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Tlazolteotl View Drop Down
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    Posted: 21 Nov 2023 at 7:06am

Alan Kohler: Australians can’t afford homes – something politicians can’t risk fixing


https://www.thenewdaily.com.au/finance/2023/11/20/housing-market-conundrum-kohler



In my Quarterly Essay to be published next week (The Great Divide: Australia’s housing mess and how to fix it), I point out that the cost of housing, the most basic necessity of life, has doubled as a multiple of income in the past 23 years – from three-to-four times to seven-to-eight. This has changed everything about the economy and the way Australian society works.

Can’t turn back the clock

The only housing policy that would effectively deal with that would explicitly aim to reduce that ratio to what it had been for most of the nation’s history.

And since drastically reducing house prices would be both impossible and disastrous, the only viable way to achieve that reduction in the house price-to-income ratio is to ensure house prices don’t rise for 18 years, through reduced demand (removing tax incentives) and increased supply (fast trains to open up a lot more land further from the cities).

That’s how long it would take for incomes rising at 4 per cent per year to catch up and bring the house price-to-income ratio back to three to four times.

But would any political party that actually promised to try to keep house prices unchanged for 18 years ever win an election? Definitely not.

Most people own a house, often more than one, and expect it to increase in value – many need it to, especially young families, so they can build some equity. Super is too long distance, for retirement only, and, anyway, anything can happen to the sharemarket. Housing is the way Australians know how to safely build wealth.

So here’s the excruciating paradox: Everyone agrees that housing affordability is one of Australia’s biggest economic problems, if not the biggest, exacerbating inequality and causing deep resentment among voters, but promising to fix it will ensure that you don’t get elected.Dead

An honest politician is one who when he is bought will stay bought.

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Post Options Post Options   Thanks (0) Thanks(0)   Quote oneonesit Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2023 at 7:09am
There is a fundamental flaw in that article. 

The housing market is still relatively strong - so someone’s buying them Confused
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Post Options Post Options   Thanks (0) Thanks(0)   Quote oneonesit Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2023 at 7:12am
How about starting by stopping ALL foreign investment in all housing. 

No get our clauses , shonky money transfers , limits & so forth. Just stop it altogether
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Tlazolteotl Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2023 at 7:17am
Remarkable statistic - price has doubled as a multiple of income in 23 years. Shocked
An honest politician is one who when he is bought will stay bought.

Simon Cameron

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Post Options Post Options   Thanks (0) Thanks(0)   Quote rusty nails Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2023 at 7:24am
Originally posted by oneonesit oneonesit wrote:

There is a fundamental flaw in that article. 

The housing market is still relatively strong - so someone’s buying them Confused
Yeah, plenty can afford to buy a third or fourth rental, but first time buyers are struggling.

One of my kids just bought a house for a third of the value of the house I bought at the same age.
Sure, interest rates are massively different, but still, he’d be in top 20% of income earners, I’d guess.

God knows how a teacher,nurse,firefighter etc could ever afford current prices.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote oneonesit Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2023 at 7:45am
Yes - it’s almost as if the increasing rates are only further impacting those that cannot afford to buy - whilst those that can are largely unaffected

Round our way ( lower north shore Sydney) there is a lot of Asian money buying up properties. Go to any Auction & they totally dominate active participants


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Post Options Post Options   Thanks (0) Thanks(0)   Quote Afros Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2023 at 7:55am
I reckon the mess has been allowed to get to deep for any government to have the ability or desire to turn it all around.

If values were brought back, what happens to the people who brought at the top who could potentially have a house worth more than their loan?

I think as a society where we have gone wrong is we're allowing services such as housing, education, health and perhaps finance could be thrown in, to have turned into businesses.

My cousin lives in Brisbane, she had to go back to work 6 weeks after having a baby, her husband worked 3 different jobs all so that they could shovel cash into the banking furnace to pay off their house.  There are plenty in a similar position to this and all on what are historically lower interest rates, I know people talk of the high rates of the 1980s but they had a much lower housing price to income ratio than the kids are dealing with today.  Because of this we could see a real crash if the interest rates continue to climb.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Hello Sunshine Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2023 at 7:57am

No-one can escape this housing crisis — it's coming for home owners too

By business reporter Gareth Hutchens
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Hello Sunshine Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2023 at 7:58am
And well off parents of international students who are buying up accommodation for the kids.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Baghdad Bob Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2023 at 8:48am
Originally posted by rusty nails rusty nails wrote:

Originally posted by oneonesit oneonesit wrote:

There is a fundamental flaw in that article. 

The housing market is still relatively strong - so someone’s buying them Confused
Yeah, plenty can afford to buy a third or fourth rental, but first time buyers are struggling.

One of my kids just bought a house for a third of the value of the house I bought at the same age.
Sure, interest rates are massively different, but still, he’d be in top 20% of income earners, I’d guess.

God knows how a teacher,nurse,firefighter etc could ever afford current prices.
Of course many first time buyers on "average incomes " find it difficult to get sufficient deposit to get into the housing market, unless they want to live outside of our capital cities where prices are cheaper, whereas those that want to become landlords are of another category. 
Those who can afford to buy rental properties are more than likely settled into their own home and will need to gear right up and if interest rates increase their properties' values will, in all probability stagnate, or even fall, then when they do sell they will be up for CGT if any profit is made.
Owning investment properties is not all beer and skittles, despite the perception it is money for jam.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Fiddlesticks Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2023 at 9:13am
Originally posted by oneonesit oneonesit wrote:

There is a fundamental flaw in that article. 

The housing market is still relatively strong - so someone’s buying them Confused

wealthy Chinese, and no one is stopping them.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Fiddlesticks Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2023 at 9:24am
If govs aren't going to fix this awful mess then people buy land and lease it to others to put tiny houses on, or build more apartment complexes purely for rentals, open up land for trailer parks, make camper-vans more affordable and more places for people to camp/live. The wealthy who have houses now are a big part of the problem, they won't vote for a gov who wants to build lots more houses ( driving the value of their own property down )  yet they want to own multiple properties and charge astronomical rents to people struggling to get a foothold in life. People who have more than one investment property should be forced to sell any extra houses/apartments they own to first home buyers. The gov could give them a break on capital gains taxes. This country is supposed to be the lucky country, yeah good, if you are already wealthy, screw everyone else who wants to live a life free of debt. Just how exactly is a young person say 18 to 23 working and studying supposed to rent anything when firstly real estates won't let to young people with no references, and the cost of that rental would make them bankrupt anyways ?  
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Baghdad Bob Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2023 at 9:46am
Originally posted by Fiddlesticks Fiddlesticks wrote:

If govs aren't going to fix this awful mess then people buy land and lease it to others to put tiny houses on, or build more apartment complexes purely for rentals, open up land for trailer parks, make camper-vans more affordable and more places for people to camp/live. The wealthy who have houses now are a big part of the problem, they won't vote for a gov who wants to build lots more houses ( driving the value of their own property down )  yet they want to own multiple properties and charge astronomical rents to people struggling to get a foothold in life. People who have more than one investment property should be forced to sell any extra houses/apartments they own to first home buyers. The gov could give them a break on capital gains taxes. This country is supposed to be the lucky country, yeah good, if you are already wealthy, screw everyone else who wants to live a life free of debt. Just how exactly is a young person say 18 to 23 working and studying supposed to rent anything when firstly real estates won't let to young people with no references, and the cost of that rental would make them bankrupt anyways ?  
How does that work when Investor A has two units valued at $700,000 each and Investor B has one unit worth $ 1,500,000 ? Investor A has to sell one of his units whilst Investor B, with more equity, is able to retain his investment property.
I am afraid government intervention in to the private property market will not work
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Carioca Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2023 at 10:01am
Originally posted by oneonesit oneonesit wrote:

How about starting by stopping ALL foreign investment in all housing. 

No get our clauses , shonky money transfers , limits & so forth. Just stop it altogether

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Post Options Post Options   Thanks (0) Thanks(0)   Quote Hello Sunshine Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2023 at 10:17am
the Chinese are the untouchables.
Cant touch them because they will withdraw markets.
Albanese weak as pi$$.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Fiddlesticks Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2023 at 10:17am
How bout you offer some answers Bobby instead of continually finding excuses for your self. 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Afros Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2023 at 12:15pm
Bobby clearly has some investment properties, based on comments from him over a period of time here,

Bobby's opinions on the housing situation are driven by self interest, not the greater good.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote furious Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2023 at 12:40pm
I have a daughter who has got to $100K but still can't afford to buy in the Sydney basin.  As she has to leave home at 5am every money to get to work going further afield wouldn't work but she can only get $250K from the bank and let's face it nothing of that value anywhere around.

Even when I die this house has to be sold as the six have part of it so where she and her brother will live is up in the air.  My home wont give any of them enough to get something.  At least three have a house or a unit.  So three with and three without.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Baghdad Bob Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2023 at 1:16pm
Originally posted by Afros Afros wrote:

Bobby clearly has some investment properties, based on comments from him over a period of time here,

Bobby's opinions on the housing situation are driven by self interest, not the greater good.
I do have investment properties in suburban Melbourne, which along with my SMSF, provide me with a retirement income so that I do not rely on any government welfare, in fact, as I should, I pay income tax on my income from those investments. My concern today is helping out my sons to get into the property market, which without my help they would find it difficult. To buy an average 3 bedroom home inner better  suburbs of Melbourne will  set them back $ 2K +, so the only hope they have is a help from my wife and myself. Sure it is difficult for young people to get into the housing market, but like those
have gone before them , unless they get that bit of help, they could finish up as renters for life.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Brudder_A Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2023 at 1:23pm
Time to live in a rusty caravan near Wodonga and know how to drive a truck...
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Post Options Post Options   Thanks (0) Thanks(0)   Quote rusty nails Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2023 at 1:24pm
Huh?
It’s difficult to get into the housing market, like it’s always been?
And you acknowledge your kids will need your help to get into home ownership.
This is the first generation where that’s been the case.


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Post Options Post Options   Thanks (0) Thanks(0)   Quote Baghdad Bob Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2023 at 1:42pm
It has always been difficult to get into the housing market, my parents were renters for their lives and they died 30 years ago.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote rusty nails Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2023 at 2:42pm
After the 60’s pretty much everyone could get a foothold in the property market.

In the 80’s anyone who had a job, and didn’t have a gambling or drinking addiction could buy a house.
In the 90’s, all the kids were getting low start loans with 95% LVR’s. (and keeping their payments to approx 30% of their income)

Today, young professionals earning $200k still can’t get in easily.
If you’re a copper or a nurse, you’re out of the market.
That’s never,ever been the case previously.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote rusty nails Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2023 at 2:45pm
Ignoring that over 1/2 the kids have been whacked with a HECS debt of $50k, that previous generations 
Didn’t cop.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote VOYAGER Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2023 at 3:41pm
I hope that the paragraphs in the OP are just a snippet of the column because if that was the whole article then the writer is someone who does not know what they are talking about, as far as the solution is concerned.

Problem -

The problem is very specific. Allowing first home buyers the opportunity to get into the housing market without having to over finance. 

Cause of problem - The cause of the problem is an exponential increase in the number of real estate investors. When you have a section of the society who owns two or more properties, the supply for first home owners decreases (this is due to investors looking to buy less expensive investment homes than their own home), so they target brand new homes or low cost homes which would normally be the target of first home buyers.

The solution - Forget current homes and get the first home buyers into new homes. Offer no interest no deposit mortgages to first home buyers, and limit the prices of the houses ($450,000 to $720,00). These prices could be subsidised by the government, which already is being offered (in NSW the government will pay for 40% of a homes cost for eligible first home buyers. The government owns 40% of the home but this is a good way for first home buyers to get into the market). 

So this is how the policy would work.

The value of the home $720,000.

The NSW government first home buyers ownership subsidy is worth $288,000.

The buyer needs a loan for $432,000, so they go to the federal government and secure the no deposit no interest loan for 30 years or 360 months. 

So the home buyer has entered the market.

Now the monthly repayments will be $1200. 

No investors allowed to access these mortgages, with the exception of grand parents or parents who want to secure their children's futures. If they invest there will be caps put on the rent they can ask for which will be enough to cover the payments and a small amount for any maintenance and the annual rates. Because the monthly payments do not increase this rent will only increase to cover costs.  

Obviously this means there needs to be cooperation between all levels of the governments and I would not be holding my breath for that to happen. 

The answer is simple and I do not understand why no party implements this policy, because if they did it would be a vote winner.

This policy is something which could benefit everyone in society.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Fiddlesticks Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2023 at 4:14pm
Originally posted by oneonesit oneonesit wrote:

How about starting by stopping ALL foreign investment in all housing. 

No get our clauses , shonky money transfers , limits & so forth. Just stop it altogether

This I agree with 20000% I mean why does Australia need/allow foreigners to buy property ?All housing is supposed to house citizens and residents who are living in the country period. All countries of the west should be housing their own people first and foremost, and stuff anyone who wants to buy from overseas. Overseas investment in Australian property is a virus on this nation, there are whole apartment complexes that are owned by internationals with no one living in them because the owners just want an investment that grows in value. To let people live in them would cost them money in security, maintenance, estate agents etc etc so they buy new apartments and leave them empty, this is criminal imo. I'm actually looking at buying a large SUV/wagon in case I can't renew my current lease or find myself unemployed, at least i'll be able to sleep and move around in the SUV.   
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Post Options Post Options   Thanks (0) Thanks(0)   Quote rusty nails Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2023 at 4:14pm
The answer ignores market forces.
If 100,000 people can all of a sudden afford $300k more than they could yesterday, then the market at that end will explode, and prices will go up by $300,000
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Post Options Post Options   Thanks (0) Thanks(0)   Quote rusty nails Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2023 at 4:16pm
The only solution is to wind back all the tax perks, which is political suicide.

That’s why no one from either party wants to touch it.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Plastic letters Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2023 at 4:20pm
Originally posted by rusty nails rusty nails wrote:

Originally posted by oneonesit oneonesit wrote:

There is a fundamental flaw in that article. 

The housing market is still relatively strong - so someone’s buying them Confused
Yeah, plenty can afford to buy a third or fourth rental, but first time buyers are struggling.

One of my kids just bought a house for a third of the value of the house I bought at the same age.
Sure, interest rates are massively different, but still, he’d be in top 20% of income earners, I’d guess.

God knows how a teacher,nurse,firefighter etc could ever afford current prices.

 

Not sure about teachers. I know 3 who earn well over 120k. Duel incomes take them over 200k a year. they can’t afford a house

First year out of uni, the start up is 85k
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Plastic letters Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2023 at 4:22pm
To my mind it seems older singles are the ones struggling with the massive rent hikes and the ability to buy 

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