Wealth paradox

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.

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Originally Posted by ak

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.

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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.

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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?

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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

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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.

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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

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Originally Posted by barryj

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.

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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.

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Originally Posted by barryj

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.

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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.

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Originally Posted by stevo68

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

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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?

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Originally Posted by vnx205

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

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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?

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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.

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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

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.