Wealth paradox

[DirtyDawg]

I have a friend who needs some brick paving done
He and his lovely wife have 3x homes and 2x blocks of land , 1 x HSV club sport R8 about 3 weeks old and a new ford Territory.

Quote for the brick paving $4000 , he said they can affored it:confused: mates rates I said I would do it for $2000
When asking him about his cash flow he said his whole earnings and his wifes go's on the mortgages and they live off of the $800 rent the receive each week.
Weird up front looks as if he is rolling in it but really just making ends meet...God help him if interest rates go up...
Oh in answer to the obvious question..was 3 blocks of land but they sold it and bought the cars with the profit;)

Anyone else know of anybody doing it this way?

[amtravic1]

That is just greed. No sympathy for them if the interest rates do go up and they lose the lot I am afraid.

Ian

[Vern]

That is just greed. No sympathy for them if the interest rates do go up and they lose the lot I am afraid.

IanI call it trying to make something of your life, building up your assets for the future and family. Good on them! (though the cars are a bit much, obviously for apperences)

[Bushie]

I'd say it's a bit of both, obviously they are planning for the future - to set themselves up etc. Maybe though they are just stretching things a bit thin, they want it now, not in a few years. Should things go wrong well maybe they would have to shed (say) half of what they have.


Martyn

[Slunnie]

Yep, I reckon good on them also. Assuming the gamble falls their way then they will set themselves up nicely for some financial independance. It'd be nice to have an income generate itself without having to go to work in the future.

[stevo68]

"He who risks nothing has nothing"

Regards

Stevo

[JDNSW]

Yep, I reckon good on them also. Assuming the gamble falls their way then they will set themselves up nicely for some financial independance. It'd be nice to have an income generate itself without having to go to work in the future.

Yes, although the choice of cars does suggest the danger that comes with financial independence - getting hooked on a lifestyle that always seems to need more money than you have!

John

[Utemad]

I also think that stretching yourself for property is a good idea. If interest rates do go up (and they can't afford to continue) they can always sell one of the blocks.

Selling property to buy cars though is a dumb idea.

Keeping up appearances or keeping up with the neighbours etc is also a dumb idea.

[Greylandy]

I reckon good on them .. the biggest problem I have is people putting their current life and dreams on hold to have it "all" in the future. You only get one "young body" ... use it!!

[BigJon]

Wealth is measured in time, not in money.

If you stopped working for money, how long could you maintain your current lifestyle without making any changes?

One week, one month, one year, indefinately?

Passive income greater than your expenses is the only path to true financial freedom.

[olbod]

Woman we know, does this.
She uses the equity in properties to reinvest. She has worked very hard. Now has 15 houses carefully selected around Qld, to maximise her return on investment.
After the morgages are paid she has an income of $6500 per month.
This increases as each morgage is paid out.
My young Bro is a Financial advisor and finds investment properties for clients and makes a nice living.
He and his wife also invest in housing properties and have a very healthy portfolio.
He is retireing in Dec, this year at age 58. He will
continue to dabble in this field but doesn't need too.
He was the financial advisor to the woman above.
I retired at age 57.
Anyone who doesn't use the equitty in this way is
losing out. You have to own your own home tho,
so as you are not putting yourself at risk during a
recession. Careful selection and location of investment
property is the key to success.
Some people might think they are greedy, thats crap,
it's being smart and using a good business sense to
make hard work pay off !
Cheers.

[olbod]

Must have hit a button or something.
I lost me Capitals, didn't I !

[stevo68]

weird up front looks as if he is rolling in it but really just making ends meet...god help him if interest rates go up... There is an excellent book called "Living next door to a millionaire", the premise being you probably wouldnt know due to the way they appear, the car they drive or in a lot of cases the humble home they live in. Now I am not applying this to this example of people, as it sounds like they are on the right path. However, there are examples where somebody may be in a flash house/ car etc but a hiccup and the cards come tumbling down. Generally because they are financed to the hilt, no equity and have actual funds that may last them a month or so.

Most people make plans whilst life is passing them by, today is the time to make things happen. In respect to them or anyone out their working to increase their financial security being greedy is just another example of the good old "tall poppy" syndrome. Its funny, its always seem to be ok to go " ****** in his flash car or house" but never much chop if you go " look at the povo driving around in a heap of junk" :angel:

Regards

Stevo

[stevo68]

must have hit a button or something.
i lost me capitals, didn't i !
Hmm so did I????

Regards

Stevo

[Utemad]

Must have hit a button or something.
I lost me Capitals, didn't I !

Seems to be happening across the site. If you hit 'quote' or 'edit' the capitals are there. Just not on the main reading pages.

[barryj]

Nothing wrong with that.

That's what is called negative gearing, you put all your cash into an asset and borrow the rest and hope you can rent it out or sell it for more in the future. If not it comes off your taxable income.

Same with those poor cash starved business people. As long as their income remains viable they are OK. Until a recession comes again.

An Aunt of mine had 9 houses on the go. When she was short on cash in her retirement she just sold one off. Saves relying on the pension system.

My Sister is doing the same. One house in Hervey Bay, one in Hobart and a unit at Nerang. All negative geared.

She lives in a caravan and when she wants a trip up or down the East Coast of Australia all expenditure is a tax deduction as long as she conducts business to do with one of the houses.

[BigJon]

Nothing wrong with that.

That's what is called negative gearing, you put all your cash into an asset and borrow the rest and hope you can rent it out or sell it for more in the future. If not it comes off your taxable income.

An Aunt of mine had 9 houses on the go. When she was short on cash in her retirement she just sold one off. Saves relying on the pension system.

She lives in a caravan and when she wants a trip up or down the East Coast of Australia all expenditure is a tax deduction as long as she conducts business to do with one of the houses.

1: The only thing wrong is selling assets to purchase liabilities. I don't think that is good business sense.

2: Plenty of it about, but I don't think it is a good way to invest. By the same token, I don't go to the casino and gamble.

3: Good on her. I too don't intend to rely on a government funding of my retirement years.

4: That can become a grey area. Travel can only be claimed if the primary purpose is business (in this case the investment houses) related. You can't take a three week holiday and "pop in" to an investment house and claim the lot (well you can, but look out if you are audited!).

[barryj]

1: The only thing wrong is selling assets to purchase liabilities. I don't think that is good business sense.

2: Plenty of it about, but I don't think it is a good way to invest. By the same token, I don't go to the casino and gamble.

3: Good on her. I too don't intend to rely on a government funding of my retirement years.

4: That can become a grey area. Travel can only be claimed if the primary purpose is business (in this case the investment houses) related. You can't take a three week holiday and "pop in" to an investment house and claim the lot (well you can, but look out if you are audited!).

She always does work on the properties while she is there, e.g. curtains etc.

She also organises the real estate agent to do an inspection with her and she gets to know the tenants during this time. She has only had one problem with a tenant and this was due to the agent not doing their job. Took the agent to court and won damages plus costs.

My Sister is a Financial Adviser so she makes sure all is in order.

Too much of a risk for me but it works for her.

[BigJon]

She always does work on the properties while she is there, e.g. curtains etc.

She also organises the real estate agent to do an inspection with her and she gets to know the tenants during this time. She has only had one problem with a tenant and this was due to the agent not doing their job. Took the agent to court and won damages plus costs.

My Sister is a Financial Adviser so she makes sure all is in order.

Too much of a risk for me but it works for her.

Yep, like I said, a grey area. I think the phrase "primary purpose" is open to interpretation.

[vnx205]

Since no-one else seems to be prepared to stir up this discussion by presenting an opposing view, it looks as if I will have to do it.

Here goes!

People like those you have all been admiring for their financial genius are probably the most important single reason why so many first home buyers can't even go close to affording a home.
The activities of those people investing in property drives the price up.
It is only because property is a good investment that they put their money into houses. They invest knowing that the price will go up and they know they can sell at a profit because someone else knows that they can fairly safely pay a ridiculous amount for the property because demand will force the price up even further.
Since property is such a good investment, no-one is interested in building or financing affordable housing. The bigger the house, the bigger the return, so two income, one child families build a Mcmansion to maximise their return.
As is so often the case when someone makes a profit it is at someone else's cost.
If housing was not such a good investment, we would not have a housing affordability crisis as severe as the one we have now.
As I am part of the generation who could afford to buy a home (even if I did have to pay 17% interest for a time), I am not making this point because I missed out. It is current crop of young parents who are suffering.
Those people who are securing their own financial security are choosing to do it in a way that almost ensures that a lot of other people will struggle financially all their lives.
Before anyone points out that everyone could do the same, let me suggest that usually when it comes to having to make a choice between paying the family grocery bill or the electricity bill, or investing in a property on the Gold Coast, parents tend to choose to feed the kids.
Greed may be good for the greedy, but it forces others to pay for the luxuries the greedy enjoy.

[stevo68]

Since no-one else seems to be prepared to stir up this discussion by presenting an opposing view, it looks as if I will have to do it.

Here goes!

People like those you have all been admiring for their financial genius are probably the most important single reason why so many first home buyers can't even go close to affording a home.
The activities of those people investing in property drives the price up.
It is only because property is a good investment that they put their money into houses. They invest knowing that the price will go up and they know they can sell at a profit because someone else knows that they can fairly safely pay a ridiculous amount for the property because demand will force the price up even further.
Since property is such a good investment, no-one is interested in building or financing affordable housing. The bigger the house, the bigger the return, so two income, one child families build a Mcmansion to maximise their return.
As is so often the case when someone makes a profit it is at someone else's cost.
If housing was not such a good investment, we would not have a housing affordability crisis as severe as the one we have now.
As I am part of the generation who could afford to buy a home (even if I did have to pay 17% interest for a time), I am not making this point because I missed out. It is current crop of young parents who are suffering.
Those people who are securing their own financial security are choosing to do it in a way that almost ensures that a lot of other people will struggle financially all their lives.
Before anyone points out that everyone could do the same, let me suggest that usually when it comes to having to make a choice between paying the family grocery bill or the electricity bill, or investing in a property on the Gold Coast, parents tend to choose to feed the kids.
Greed may be good for the greedy, but it forces others to pay for the luxuries the greedy enjoy.
Totally disagree. Over the last 50 years you will have people who are financially successful and those that are not. I can't remember the actual figures but only 5% of the population retires financially independant, the balance on to a pension. My Sis in Law is early 20's and her and hubby have a townhouse that they bought on minimum deposit a couple of years ago and now selling it to move to a larger house. If you have a family before organising the financial side of things that is a choice.

Some people spend their 20's splashing their money up the walls, others invest into property. This has been happening around me since I was in my early 20's. This blaming others for their situations really riles me. Life is about choice and not everyone makes the right choices. There is still plenty of affordable properties right around the country, you may have to buy an investment first before you but your own home, but so be it. My priority is my family and I will make sure that they are looked after properly, I'm not out to ensure that somebody else can get into their own house, that is their problem. So many want it all but aren't prepared to work for it and are happy with the status quo, kudo's to them. Not everyone want's the stress or responsibility required for occupations that give a certain level of financial reward. With all due respect that response ( and yes you did want to stir it up, so considered stirred :D) smacks of the typical "poor is me/ life owes me a living" mentality,

Regards

Stevo

[vnx205]

With all due respect that response ( and yes you did want to stir it up, so considered stirred :D) smacks of the typical "poor is me/ life owes me a living" mentality,

Regards

Stevo
I had hoped to avoid that reaction by pointing out that I did not miss out.

[JDNSW]

Since no-one else seems to be prepared to stir up this discussion by presenting an opposing view, it looks as if I will have to do it.

Here goes!

People like those you have all been admiring for their financial genius are probably the most important single reason why so many first home buyers can't even go close to affording a home.
The activities of those people investing in property drives the price up.
It is only because property is a good investment that they put their money into houses. They invest knowing that the price will go up and they know they can sell at a profit because someone else knows that they can fairly safely pay a ridiculous amount for the property because demand will force the price up even further.
Since property is such a good investment, no-one is interested in building or financing affordable housing. The bigger the house, the bigger the return, so two income, one child families build a Mcmansion to maximise their return.
As is so often the case when someone makes a profit it is at someone else's cost.
If housing was not such a good investment, we would not have a housing affordability crisis as severe as the one we have now.
As I am part of the generation who could afford to buy a home (even if I did have to pay 17% interest for a time), I am not making this point because I missed out. It is current crop of young parents who are suffering.
Those people who are securing their own financial security are choosing to do it in a way that almost ensures that a lot of other people will struggle financially all their lives.
Before anyone points out that everyone could do the same, let me suggest that usually when it comes to having to make a choice between paying the family grocery bill or the electricity bill, or investing in a property on the Gold Coast, parents tend to choose to feed the kids.
Greed may be good for the greedy, but it forces others to pay for the luxuries the greedy enjoy.

Actually it is worse than that - because property is such a good investment, people invest in that instead of more productive investments.

But governments have long encouraged property investment, because in its absence, rental properties become very scarce - look at the current NSW situation where State government charges have driven most property investors interstate.

I seem to have just produced arguments both ways! Perhaps shows it is not so simple.

John

[vnx205]

Some people spend their 20's splashing their money up the walls, others invest into property.Regards

Stevo
.. and some others with good qualifications, plenty of ability and so on, work in grossly underpaid jobs that society could not function without.

If you check my age, you will see that none of my arguments apply to my own situation.

Do you accept that present government policies and tax structures make property an attractive investment and that that has the effect of driving up house prices?

[ak]

Actually it is worse than that - because property is such a good investment, people invest in that instead of more productive investments.

But governments have long encouraged property investment, because in its absence, rental properties become very scarce - look at the current NSW situation where State government charges have driven most property investors interstate.

I seem to have just produced arguments both ways! Perhaps shows it is not so simple.

John

Could not agree more.

[vnx205]

But governments have long encouraged property investment, because in its absence, rental properties become very scarce - look at the current NSW situation where State government charges have driven most property investors interstate.John
But because property prices are so high, rents have to be high too to give investors a worthwhile return.
So not only does the price of a house go up, but so does the cost of rent.

[stevo68]

I had hoped to avoid that reaction by pointing out that I did not miss out. Ah but by saying that you knew that sort of response was going to come from somewhere. Which would also imply that even though you wrote an opposing view, you also felt that view does smack of that mentality. Right or wrong, life is full of the have's and have not's. My father at 52 lost it all, second wife took of at same time. Bankrupt and having to live in my uncles house. Most at 52 would pull up stumps. He instead started a business in my uncles shed. Within 3 yrs had bankruptcy annulled, within 6 yrs, his first million. Now at 67 he is a multimillionaire. I don't have a lot of sympathy, having lost all too at 30 odd and starting from scratch. If you are hungry enough and really want it, you will have it. If you don't, then stop being a whinger I say to people with that attitude. On the whole the aussie attitude isn't " Good on him/ her" it is moreso " Pfft, tosser, look what they have and I don't" " Thats the reason I dont have my own home" etc etc. Nah, the reason is looking at them staring back in the mirror,

Regards

Stevo

[ak]

Since no-one else seems to be prepared to stir up this discussion by presenting an opposing view, it looks as if I will have to do it.

Here goes!

People like those you have all been admiring for their financial genius are probably the most important single reason why so many first home buyers can't even go close to affording a home.
The activities of those people investing in property drives the price up.
It is only because property is a good investment that they put their money into houses. They invest knowing that the price will go up and they know they can sell at a profit because someone else knows that they can fairly safely pay a ridiculous amount for the property because demand will force the price up even further.
Since property is such a good investment, no-one is interested in building or financing affordable housing. The bigger the house, the bigger the return, so two income, one child families build a Mcmansion to maximise their return.
As is so often the case when someone makes a profit it is at someone else's cost.
If housing was not such a good investment, we would not have a housing affordability crisis as severe as the one we have now.
As I am part of the generation who could afford to buy a home (even if I did have to pay 17% interest for a time), I am not making this point because I missed out. It is current crop of young parents who are suffering.
Those people who are securing their own financial security are choosing to do it in a way that almost ensures that a lot of other people will struggle financially all their lives.
Before anyone points out that everyone could do the same, let me suggest that usually when it comes to having to make a choice between paying the family grocery bill or the electricity bill, or investing in a property on the Gold Coast, parents tend to choose to feed the kids.
Greed may be good for the greedy, but it forces others to pay for the luxuries the greedy enjoy.

Are you kidding, are you suggesting that people that work hard all their lives prepared to take a bit of a risk and have a go to better themselves are to blame for the poor financial situation that someone finds themselves in that sits around only prepared to work 4-5 days a week and expects opportunities to fall into their lap.

I think there are alot more variables to this than that.

[HangOver]

But because property prices are so high, rents have to be high too to give investors a worthwhile return.
So not only does the price of a house go up, but so does the cost of rent.

It's still way cheaper to rent than to buy.
This generation may be better off just renting?

OK so they don't get a return in a lump sum once a home owner pays the mortgage off or sells up but they save money every week for 20-30 years.

It would be interesting to do the maths.

[ak]

It's still way cheaper to rent than to buy.
This generation may be better off just renting?

OK so they don't get a return in a lump sum once a home owner pays the mortgage off or sells up but they save money every week for 20-30 years.

It would be interesting to do the maths.

Problem is Australian's aren't the world's best savers or investors. Paying off a home is forced saving.

[barryj]

We purchased our first house before we were married in 1980.

We looked at houses in Brisbane and could not justify what they wanted to what was on offer.

So off to Wellington Point which was 30 minutes drive from Wynnum where I grew up, one and a half hours from where the missus grew up and one hour from the area where we both worked.

The house and land had no curb and channel, no underground power, no telephone, no fences, no trees, no sewerage, no turf, no landscaping, no driveway, no letterbox, no TV antennae, no floor coverings at all, etc. etc. ect.

The new generation, my 3 20 year olds included, want all the bells an whistles on a four bedroom house with a double lockup garage and a shed in the back yard, and a pool would be nice.

Then they whine about how much a house and land costs.

I was earning $15,000 per year in 1980 and the bank would only count my wage toward the loan.

The house and land cost us $36,500 with $30,000 borrowed.

There are still houses for just under $300,000 on offer but the new generation turns up there noses at these.

It's little wonder that investors but these and rent them out.

[vnx205]

Are you kidding, are you suggesting that people that work hard all their lives prepared to take a bit of a risk and have a go to better themselves are to blame for the poor financial situation that someone finds themselves in that sits around only prepared to work 4-5 days a week and expects opportunities to fall into their lap.

I think there are alot more variables to this than that.

No. I just wanted people to consider that property is now a good investment because of a number of things including the tax incentives and that there is a downside to the rapid rise in property values..
JDNSW's point about increased investment in property often meaning reduced investment in other more productive things is, I think, an example of how there is sometimes a downside to what looks like a good thing.
Maybe it's a bit like the rise in the value of the $A. Importers are delighted, exporters are depressed. There are winners and losers.
Sometimes people win because of talent and persistence. Sometimes they win because gov't policy makes their decisions pay off.
If we can put aside the fairly unproductive issue of whether some people are envious of the success of others for a moment, can we consider whether there is any validity in the argument that the housing affordability crisis is largely due to curent gov't policies that make property a good investment?
I accept that there will probably be a downside to whatever alternative policy someone might come up with.

[stevo68]

Do you accept that present government policies and tax structures make property an attractive investment and that that has the effect of driving up house prices? No not really, the market plays a huge part of determining price, plus property has generally been an attractive investment, though people haven't always realised that. My old man when he first came over from the mother land had a choice of a takeaway shop at Shelley Beach Manly or a couple of acres at Frenchs Forest :eek:. He went the former on a cousins advice:bangin:. That land would have been worth 10's of million's of dollars. I guess that's why there is the old expression of "safe as houses" :D,

Regards

Stevo

[stevo68]

The new generation, my 3 20 year olds included, want all the bells an whistles on a four bedroom house with a double lockup garage and a shed in the back yard, and a pool would be nice.

Then they whine about how much a house and land costs.

I was earning $15,000 per year in 1980 and the bank would only count my wage toward the loan.

The house and land cost us $36,500 with $30,000 borrowed.

There are still houses for just under $300,000 on offer but the new generation turns up there noses at these.

It's little wonder that investors but these and rent them out. Very valid point, bit like when people used to say there wasn't any work around....but there always is, if you really want to work. I have gone from corporate banking to working behind a bar in the "recession we had to have" back in the 90's.

And yes, there will be the old " someone's loss can be someone else gain" but in a country like ours, we all start on a level playing field. People come from horrific backgrounds overseas, get the opportunity here, and build financially sound lifestyles. Why? Because many already born and raised here, do not know how lucky they are. Boo hoo, they can't work hard enough to save for a deposit, better that then wondering if they are going to be shot, raped or when there next meal maybe.

Regards

Stevo

[vnx205]

We purchased our first house before we were married in 1980.

The house and land had no curb and channel, no underground power, no telephone, no fences, no trees, no sewerage, no turf, no landscaping, no driveway, no letterbox, no TV antennae, no floor coverings at all, etc. etc. ect.

The new generation, my 3 20 year olds included, want all the bells an whistles on a four bedroom house with a double lockup garage and a shed in the back yard, and a pool would be nice.

Then they whine about how much a house and land costs.

There are still houses for just under $300,000 on offer but the new generation turns up there noses at these.

It's little wonder that investors but these and rent them out.
I also bought my first house back when things were different in 1974.
It was a weatherboard house in Narrabri and cost $12,000, but I had to have at least 10% deposit.
It certainly is true that many of the current generation expect to be able to have trips overseas, huge mobile phone bills, enormous Plasma TVs and a house with all the features you mentioned.
However, isn't it true that because the land is so dear, no-one is interested in building affordable housing on those blocks? So even if a homebuyer was prepared to settle for the sort of house you and I were quite prepared to accept for our first home, no-one wants to build anything like that.
I am still waiting for a reasoned argument to refute the suggestion that the housing crisis is in large part due to the fact that the gov't makes property a good investment. Your point Stevo about the market determining prices is really saying the same thing that I am saying. That is that prices go up, so property is a good investment, so prices go up more.

[Utemad]

The new generation, my 3 20 year olds included, want all the bells an whistles on a four bedroom house with a double lockup garage and a shed in the back yard, and a pool would be nice.

Then they whine about how much a house and land costs.

This annoys the ummm can't say that word....bejesus out of me.
I don't understand why some people aspire to buy their huge expensive dream home in the best suburb straight away. They won't buy somewhere as a starter but are happy to pay heaps in rent in the better suburb/house until they can afford their dream home.

I went to a bbq recently at a first year teacher's house and she and her husband rented a 5 bedroom monster of a new place. Cost more than double our repayments on our townhouse per week to rent and it is just the two of them living in it. Unbelievable!
There was at least one shiny new car in the garage too.

Property prices is one of the many reasons I want to move to a regional centre. Why pay $500k for something I don't want or move hours from where I work for a reasonable price/size property just for the sake of living in a capital city?

You don't need to earn $100k per year if you can cut $200k off your home price plus live closer to work etc.

[vnx205]

Very valid point, bit like when people used to say there wasn't any work around....but there always is, if you really want to work. I have gone from corporate banking to working behind a bar in the "recession we had to have" back in the 90's.

And yes, there will be the old " someone's loss can be someone else gain" but in a country like ours, we all start on a level playing field. People come from horrific backgrounds overseas, get the opportunity here, and build financially sound lifestyles. Why? Because many already born and raised here, do not know how lucky they are. Boo hoo, they can't work hard enough to save for a deposit, better that then wondering if they are going to be shot, raped or when there next meal maybe.

Regards

Stevo
OK, I admit that my first post allowed this sort of reponse,(and was possible even calculated to stir up such a response) but now that I have got people's attention and hopefully got them thinking, can we just shift the debate a little to the aspect of the topic that I would like to hear some sound arguments about (on both sides)?

Like other posters, I admire those who have made good because of their determination and/or talent.

Like others, I believe that (generally speaking), the current generation expect too much too soon.

But does anyone agree that we have gov't policies in place that make property a good investment and that this is contributing to the housing affordability crisis?

[Utemad]

due to the fact that the gov't makes property a good investment.

I am too young to remember when housing prices didn't go up thousands per month (I'm 28) but a guy in our club mentioned he owned a rental house (years ago but don't know when) and it didn't go up in value at all in the years he owned it. Ended up selling it at a loss just to get out of it. However the people he sold it to made a killing in a short period of time.

Our townhouse has more than doubled in value in 6 years since 2002.

So when did property begin to be so attractive as an investment?

[stevo68]

I am still waiting for a reasoned argument to refute the suggestion that the housing crisis is in large part due to the fact that the gov't makes property a good investment. Your point Stevo about the market determining prices is really saying the same thing that I am saying. That is that prices go up, so property is a good investment, so prices go up more.In simple terms, doesnt matter the era or the government at the time, property has always been a good investment long term, whether you are buying for yourself or as an investment. Property appreciates, always has, it isn't that hard to understand is it?

Maybe the mentality has changed, in that you don't buy a house to live in for the next 25 yrs, but perhaps 3-5 yrs, increase your equity through property appreciation and move onto the next place. It annoys me no end that, if someone is doing it rougher than someone else, lets blame....ummmm..........the government. To be honest I don't think there is a housing crisis, it works for the opposing goverment and media and makes a good story. In respect to prices going up, was watching some show the other day where parents bought a place worth $100k, sold it for $1.1million 20 years later. Do you expect same place to be around the same price years on down the track. No, because property appreciates over time.

When I was in my 20's, I couldn't afford a house back then, whats the difference now? Back then I was earning maybe $20-24k, same job nowdays is paying $40k, we forget that incomes increase as well.

Regards

Stevo

[olbod]

vnx205, Thats not right.
People that are negative gearing do not drive prices up.
You obviously dont know much about the business ?
For a start you dont buy the usual sort of 3 bedroom,
first home buyer house as an investment. The rent would not cover the ongoing costs involved when the bills are added up at the end of the year !
What you look for is an upper market home that people
earning a good wage want to rent. It has to be in an area carefully selected that is not going to be affected
by outside influences, like new development etc, that
may mean Council rates and services will get out of hand.
Also, business, like banks etc, rent these sort of properties to provide managers and the like, homes, as they are moved around from place to place.
Then you have Miners and trades people that go to areas for a length of time that want to provide a comfortable living standard for their families in a nice area, for a short or longer period.
Some of these people already have their own homes
and have rented them out as they follow the work trail.
Officers in the ADF rent these homes on short terms
as they are moved about. There is a demand for these properties.
It has absolutely nothing to do with first home buyers
or normal hard working families trying to cope with their morgages.
Some Company type developers might build and try to
take advantage of working people with high rents and
so on. But that is not negative gearing, it's property
development, which is something entirely different.
When people cant manage themselves and have out
of control credit card debt, they develop a tall poppy syndrome and are jealous of folks that are a bit more capable.
Then you have the other hard working people that have debt and are striving and working hard to get on top and build a future without trying to pull people
down. They dont have a negative attitude !
There is a big difference between envy and jealousy.
Cheers.

[vnx205]

I am too young to remember when housing prices didn't go up thousands per month (I'm 28) but a guy in our club mentioned he owned a rental house (years ago but don't know when) and it didn't go up in value at all in the years he owned it. Ended up selling it at a loss just to get out of it. However the people he sold it to made a killing in a short period of time.

Our townhouse has more than doubled in value in 6 years since 2002.

So when did property begin to be so attractive as an investment?
It can be all about timing.
Although some people here would prefer to describe that as making the right decision at the right time.

The example I like to quite about how timing can be everthing and that a decision which is a good one this year could be a bad on last year or next year is the experience of my father.
He bought half the blocks in our street just after the war. He owned 5 blocks on one side and 4 on the other. He sold one to Mum's parents and two to a couple of his uncles. He built house on those blocks for them. Then just before the change to decimal currency, he sold the remaining blocks for 500 pounds ($1000) each. I remember him telling me that the increase in value just covered the rates he had paid over those 30 years. Less than two years later he could have got over $5000 each.
When he bought a double block just out of Camden, he sold one half of the block just a few years later for about twice what he had paid for the two.
So was he a wise investor or not?
Sometimes you get the timing right; sometimes you get it wrong.

[vnx205]

Property appreciates, always has, it isn't that hard to understand is it?Regards

Stevo
So why did a work colleague have to wait well over 5 years before his house in the ACT got back up to the price he paid for it?
I know that as a long term investment it is pretty reliable, but people whose employment moves them all over the state or country don't always have the luxury of deciding when to buy and sell.

[vnx205]

When I was in my 20's, I couldn't afford a house back then, whats the difference now? Back then I was earning maybe $20-24k, same job nowdays is paying $40k, we forget that incomes increase as well.

Regards

Stevo
I can't type fast enough to have the time to check your profile to see when you were 20, but the fact is that about 40 years ago the median price of house was something like twice average weekly wages. Now it is about 7 or 9 time average weejkly wages (I have forgotten the exact figure).
Yes, wages have gone up, but houses have gone up about 3 or 4 times faster.

[stevo68]

It can be all about timing.
Although some people here would prefer to describe that as making the right decision at the right time.

The example I like to quite about how timing can be everthing and that a decision which is a good one this year could be a bad on last year or next year is the experience of my father.
He bought half the blocks in our street just after the war. He owned 5 blocks on one side and 4 on the other. He sold one to Mum's parents and two to a couple of his uncles. He built house on those blocks for them. Then just before the change to decimal currency, he sold the remaining blocks for 500 pounds ($1000) each. I remember him telling me that the increase in value just covered the rates he had paid over those 30 years. Less than two years later he could have got over $5000 each.
When he bought a double block just out of Camden, he sold one half of the block just a few years later for about twice what he had paid for the two.
So was he a wise investor or not?
Sometimes you get the timing right; sometimes you get it wrong. Look I think a lot of where you are coming from can be summed up with " That's life". Can also be being on the ball, following the market, getting the expertise and so forth.


So why did a work colleague have to wait well over 5 years before his house in the ACT got back up to the price he paid for it?
I know that as a long term investment it is pretty reliable, but people whose employment moves them all over the state or country don't always have the luxury of deciding when to buy and sell. Again falls into "Thats Life" and "Who Care's", ultimately we are responsible for where we are in life. One faces hurdles and overcomes them or succumbs to them.

Regards

Stevo

[stevo68]

I can't type fast enough to have the time to check your profile to see when you were 20, but the fact is that about 40 years ago the median price of house was something like twice average weekly wages. Now it is about 7 or 9 time average weejkly wages (I have forgotten the exact figure).
Yes, wages have gone up, but houses have gone up about 3 or 4 times faster. www.realestate.com.au (http://www.realestate.com.au) today, 200+ properties in QLD under $300k. 5% deposit on max $300k is $15k + expenses/ s.d/LMI lets say $30k in total. One person over 4 yrs is looking at saving $144 p.w, a couple, $70p.w or $10.00 a day. Again if someone really wants something they will knuckle down and get it. Housing crisis my bum cheeks :angel:, more like a "I can't be fagged sacrificing a few things type crisis"

Regards

Stevo

[vnx205]

vnx205, Thats not right.
People that are negative gearing do not drive prices up.
Cheers.
Which bit wasn't right?
I think I can see the logic of what you are saying makes a good investment property, even if it doesn't accord with what some others have described as the sort of property that investors buy up.
I hadn't intended to confine my argument to negative gearing. I was trying to be a bit more general.

How about this for an alternative way of asking the question?

Do the factors that make property such a good investment in this country have to share any of the blame for the fact that even though my generation paid not much more than a year's wages, today's first home buyers have to pay about 7 (or is it 9) times their year's pay?

Would houses be more affordable if property was not such a good investment?

[stevo68]

Would houses be more affordable if property was not such a good investment? That's a silly question, as the answer is obvious.


Do the factors that make property such a good investment in this country have to share any of the blame for the fact that even though my generation paid not much more than a year's wages, today's first home buyers have to pay about 70 (or is it 9) times their year's pay?
Well, couldn't you apply that to most things, cars, travel, food, cost of living over the years has increased, worldwide. Its the nature of the beast, hence why if it appreciates........own it..........if it depreciates.........finance it........guess who is in finance :D

Regards

Stevo

[BigJon]

, today's first home buyers have to pay about 70 (or is it 9) times their year's pay?



I was a first home buyer 18 months ago. I paid roughly 4.5 times my annual wage for a house (not our household income, mine alone). My house is ex housing comission, required painting, with an undeveloped garden. I consider that I bought it "wholesale".

I am entirely with Stevo on this one. Many people won't do what it takes to move forwards and that is no ones fault but their own.

I drive a 20 year old car because I won't buy a new one on finance.
I will buy an investment property on finance because A: it will go up in value and B: someone else will pay for it (rent).

[vnx205]

Look I think a lot of where you are coming from can be summed up with " That's life". Can also be being on the ball, following the market, getting the expertise and so forth.

Again falls into "Thats Life" and "Who Care's", ultimately we are responsible for where we are in life. One faces hurdles and overcomes them or succumbs to them.

Regards

Stevo
..and sometimes you get lucky.

I am a great believer in people accepting responsibilty for their own actions and decisions.
But when someone whose grandmother dies and leaves them a home in Sydney which they use as the start of their real estate empire tries to pretend that they succeeded by the sweat of their brow and they talk as if they are more financially savvy than someone whose parents and grandparents are alive and well, I think they are kidding themselves.
Of course people who work hard and make the right decisions are likely to do well. But unless the person who inherited grandma's house in Sydney actually bumped her off, how much credit do they deserve for the start they have got?
Just because we generally get what we deserve shouldn't blind us to the fact that there are some people who deserve a better hand than fate deals them and sometimes a situation that benefits most people can be harmful to others.

Can we not go over the jealousy/envy thing again. We've been there and done that.

[loanrangie]

A lot of good arguments here but there is always the greed element - i know someone who has 9 investment properties and yet his wife still struggles to buy nappies for their 2 kids each week . There are still new homes to be had in the new areas for under $300k for those that are desperate - if you like living in a sh#t hole but then beggars cant be choosers.

[vnx205]

Well, couldn't you apply that to most things, cars, travel, food, cost of living over the years has increased, worldwide. Its the nature of the beast, hence why if it appreciates........own it..........if it depreciates.........finance it........guess who is in finance :D

Regards

Stevo
At the same time I bought my $12,000 house, I could have bought a family car for $3000.
The same house would now cost over $240,000 (20 times as much).
The same car would cost $30,000 (10 times as much)
Yes, other things like cars have gone up, but houses have gone up faster or further.

[stevo68]

..and sometimes you get lucky.

I am a great believer in people accepting responsibilty for their own actions and decisions.
But when someone whose grandmother dies and leaves them a home in Sydney which they use as the start of their real estate empire tries to pretend that they succeeded by the sweat of their brow and they talk as if they are more financially savvy than someone whose parents and grandparents are alive and well, I think they are kidding themselves.
Of course people who work hard and make the right decisions are likely to do well. But unless the person who inherited grandma's house in Sydney actually bumped her off, how much credit do they deserve for the start they have got?
Just because we generally get what we deserve shouldn't blind us to the fact that there are some people who deserve a better hand than fate deals them and sometimes a situation that benefits most people can be harmful to others.

Can we not go over the jealousy/envy thing again. We've been there and done that.
But you have just clearly done that yourself. Who cares if someone got left property that started an empire and think they are the ants pants. Who is worrying about who gets credit? I feel that your comments are coming from somewhere personal to yourself and that there is an underlying resentment for some reason. Ultimately what ever you are dealt with, it is up to you to make the best of it,

Regards

Stevo

[leeds]

An interesting and quite a sensible discussion.

As far as I remember in this thread no on has admitted that they personally invest in rental markets. OK yes family has but not them.


Well I invest in the rental market in the UK and yes I have taken a bit of stick from people about it.

In the first instance given, it sounds to be that they are 'highly geared', i.e. they have borrowed a high percentage of total worth of assets.

That is a high risk strategy. Many possible pitfalls, property prices fall (Can be due to very local reasons, like a new trunk road/rubbish recycling facility being built at end of garden), rental voids, BIG investors coming into town and building more rental properties so that surplus of rental properties on market which drives rents down and void periods up. Rising interest rates.

On a highly geared portfolio (say 80-90%) then with a strong rental market and rising property prices you can make money, equally if market weakens the banks can pull the plug and enforce sale of properties.

Banks consider two things on investments, 1) Security of their money, 2) ability to repay. As long as those things are satisfied they basically dont care


Personally I am happier with a lower geaing and wont go above about 60% on my portfolio. That way IF I get a void/house prices drop then I can sit it out.

One way of getting money out of property TAX FREE in UK is as follows. Buy a house for £100,000, put down a 20% deposit, borrow 80% as long as rent covers costs. Two years later say house is worth £120,000 reliase the 80% increase in value(i.e. borrow) of £16,000. This extra £16,000 is TAX FREE. Do what you will with it. Pi$$ed up against a wall or use it as another deposit

You now have a house worth £120,000 with an outstanding loan of £96,000 and with £4,000 of your money in it plus an equity of £20,000 in it. Repeat it again in 2 years time and you have none of your own cash in the property, have taken cash out and still have equity in property. THIS always asumes rent will pay loan off!

In my search for properties I see rental properties which I would not let an animal live in. I take pride in providing a decent rental property and quite often will reroof/rewire/install new central heating/kitchen/bathroom etc. That way i tend to get decent tenants who stay in the property.

Where I do feel sorry for youngster is in pictuesque areas where people buy second homes and only occupy them for a few weekends of the year but drive up costs of housing often in area of low employment prospects, hence youngsters are forced out of countryside into towns


Regards


Brendan

[vnx205]

I am genuinely sorry that I have to withdraw from the discussion for a day or two, but I am visiting relatives and my niece needs her computer back to do some schoolwork.

I know it is unfair to make a parting comment then disappear for a couple of days, but I am going to do it anyway.

Why are so many people so insistent (or is it just one person who is repeatedly insistent) that I am being jealous or resentful or something similar?

Aren't other people prepared to look at situations from other people's points of view? Why do you assume they are my views? Is it just because I take pride in presenting a side of a case in a fairly robust manner?

Apart from the obviously personal comments about my father and my first house, I am simply repeating arguments advanced by some of the panel on a recent episode of "Difference of Opinion" on TV. Those panelists were not personally attacked for presenting those views; why are people casting aspersions on my motives?

[Captain_Rightfoot]

We are fairly conservatively geared. If interest rates went to 18 percent tomorrow it would not impact us in any direct way. If anything it would be a benefit as housing would probably get cheaper after the shakeup.

Personally, I applaud people for doing this type of thing. However I think it becomes a hobby of theirs and good on them.

However sometimes I think they forget what is important. Some friends of our are building a mega property portfolio. Our children are the same age, and at one point the Meningococcal (http://en.wikipedia.org/wiki/Meningococcal) vaccine had to be paid for. It was about $300, and we paid for it. Despite their income being double ours, and them having half a dozen million dollar houses, they choose not to do it because it was too expensive ???

They are definitely going to die richer than us.

The way I look at it, we're doing better than some, and not as well as some others.

[Blknight.aus]

I have a friend who needs some brick paving done
He and his lovely wife have 3x homes and 2x blocks of land , 1 x HSV club sport R8 about 3 weeks old and a new ford Territory.

Quote for the brick paving $4000 , he said they can affored it:confused: mates rates I said I would do it for $2000
When asking him about his cash flow he said his whole earnings and his wifes go's on the mortgages and they live off of the $800 rent the receive each week.
Weird up front looks as if he is rolling in it but really just making ends meet...God help him if interest rates go up...
Oh in answer to the obvious question..was 3 blocks of land but they sold it and bought the cars with the profit;)

Anyone else know of anybody doing it this way?

yep Me and SWMBO all my pay, the rent from the property in townsville go on paying for houses and we live off of her pay for the bills food and fuel....

(this is the only reason IVe started doing backyarders for cashies instead of beer/bbq and no its not the reason for yall are paying how much thread that was my sheer disbelief)

[barryj]

Unfortunately for the 'life experience' we have a generation that has never seen hard times.

When was the last recession?

When I was teaching at TAFE I used to tell students that a recession is no fun. I used the example of going to work on Monday and finding out that the company had gone bust. You would be told that your wages and entitlements might be paid when the assets were sold, if there was money left over.

This happened to me as an Apprentice in late 1974 and again as Production Manager in 1990.

Without fail the students would say "they can't do that to an employee". "We have rights you know!"

On house values, we rented in 1991 while I was training to be a Teacher for $200 per week. The next year we thought we would be smart and buy a place and sell it when I was transferred.

The house cost us $108,000 and I never had to transfer so we kept the house to renovate.

You know, buy the worst house in the best street and get rich.

After 7 years and spending $30,000 in renovations plus loan repayments we sold the house for $108,000 due to a new estate opening over the road.

We should have saved our money and had time to spend apart from renovating.

You don't always make money on real estate.

[Captain_Rightfoot]

Can anyone name a period in Australian history when real estate prices have had large gains without being followed by a "bust"?

[DaveS3]

Interesting topic, something I have been thinking & talking about with people of similar age to myself - many arguments here are of similar / mixed standings to myself.

I have just turned 22 - still studying and will be for the next 18 months and will exit university with a piece of paper and a $35000 HECS debt (Not a massive drama, only goes up by CPI, comes off wage as tax so effectively it pays itself off - the point of this being that many students can be behind the 8 ball so to speak before the you even get out of the red)

So I will be 23, without really having held a full time job, due to a full time study load with heavy course requirements - I have as worked for 14months full time with a company as experience, but at work exp rates.
This doesn't enable me to save the way I would like to, and once finished I won't have a bank balance that even warrants considering the purchase of a property.

Given a few years time, and I have managed to save some money and can consider the option of purchase it is now 5 years from the current time at minimum – what will prices and availability be like then? It is a scary thought, and most likely be a very real problem for those of my generation.


With that being said, I don’t believe I will in a position of enormous difficulty, sure it may be tight when the time arises but I have the skills to nut it all out and make the decision and get through it. Although I do know a few people of a similar position whose career outlooks are much bleaker than mine.

Whist it is said there is a housing crisis now, the future is not looking like it will ease for those who are struggling at this current period, especially if housing prices continue to rise at the same rate as they have over the previous 5 year period – even if the do decelerate, the rate still will not be proportional to wage increase rates for the average or median person.

At the end of the day, land is not infinite. There is the old saying supply and demand; whilst the supply is steady and the demand is rising the prices will continue to go up. Those who wish to invest in property MUST have some bearing on this price rise as the are increasing demand whilst reducing supply – attribute it to ‘market conditions’ if you will, but this must have some bearing on the effect, justifying sentiments by some above.

A block of land now is looking good!

Cheers,
Dave.

[Utemad]

At the same time I bought my $12,000 house, I could have bought a family car for $3000.
The same house would now cost over $240,000 (20 times as much).
The same car would cost $30,000 (10 times as much)
Yes, other things like cars have gone up, but houses have gone up faster or further.

I remember when my parents were buying a Landcruiser that they looked at a Sahara model and said "you could buy a house for that much!" The price of the Sahara was I think $30k. This was in about 1987/88. They bought an ex govt FJ45 troopy that my brother still has.
For the price of a Sahara these days I doubt you could buy a house. They are about $100k I think.

[barryj]

Interesting topic, something I have been thinking & talking about with people of similar age to myself - many arguments here are of similar / mixed standings to myself.



I have just turned 22 - still studying and will be for the next 18 months and will exit university with a piece of paper and a $35000 HECS debt (Not a massive drama, only goes up by CPI, comes off wage as tax so effectively it pays itself off)

So I will be 23, without really having held a full time job, due to a full time study load with heavy course requirements - I have as worked for 14months full time with a company as experience, but at work exp rates.
This doesn't enable me to save the way I would like to, and once finished I won't have a bank balance that even warrants considering the purchase of a property.

Given a few years time, and I have managed to save some money and can consider the option of purchase it is now 5 years from the current time at minimum – what will prices and availability be like then? It is a scary thought, and most likely be a very real problem for those of my generation.


With that being said, I don’t believe I will in a position of enormous difficulty, sure it may be tight when the time arises but I have the skills to nut it all out and make the decision and get through it. Although I do know a few people of a similar position whose career outlooks are much bleaker than mine.

Whist it is said there is a housing crisis now, the future is not looking like it will ease for those who are struggling at this current period, especially if housing prices continue to rise at the same rate as they have over the previous 5 year period – even if the do decelerate, the rate still will not be proportional to wage increase rates for the average or median person.

At the end of the day, land is not infinite. There is the old saying supply and demand; whilst the supply is steady and the demand is rising the prices will continue to go up. Those who wish to invest in property MUST have some bearing on this price rise as the are increasing demand whilst reducing supply – attribute it to ‘market conditions’ if you will, but this must have some bearing on the effect, justifying sentiments by some above.

A block of land now is looking good!

Cheers,
Dave.

Sounds like you have looked at the future wisely.

There is no land shortage outside of the main cities.

What the governments need to consider is how to encourage growth in regional areas. Sure the bells and whistles won't be many but at least housing will be affordable and considering the water crisis the goverment needs to get people to where the water is.

How many new towns have been developed outside of the resource boom areas? Very few if any.

Decentralising will be the easiest way to go. With internet it would be easy to operate a business in regional areas. I know of several shopfitting companies who build their products in regoinal Queensland and transport them throughout Australia. One company I used to work for sent a lot of office furniture to places like Darwin and Melbourne and many places in between.

My future son-in-law is working at a company especially formed in Hobart as rents are cheaper than the mainland. He is doing animation so all he needs is a good computer and the internet. He has just completed a contract for Western Australia which he did in his flat in his own time.

[BigJon]

As far as I remember in this thread no on has admitted that they personally invest in rental markets.

Pick me, pick me!

We have one house locally and we are actively looking for the next one.

[BigJon]

I am genuinely sorry that I have to withdraw from the discussion for a day or two, but I am visiting relatives and my niece needs her computer back to do some schoolwork.

I know it is unfair to make a parting comment then disappear for a couple of days, but I am going to do it anyway.

Why are so many people so insistent (or is it just one person who is repeatedly insistent) that I am being jealous or resentful or something similar?

Aren't other people prepared to look at situations from other people's points of view? Why do you assume they are my views? Is it just because I take pride in presenting a side of a case in a fairly robust manner?

Apart from the obviously personal comments about my father and my first house, I am simply repeating arguments advanced by some of the panel on a recent episode of "Difference of Opinion" on TV. Those panelists were not personally attacked for presenting those views; why are people casting aspersions on my motives?

I don't think I have attacked you (sincerest apologies if I have).

I like to think that by owning rental properties I am actually giving back to the community.

I provide good quality housing (it is arguably nicer than my own dwelling) at a reasonable price (as dictated by market forces).

I freely admit that I want to make money from this sort of venture, but surely I am doing better for society by providing houses than, for example, just making cash by share / option trading?

[BigJon]

There is no land shortage outside of the main cities.



Bingo!! An excellent point.

Too many people want it all now (the house and land package in the city) rather than move somewhere more "regional".

[barryj]

Bingo!! An excellent point.

Too many people want it all now (the house and land package in the city) rather than move somewhere more "regional".

It is clear to me that people love to live in each others pockets, so to speak.

Our family has been trying to sell a property at Boonah which is a comfortable drive from Ipswich. It's 93 acres all up on three titles adn we have not had one offer on it.

People are spending half a million $ for land in Brisbane and what do they get, about 800 square metres of neighbours, and it still takes them an hour to get to work and more to get back.

[Utemad]

It is clear to me that people love to live in each others pockets, so to speak.....

People are spending half a million $ for land in Brisbane and what do they get, about 800 square metres of neighbours, and it still takes them an hour to get to work and more to get back.

I can't wait to get out Barry. Just need to get myself a job somewhere.
It is a 16km drive to work at the moment. It takes me between 35 and 60mins to get there and 35mins to get home.

[scrambler]

Housing is a basic need. Trading in houses ("investing") withdraws houses from the market for owner-occupiers. If more up-market houses have better returns, then there is incentive to replace older housing stocks with better houses, renovate older houses, not build cheap houses etc. These things are all good for the economy but bad for people wanting to buy or rent houses to live in.

Housing affordability isn't a new problem. Queensland (and I assume other states) is littered with cute little "Worker's cottages." - the size and type of house that you could afford on your Government grant. They have 4 rooms and a kitchen on the back verandah. I've lived in a few - one notable one had clearly been owner-built by a short fellow - none of the doors were the same height and all were shorter than 5'10". It was owner-built because the grants were enough to buy materials, not pay labour.

Property is a good investment because values rise. Values rise because investing in property is a good investment, so whatever price I buy at it will appreciate.

Not true, of course. I bought a house, in a "dress circle" area of town, for $140,000 in 2000. It had sold for $160,000 ten years earlier. I sold it for $300,000 (with some renos, but would still have gone close to doubling in value without them) at the start of this year. There is no way the cost of living, income etc, doubled in that time. Housing was silly in Toowoomba 2-3 years before I sold (I probably would have made at least $50,000 more by selling a year or more earlier) - houses were sold before they were listed. If you wanted a house you added your name to a list in the Real Estate agents and bought whatever came up.

The typical house in Toowoomba at the moment would be in the $300-400,000 bracket. You can get examples under $200,000, though you might think twice about living in them. Median wages are less than $50,000. If you spent the 1/3 of your income that banks think you can, you would be able to pay off a typical house (not taking interest into account) in 20-25 years. So, say 60+ years with interest. THAT is unaffordable.

I'm with vnx205, obviously ;) Investing in housing is good for the individual, and some of that is at the expense of broader community benefits in affordable housing. Of course, more affordable housing would be at the expense of overstretched investors like those in the first scenario.

[stevo68]

People like those you have all been admiring for their financial genius are probably the most important single reason why so many first home buyers can't even go close to affording a home.
The activities of those people investing in property drives the price up.
It is only because property is a good investment that they put their money into houses. They invest knowing that the price will go up and they know they can sell at a profit because someone else knows that they can fairly safely pay a ridiculous amount for the property because demand will force the price up even further.
Since property is such a good investment, no-one is interested in building or financing affordable housing. The bigger the house, the bigger the return, so two income, one child families build a Mcmansion to maximise their return.
As is so often the case when someone makes a profit it is at someone else's cost.
If housing was not such a good investment, we would not have a housing affordability crisis as severe as the one we have now.
As I am part of the generation who could afford to buy a home (even if I did have to pay 17% interest for a time), I am not making this point because I missed out. It is current crop of young parents who are suffering.
Those people who are securing their own financial security are choosing to do it in a way that almost ensures that a lot of other people will struggle financially all their lives.
Before anyone points out that everyone could do the same, let me suggest that usually when it comes to having to make a choice between paying the family grocery bill or the electricity bill, or investing in a property on the Gold Coast, parents tend to choose to feed the kids.
Greed may be good for the greedy, but it forces others to pay for the luxuries the greedy enjoy.


I'm with vnx205, obviously ;) Are you sure?
Housing affordability isn't a new problem.

Regards

Stevo

[BigJon]

Housing is a basic need. Trading in houses ("investing") withdraws houses from the market for owner-occupiers.

Maybe so, but not everyone wants to be an owner-occupier.
That being the case (and it is a FACT), then someone has to own the houses that these people rent.
Surely I can be that person, rather than the government.

[stevo68]

Why are so many people so insistent (or is it just one person who is repeatedly insistent) that I am being jealous or resentful or something similar?

Aren't other people prepared to look at situations from other people's points of view? Why do you assume they are my views? Is it just because I take pride in presenting a side of a case in a fairly robust manner?
Me thinks in part this was levelled at myself. If anything I challenged the original view point and the opinion. The aim was to "stir" things up and it got stirred. One cannot then complain that it has been stirred. When it comes to viewpoint/ opinion etc the reason that it comes across with passion is generally the person believes in what they are articulating.

So yes I would say you do share some of the views that you have written, as you have been fairly succinct in the examples. Because I challenge that perspective is not to say I am "attacking" you per se but the opinion. You even acknowledged that the perception of the content being of a jealous/ envious nature would be detected, or raised.

As stated before, and one can always find variances, but generally property has always been a good investment, not just because of the current government or its policies. Housing crisis is a great drawcard for the opposition and media, but in reality there are plenty of affordable houses through out the state, it is a case of whether people are prepared to work hard and save. My previous example shows that it is not impossible. Guaranteed there are new immigrants who have come over here with nothing and likely to be miles ahead of the whingers, because they have seen the opportunity that Australia presents them ( ie there option may have been a mud hut, no sewerage, lack of transport etc etc). But the lucky little Aussie can't see that, and that applies to employment as well, some just don't know how lucky we are,

Regards

Stevo

[barryj]

I can't wait to get out Barry. Just need to get myself a job somewhere.
It is a 16km drive to work at the moment. It takes me between 35 and 60mins to get there and 35mins to get home.


I'd love to leave this city too but my cancer treatment prevents this :(.

Handy to have a backup plan I suppose :).

[scrambler]

Are you sure?

Regards

Stevo
Yeah, I'm sure. I did say "Government grant" Stevo ;)

Since I know you've "been there done that" at some level I can let you in on the secret - the equity/capital gain in the house ended in lawyers pockets sorting out what happened with the kids. Worth it in the end but still sad to see.

I'm getting to see the rental side of the equation at the moment, reflecting on the difference between $100,000 mortgage and $300,000.