Thread: Wealth paradox

Originally Posted by leeds

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.

Originally Posted by 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?

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?

Originally Posted by barryj

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".

Originally Posted by BigJon

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.

Originally Posted by barryj

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.

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.

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

Originally Posted by scrambler

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.