sky rocket?

Superficially......by our beloved Government for what they thought were fixing the economy.

Can anyone remember?

Why were first home buyers going like crazy for their first homes?

How much did the amount of it go to?....the 'first home buyers grant'?....I believe it was up to and over the $30,000 mark in some cases.  It started out at $7,000, then doubled, then tripled, plus.

And the banks were lending left right and centre! It was 'no holds barred' !

And now, what do we have, the romance of all that has died down, and there are more people losing their homes than ever before.

So which real estate investor could have competed with that, certainly not moiye....I stepped back and gulped at it all.

Then something happened in all that first home buyers grab....rental properties had become more scarce, and admittedly, we had many people phoning and asking if we had a house to rent them.
We were actually able to pick and choose the tenants, the best of. Most were young working couples wanting to shift out of home, with excellent references.

My son and his partner got caught up and borrowed well over $350,000 and now, they want out, and would rather rent, as the interest rates are eating at them, and the repayments don't seem to do much difference, and they want to go on holidays and have fun but find it a drag when the 'rates and insurance and repairs' have to be paid for.
This is keeping them, well, what would one say, poor, or broke?

So you will find an exit of people that have bought houses for maybe that very reason. I know interest rates have come down a long way, and this is offering some relief, but should be even lower to really help all the home owners keep their roof over their heads, whilst all the rest of living has sky rocketed.

In the UK employers are finding a whole generation of Brits who are not willing to work 12 hours a day / 5 days a week for a paltry $55 per day (30 Brit Pounds).

Comes to $4.50 an hour.

Soooo ... It would seem that those on the dole in the UK are managing very nicely, thank you.

link

Sophia wrote on Jan 8^th, 2014 at 10:26pm:



don't do it, they'll pay for it later .... sure it may seem like the repayments aren't making a lot of difference, but I'd bet they aren't much more than tany rent they''ll have to pay either. They'll see the reward of perservering later.

I had a look through a tenants rental ledger yesterday, she's been in the one property for over 10 yrs ... paid over $200 000 in rent, I nearly cried when i saw it. If she had bought the place when she first moved in, she would now own it. Crazy .

Sophia wrote on Jan 8^th, 2014 at 10:26pm:


You have it there yourself - the same as my view - banks lending when it was obvious that negative gearing would be in play and would directly affect the market availability and prices of housing.

That was the entire point of my discussion and why I reject negatively geared loans as anything viable in any genuine business sense - and these easy loans have had a terrible effect on the economy, cost of living and rental housing availability.

When a bank loans negatively geared money - it follows immediately that in order to see some light, the lendee has to raise money - and that means that rentals rose.

You see - it's a cycle - more people have to pay more to exist - wages go up - cost of living goes up to meet that rise - your tradesman follows suit and raises his costs- your net income goes down - you raise your rent - more people have to pay more to exist - wages go up - cost of living goes up to meet that rise your tradesman follows suit ..

We've been through that before.

There is a difference, as with your daughter etc - in that the home owner does not borrow on a negative gearing business principle - but on the certain knowledge that they will have to work to pay the mortgage in order to one day OWN their own home - not some 'dead stock' investment.

Most 'property magnates' are forced to work to sustain their 'investments' and this means - with rising costs in maintenance and so forth - they are forced to raise rentals until it becomes nearly non-viable.

Asset rich and cash poor.  Great business sense there.

The ONLY reason you can pick and choose is that this very policy of lending has created a lost generation of homeless people, while enriching the few - who - in many cases, are not enriched until they manage to hold on desperately for many years.

When a median mortgage in Sydney costs around $1000 to sustain - it is obvious that no renter can afford to pay that amount - ergo - the 'investor' is bound to lose some time and will have to make up the difference out of earned income from work, as I see so often with many who claim 'property investments' - and the banks will lose nothing.

Everyone seems to imagine that owning a portfolio of investment properties means you have all this money - you have - in reality - very little - and the cost of running this negative business is borne by the taxpayer.  You may have TURNOVER of cash - but it is the end result that counts - and most will only see that in thirty years or more, provided the market survives the coming economic and social catastrophes, up to and including revolution.**

Not only that, but those without lots of income - especially the poor, unemployed and the pensioners etc - will inevitably end up homeless.

Now - you can argue about availability of housing - let me try once again - without negative geared lending by the banks - more would be available for building etc - and thus would be far more beneficial.

In fact - YTF do banks not invest in building projects instead of negative gearing?  Much faster return and less uncertainty.

All I have to say to that is what I always say - the damned fools running the show have simply no idea how to do so.  In one sense - it's called 'management by ego' - I think - therefore it must be so.

Rather than 'rental properties becoming more scarce' - OWNED properties became more common - and the already existing deficiency in the availability of housing became more apparent.

It is simply not mathematically possible for the existing number of available properties to vanish simply because they are purchased to live in rather than as investments.

Argue all you like - which is preferable?  Fewer people in their own homes and better off - or tougher renting conditions which must inevitably force some positive action to resolve the current housing crisis.

Again - the lack of responsibility in those running this market will lead inevitably to a 'strong' government arising and controlling that market - same as employment and everything else.

The very selfishness and lack of responsibility of the West will lead us into Fascism - UNLESS we all do something about it NOW.

** Kinda reminds me of the film 'Paris Texas' - where the dad shows his son a photo of some land in Paris Texas... all bare dirt and mesquite.

"I've got two blocks of land in Paris Texas!"

"What are we going to do there?  Eat dirt?"

I'm afraid the 'property magnate' vanished already the moment it became too easy to obtain loans to buy property - and the prices went through the roof.

As I've said to you before - you can no longer buy a house for $7000 three hour's drive from Sydney.....  to buy now you need to mortgage yourself to the hilt and work to pay for it - who benefits?

Only the banks and real estate agents.  You go bust, they sell you up and lose noting and already have the fat end of the interest cycle

Quote:


It saddens me somewhat, to see my adult children, and their generation, to be caught up in a housing market that means they both have to work, and delay having babies.

It saddens me also that many are losing their homes to mortgagee auctions.
They needed to do the maths, why didn't someone show them properly, the maths of what it really costs at the end of the month? Instead of buying what they call McMansions, why not start with a small home first, that needed some painting and fixing, that's how we did it, worked our way up...not start from the top!

Quote:


This is correct, and there should  be a new rule to help home owners offset their mortgage interest rates, against their income. Why not, if it's good enough for an investor, then why not a home owner...although for first home buyers, they did get the home buyers grant, which offset the stamp duty etc.

I think in a different country I had heard, can't remember which country it was now, where the home owner can claim the interest payments of their home morgtage against their income.

Quote:

And we all know when a politician is lying....their lips are moving! 
Nope, I do not trust them, I feel they want what we have, and would like to see us go down the gurgler.

For instance, some years ago, pensioners that retired, living in their homes in Mornington (down by the Peninsula)...suddenly had a huge rise in rates because they lived in an area that had become fashionable, yuppy and classy......from less than $1000 to over $3000 the rates soared.
These people that lived in that area, were pensioners, and could not afford that.....it would force them out wouldn't it?

Gets me how the stats for Australia many eons ago, were that in Australia, there were more homeowners than anywhere else in the world.
Wonder what the stats are now?

In the 1970's, when we married, we both worked, and paid off our first humble abode, with second hand furnture and older cars. Who does that now?
We were lucky to be able to save as well.....something very difficult now, even though I keep harping at my kids to try and save something, save it for a rainy day, as my dad used to say to me.

So I say to the hubby, maybe we better just consider ourselves fortunate we have something, so we must try and hang on and keep it if we can, so then at least our kids and their kids may have something to live more comfortably with....because I have this feeling.....don't know why....that we are headed for harder financial callings.
Could be the shire rates rising 7% every year, or the electricity going up yet again (4%) this year, and I have already made complaints about the insurances rising astronomically....bang bang bang, hitting us in the pocket left right and centre!

Sophia wrote on Jan 8^th, 2014 at 10:04pm:

The trouble is, they don't.

Negative gearing is one of the biggest rorts in the taxation system. It sucks out huge amounts of money from the taxation system. It should be abolished by popular opinion. Keating did abolish it in the 1980s but had to bring it back under pressure from the real estate lobby. No government since has had the guts to take on the real estate lobby to get rid of this permanently.

Another way that property owners don't pay their way is if they sell the property. The profit they get - capital gains - is only taxed at half the rate of someone who earns the same amount of money by working for it. Keating had it right when he taxed capital gains at full value, thus bringing equality to the tax system, but Costello reduced this to half for no other reason than to line the pockets of the idle rich at every one else's expense.