Thread: Wealth paradox

Originally Posted by stevo68

With all due respect that response ( and yes you did want to stir it up, so considered stirred ) 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.

Originally Posted by 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.

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

Originally Posted by stevo68

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?

Originally Posted by JDNSW

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.

Originally Posted by JDNSW

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.

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

Originally Posted by 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.

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.

Originally Posted by vnx205

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.