Would You Support The Government Incentivising Investment Owners Selling to First Home Buyers?

• 

  CrowReally on 11/06/2023 - 13:18

  +2

  NSW has been doing this for a while (e.g. https://www.nsw.gov.au/housing-and-construction/first-home-b… ), realistically it just pumps up the tyres of the property market (free money for buying houses adds to the price of the house).

  • 

    ngengerous on 11/06/2023 - 13:28

    While that may be true for grants given to the buyers, my question is leaning more towards grants/tax breaks given to the sellers instead. I doubt it would lower prices at all, but if a seller had a choice to take free money, I doubt there would be many reasons to pass that up.

    • 

      CrowReally on 11/06/2023 - 13:54

      +8

      So instead of

      a "$10,000 bag of government money" being handed by the government, to the 1st home buyer, who then hands it to the seller (which pushes the price up by $10,000)

      it's now a

      "$10,000 savings on your CGT in your tax return voucher" being handed by the government, to the 1st home buyer, who then hands it to the seller (which pushes the price up by $10,000).

      • 

        ngengerous on 11/06/2023 - 13:56

        +1

        You might need to re-read the original post again. In my hypothetical, the buyer never receives any extra money - only the seller. The CGT break is for the seller, not the buyer.

        • 

          CrowReally on 11/06/2023 - 13:58

          +5

          @ngengerous: Yeah, that's where the voucher comes in. The auction factors that value in to the price. "If I sell to Mr 1st home, I get a $10,000 voucher, so anyone who wants to outbid him will need to drop $10,001 more on the table to beat their offer".

          It's exactly the same result. (Actually slightly worse, because you'll have PPOR sellers who are CGT exempt who won't be able to take advantage of a CGT voucher, so it's less efficient a scheme than the old fashioned bag of cash)

          • 

            ngengerous on 11/06/2023 - 14:19

            +1

            @CrowReally: Fair point - there'll never be a catch-all solution unfortunately, but my hope would be that something like this would at least provide a small step in the right direction. I imagine there'd be a few cashed-up investors who would be able to add the extra cash no problem, but it might help to discourage smaller investors from trying to ride the property wave instead of investing in something else more sustainable. The optimist in me hopes that the benefits would outweigh the negatives, but maybe I'm hoping for too much.

            • 

              CrowReally on 11/06/2023 - 14:30

              +5

              @ngengerous: The reason why the prices are high is because there's not enough supply. You can use incentives to bring prices down by ensuring there's more supply. Some examples (that could be done in any combination):

              1. Disallow negative gearing on more than 1 property (say), now it's more tax-expensive to hold a housing portfolio, some people will sell.
                 2a. Tax incentives for builders of new homes
                 2b. And, if you want, 2a only eligible if they're being built for 1st home buyers

              These are blunt tools (you're 'punishing' people with $3m in property investments but not $3m in stockmarket investments etc) but the levers are there.

              • 

                ngengerous on 11/06/2023 - 14:39

                +1

                @CrowReally: I like your examples, and would personally support them if they were implemented. Unfortunately, there are already a lot of people with investment properties who would be strongly against measures like these… Remembering back to how badly it went for Labor a few years back when they were discussing changes to negative gearing would indicate to me that it'd be very difficult to implement negative (but probably necessary) changes like these, when a large portion of the public would be against them. I'd imagine a more positive incentive would be easier to sell to the public, even if it's not as effective.

    • 

      UnternamenBernhard on 11/06/2023 - 15:16

      +3

      I voted yes with caveats- the main caveat property sold at market rates before acquiring the money. However with the government- that money has to come from somewhere meaning the taxpayer- not slashing bureaucracy and becoming a lean mean business-friendly regime.
      First home buyers grant was the stupidest idea ever come up with straight from the pea-brain of the prize imbecile Howard.
      Secondly, banks lend money as a rule hedging on Credit Default options.
      These were once rare and exotic derivatives very few mainstream economists knew about let alone knew how to take advantage of.
      The entire point of the GST twerp Howard stole from Dr Hewson (PhD economics) was as Hewson envisaged no more PAYE, no more all the other raft of taxes the government farms and psses away (sales tax, state taxes, etc).
      GST was meant to be an 11% tax on everything no income tax or slight income tax on the highest incomes which they'd easily negate through access to superior tax avoidance expertise. Had GST been implemented correctly and authentically- Australia would be not only a destination for wealth but an immensely wealthy society with plenty of tax revenue. On a low income but want to improve your lot in life? Consume less. Probably GST would have been mediated like UK VAT to be exempt on "baskets of goods" meaning on foods, products and services deemed by the left-wing of Conservatives and sensible Labour as vital importance to the lowest incomes. That's why UK has bread in the upper end supermarkets like Waitrose at under 90 pence. Australia? Pffft Can't even buy Coles brand bread for $2.40

      Under Howard we had higher income taxes especially on the mid to lower incomes and an unnecessary conflict which costs Australian agriculture severely, far worse than the sweetheart deals the Wheat Board had negotiated with Saddam. Remember it was the Australian government under both parties, the UK and the US which encouraged a reluctant Indonesia to secure East Timor from the Chinese. Now who is lined up for a "string of pearls" Chinese base?
      Now brilliant Australian politicians lease out Darwin and for pennies to the greatest threat Australia faces since WW2 Japan, and Japan never engaged in an active economic war buying out Australian real estate, farming, manufacture, etc.
      Imbecility at every level- I could not trust any Australian politician to enforce any caveat that would mitigate pumping housing prices higher- no one has any real incentive to adjust pries to be less than their current rate of 1 million median house price Melbourne for median salary $1250/week ($65,000)- which is the extremely unhealthy ratio of house price to wages 15.6:1, when in the late 1970s when Western real wages stagnated (and remain so to this day) versus cost of living it was new house median price 6 times annual salary and new average car 1:1 salary ratio- which is why US and Australia had a massive boom, as it Melbourne did under Kennett when house prices were sub 9:1 income- with massive spending of discretionary income on arts, retail etc. and Ford and Holden, Mitsubishi and Toyota fat with Kennett union shut-up money and other government incentives offered cars at 1:1 income.
      But that was a time when environmentalist extremists had not escaped the padded cells and convinced the hoi polloi manufacturing was somehow morally evil, Melbourne had cheap power with an unshakeable base load capacity in the sub 25c per kw/h. Water was cheap, gas was cheap, fuel went to 99c/litre the year Labour communists took power.
      Cheap power is the sole driver of economic power- look at Japan, China and USA. Germany has just opted into a recession for its superstitions about nuclear which the people are now violently protesting about. China is 9.3 cents per kw/h, USA is 23 cents per kw/h, Japan is consumer 25 cents, business 21 cents kw/hour.
      "Clever Country" Australia is 35 cents and business to 0.49= economic suicide by superficially environmentally friendly energy which actually pollutes more to manufacture than economising and scrubbing existing coal to latest German lignite technology.
      Imbecility at every level. Hence the caveat- Australian politicians and greedy Aussie business would odds-on fck it up.

  • 

    cookie2 on 11/06/2023 - 13:30

    +1

    They have a scheme to financially incentivise sellers to sell to 1st home buyers?

    • 

      CrowReally on 11/06/2023 - 13:47

      +2

      I mean, sure? They give first home buyers extra money, and then the 1st home buyers give that extra money to the seller.

      I guess it depends on whether "receiving extra money" would be classified as a financial incentive, in your view.

      • 

        cookie2 on 11/06/2023 - 13:54

        +1

        This is about incentivising the seller RATHER than the buyer. Its purpose would be to motivate the seller, has nothing to do with motivating the buyer.

        • 

          CrowReally on 11/06/2023 - 13:56

          +1

          @cookie2: It wouldn't make a difference

          This is standard auction theory. AngoraFish below covers it in more detail (and very well at that), but if you don't have an understanding of this and how supply/demand works, then (respectfully) you don't have the right tools to have this discussion.

• 

  WreckTangle on 11/06/2023 - 13:38

  +7

  I would support a scheme to incentivise investment properties being sold to owner occupied purchases but I wouldn’t single out first homebuyers.

• 

  AngoraFish on 11/06/2023 - 13:51

  +6

  There are so many false assumptions in your post it's hard to know where to start.

  For example, the claim that "no more investors means no more properties available for rent" is a straw man. Nobody is talking about banning rental property investment. At best we're talking about making some 1% tweaks around the edges of the equation. Nonetheless, investors bidding up the cost of housing is a large part of why we have this problem in the first place.

  If investors were completely gone from the market we'd have a huge number of cashed up people no longer inflating prices by competing against first home buyers, leaving many fewer people needing to rent in the first place.

  Property investors are not performing a community service by forcing you to pay $500+ a week for somewhere to live while creaming off capital gains and minimising their tax.

  People who can't afford to rent need social housing. Most other people could buy their own property if they weren't competing with cashed up investors for entry level accommodation.

  Furthermore, ANY government grant effects property prices. Regardless of whether a government grant is given the the buyer or the seller, ultimately it increases the effective bidding power of the purchaser. All that grants do is enable first home buyers to bid on more expensive properties, which is how you get price inflation.

  The only way to reduce property prices, and rent, is to reduce demand. Currently we have a situation where demand is being artificially stoked by encouraging people who already have one house and don't need another to enter the market as investors. When we once had one person looking for somewhere to live, we now have two people in the market bidding for the same house, one of whom has existing assets to back up their bid and the other who is struggling to save for a deposit while at the same time paying off another property investor's "nest egg".

  The entire system is completely stacked against first home buyers. All that throwing cash at investors does is further subsidize and incentivize property investment, leaving investors with even more cash in the bank to trade up to their next investment property, or three.

  • 

    ngengerous on 11/06/2023 - 14:15

    I feel like we're both arguing from the same side here - I'm personally not a huge fan of property as a form of investment myself, and it seems you aren't either.

    I never mentioned anything about banning rental properties - obviously that's something which will never happen, I added that in there as an extreme example. If every single house in the country was owned by someone living in it, there would be no full, empty property being rented out - which would come with its own set of new problems. There will always be people who need to move to another city temporarily for various reasons, or those needing somewhere to live while saving for a house of their own.

    For your point regarding the grant inflating the price, I don't see how it would allow the first home buyer to make a larger bid - if anything, they might be able to bid a little less, knowing that the seller would have an incentive to choose them over an investor's bid. Imagine if a property is listed for $700k, and both an investor and a first home buyer offer the 700k each - with the seller being able to access a 10k tax break if they sell to the first home owner. Both bids would be the same, but the seller would have a reason to choose the first home buyer over the investor. I suppose the only potential issue would be if the investors then offered more money to make up for the lack of tax break, but I'm not sure if that alone would be common enough to drive property prices up as a whole.

    I agree that the only way to reduce the prices would be to reduce demand. I'd hope that if a scheme like this existed, the example in your last paragraph would be changed a little - the bidder struggling to save for a deposit while paying inflated rent would have a foot up against the investor - thus hopefully giving the first home buyer a greater chance to get into the market, freeing up another rental property, lowering demand, helping to keep prices reasonable, and giving others more of a chance to buy their first home as well. Plus, making it slightly more difficult to buy investment properties would hopefully dissuade potential investors and encourage them to invest their money somewhere other than the property market, which would be one step closer to stopping people from making the housing situation any worse than it already is.

    I also agree that the system is stacked against first home buyers. However, I would hope that a scheme like this would not incentivise property investment, but incentivise exiting the property investment market instead. If it were made a little more difficult for investors to buy new properties, and for more homes to be taken out of the property market by first home buyers looking to live in their homes instead of renting or flipping them, I can't see a downside.

    • 

      AngoraFish on 11/06/2023 - 15:00

      +4

      You did mention something about banning rental properties. As you say, you explicitly started with "no more investors means no more properties available for rent", as if property investors provide some kind of public good that would be decimated if we fiddled too much with the system. Your words, not mine. Your deliberately extreme premise was used to make your shower thought appear plausible in comparison.

      Sadly, this straw man isn't even that uncommon. Indeed, it's pretty typical of a Real Estate Institute press release or parliamentary speech, which is no doubt where you subconsciously got it from.

      Regardless, you're focusing on the first home buyer (FHB) but they're not the only part of the equation. Sure, on an individual basis that individual got a house $10k cheaper than they might otherwise have had to pay. Good deal them.

      This is mitigated, however, by the fact that outside of auctions we have a closed bid system in this country. It's just as likely that the highest investor bid was $690k, the first home buyer bid was $700k, and the original owner walked away with an extra $10k of free money.

      But even in the case where the investor bids $709k, the FHB bids $700k plus a $10K subsidy, the effective sale price of that property was $710k. The investor knows that next time they're going to have to top that if they want to sign a contract, so next time they bid $715k or $720k, and the FHB knows that their bid was effectively $10k higher, so because they've only got one shot at the subsidy they'll be holding out for a $10k higher offer themselves if they later need to move on or trade up.

      Either way the house was sold for $710k, not $700k. $710k is now the base price expectation for similar properties in the area.

      Furthermore, it's not just one random FHB who's spreading the love with cheap $10k grants, it's a whole bunch of them. And each time a FHB nabs a sweet $10k discount on a new property it inflates price expectations for everyone else next time. Again, the property is not somehow worth only the $700k the FHB paid in cash, it's actually worth $710k, which is what everyone will expect it to sell for from now on.

      • 

        UnternamenBernhard on 11/06/2023 - 15:18

        Superlative arguments, entirely concur.

      • 

        ngengerous on 11/06/2023 - 15:45

        I could probably have worded it a little better - the point I was trying to convey was that we'll always need a mix of both owner-occupiers and investment owners. In my example 'no more investors' was meant more like 'what if nobody bought property for investment' rather than 'imagine if we started banning investment in property'. Let me try re-writing the sentence instead:

        Balancing a market with both owner-occupiers and investors is a complex issue. If 100% of properties were owned by owner-occupiers, there would be no full, empty rental properties - and if 100% of properties were owned by investors, nobody would ever own their own home. There's a nice balance somewhere in the middle - but unfortunately the balance at the moment is tipped way too far towards the investment side at the moment.

        In all honesty taking that sentence out of my original post would make pretty much zero difference, so I probably didn't even need to add it there in the first place. It doesn't change my question or thoughts at all really, more just adding colour and serving as an acknowledgement that while there is a place for investors in the current market, it's just a much, much smaller place than it currently is.

        You're right - there's a chance with closed bidding the owner might just get free money like in your example. No solution is ever going to cover every possibility and be completely watertight - it's whether or not the benefits outweigh the negatives.

        In your example you mention that "the effective sale price is $710k" which I don't think would be true. We don't currently calculate house price sale value differently based on how much CGT is paid by the seller, so I don't see why that would change in this theoretical either. A house sold for $700k doesn't magically become a house sold for $735k if the seller is an owner-occupier and is exempt from the $35k they might have otherwise paid in CGT. I'd imagine the application of a CGT discount would be treated similarly to how it's treated by sellers entitled to a partial or full main residence exemption like we currently have. The house would still be sold for $700k, but the seller would just pay less in CGT - much like they already do if they're selling their main place of residence.

        You're thinking of these as grants for the buyers - not tax breaks for the sellers. It isn't a "sweet $10k discount on a new property", it's a property selling at probably the same price as it would have otherwise. The buyer sees no additional benefit, other than hopefully a less competitive property market due to less incentives for investors - and an easier opportunity for future first home buyers after them. What it does mean, is that there's one less first home buyer looking for a property, which will have a positive flow-on effect.

        • 

          AngoraFish on 11/06/2023 - 15:55

          @ngengerous: The universe where someone selling a property simply takes $10K from the government at the back end as a goodwill gesture; where the real estate agent happily quotes the sale price and takes their commission from a value $9k less than the actual highest cash bid they were offered and/or effective purchase price and/or total compensation received; where both the state revenue office and tax office ignores the $10k grant the seller received in assessing the seller's paperwork; and where the losing bidder doesn't immediately take the same cash, add a bit more in and overbid on their next offer is, I suspect, a universe that only you live in.

          • 

            ngengerous on 11/06/2023 - 16:14

            @AngoraFish: If the money were given as a bonus or grant to the seller, then sure, you've got some good points. If the $10K is instead changed to just a CGT tax discount, would that change your thoughts? I don't imagine that the house prices would be lowered by something like a small tax break, but my hope would be that even though some investors would likely add a bit more cash to their bid next time, there would also be investors who might think 'nah, I can get better returns for less stress and effort elsewhere' and turn away from the property market - also resulting in less competition and easier possibilities for first home buyers to enter the market in the future. No potential government scheme or incentive would be infallible, but the optimist in me hopes that it'd make a positive difference, even if only a slight one.

            • 

              AngoraFish on 11/06/2023 - 16:27

              @ngengerous: The appearance of "making a slight difference", while in practice actually making things worse, has been a consistent theme in Australian housing policy for decades.

              If the difference your proposal is likely to make is only slight, however, then perhaps our efforts might be better invested in advocating for something a little more substantial??

              For my money, if the end result of changes to housing policy is that property investors end up with more cash in their pockets (either directly or indirectly) then there's probably something wrong with the way we're looking at the problem.

              • 

                ngengerous on 11/06/2023 - 16:37

                @AngoraFish: I personally hope that we'll see some real changes to negative gearing soon, but with Dutton's constant scare-mongering I doubt anything will change in the near future sadly. Shorten tried, and the election results showed how well that went down… unfortunately most of the substantial number of property investors we have in this country will vote against anything that cuts their income, but maybe a grandfathered policy like @Jetstream mentioned below might be an easier sell.

                • 

                  AngoraFish on 11/06/2023 - 17:42

                  @ngengerous: ALP policy under Shorten was in fact to grandfather existing arrangements. Indeed, it was even weaker than that, because the ALP was proposing to allow investors to continue to use negative gearing for new properties. Only investors buying existing properties would no longer have had access to negative gearing tax concessions under the Shorten ALP plan.

• 

  USER DC on 11/06/2023 - 14:09

  +2

  Its really tough to own a home man, how the heck am i supposed to earn like $500,000 or even get a mortage for that on low income.

  Everything is super expensive. Cannot get a home in long long time, sadly.

  • 

    Ghost47 on 11/06/2023 - 14:28

    +2

    how the heck am i supposed to earn like $500,000 or even get a mortage for that on low income.

    Just have rich parents who can give you a job where they work, duh.

  • 

    orangetrain on 11/06/2023 - 16:10

    Cut back on 500 lattes or 100 smashed avos or 30 take away meals per day and then get a $1 million tax free inheritance.

    • 

      UnternamenBernhard on 11/06/2023 - 20:19

      very droll. I have yet to hear of a pauper who wasted his fortune on avas or latte's. It's such a sad comment on the quality of the ruling classes when they believe social media influencers are in any way remotely analogous to the average young citizen. Out of touch? Where they ever "in touch"? Doubtful.

    • 

      capslock on 12/06/2023 - 21:52

      Assuming someone spends $25 each and every day on lattes and take away, that is still only $9k a year. That is not going to make the difference in being able to buy a home or not.

      • 

        kiitos on 13/06/2023 - 08:33

        Hence the extreme numbers to indicate how little a difference that would make in practice.

• 

  Jetstream on 11/06/2023 - 14:44

  +5

  Your idea is right, but the implementation is wrong.

  What you want to do is to make it a more even playing field for the new guy.

  In the past, we have given grants to first home owners, but all that does is increase competition between first home owners, give first home owners that shouldn’t have a loan a false deposit and at the end of the day, the investor can easily trump your 10k.

  If you want investors out, then you would want to look at regulating the way that property income is looked at for an investment loan. Let’s for instance say that negative gearing credits can’t be used as serviceability.

  That means less investors in the market - which should reduce prices. It’s come at zero cost (remember grants aren’t free, nor are cgt discounts)

  If a property investor has already paid off a place, or it is positively geared, then it won’t affect those people, but just remember that someone who is positively geared is a tax payer. Tax payers are better than welfare receivers, so we should help them.

  This would seem like a better place to start.

  • 

    ngengerous on 11/06/2023 - 14:48

    I agree with your thoughts here. Revisiting the negative gearing discussion is something which would make much more of a difference, but I can imagine it'd be an unpopular move for a government to make (Labor before the 2019 election can attest to that). My thoughts are that a positive incentive is much easier to sell than a negative, but unfortunately wouldn't have as much of an impact as a negative (but probably necessary) change.

    • 

      Jetstream on 11/06/2023 - 14:51

      +2

      If it was a grandfathered policy, then it limits the effect on people

      • 

        ngengerous on 11/06/2023 - 14:57

        Good point. Anecdotally from my experience, there's still a decent chunk of the younger population who would oppose any potential barriers to what they see as a nice money-making opportunity, but it'd definitely be an easier sell than a non-grandfathered approach.

        • 

          Jetstream on 11/06/2023 - 19:15

          +1

          @ngengerous: The other point is, I wasn’t saying to get rid of negative gearing. I was saying to limit its usefulness in purchasing the next property.

          People won’t lose anything (except perhaps the ability to buy a 2,3 4th property)

• 

  freefall101 on 11/06/2023 - 14:58

  https://ministers.dss.gov.au/media-releases/9781 - federal government tried this, but really the states need to step in and do something.

  It makes sense, increase supply, lower prices. That they've been handing out cash for decades and increasing demand when there was a supply issue was just dumb. The idea that the market would step in and increase supply to meet didn't work because they realised they could just sit back and rake in more cash via the constantly apprecitaing values rather than building more homes, particularly with how controlled land releases are.

  • 

    UnternamenBernhard on 11/06/2023 - 15:38

    I'm going to chime in that no one has considered the fact that banks lend recklessly because they hedge most of their mortgages as credit default options. Banks will lend in a reckless manner until they can no longer cash-out on non-performing loans. If banks were made, like in the bad old days- culpable and responsible for what they loaned- property prices would not be the extremely unhealthy 15.6 time median income (Melbourne median house $1 million, median salary $1250/wk aka $65,000 pa).
    Admittedly, that drops to a much healthier 7.7 to dual median incomes of $65,000- but some thoughts for the women out there- not all of them want to be cod-piece wielding business dominatrices despite the bullsht in the media and non parental/non grandparental childcare is a significant bite out of income- which has an effect on health outcomes- meaning the taxpayer is now burdened with issues of lower productivity, lower quality of life, meaning tangible health costs= taxpayer loss.
    We need cheaper energy- we are at the point brown coal to petrol is cheaper than petrol proving the Japanese BCLV plant economically viable- which is going to be extended int brown coal to hydrogen- it's merely chemistry separating hydrogen from carbon from the original hydrocarbons (personally I see this as poorly thought out), more public housing (=jobs and discretionary income spent on water skis and fishing things yobbo builders buy), more infrastructure financed and built entirely within Australia, preferably Victoria, more building societies and like Germany Staadtbanks- small state banks, more manufacturing (why cannot Australia with incomes on par with Taiwan be a microchip producer- a microchip manufacturing line costs under 10 million- chump change) and a Victorian sovereign wealth fund (like Norway). Why cannot Melbourne be the silicon valley of the Southern hemisphere- we have silicon in abundance of equal quality to California, copper, ferrous metals, gold all internally- all cheaply shipped via rail- then cheaply rail-freighted to Darwin to the Asian market.
    Why cannot Melbourne be the new salt-water battery giant- salt water and ferrous metals replacing lithium ion? Government low-interest loans and a guaranteed 10-year energy rate would cover capital and manufacturing costs- thousands would be gainfully employed. The discretionary income trickle down= no more retail apocalypse. Melbourne now being a world leader in sustainable energy STORAGE- what makes energy environmentally friendly and efficient- the ability we have not had until now to store large amounts other than as flywheels or molten salts. It would also mean an export economy instead of import reliant.
    But imbeciles and ideologues escaped from straight jackets rule us.

• 

  brendanm on 11/06/2023 - 15:41

  -3

  No. Far out, we do not need more government intervention. It will only increase prices more anyway.

  • 

    ssfps on 12/06/2023 - 00:16

    Mortgages in Australia are a government pyramid money printing scheme. OPs proposition could actually be fulfilled by simply removing the corrupt meddling in the market already in place.

    • 

      brendanm on 12/06/2023 - 13:40

      Mortgages in Australia are a government pyramid money printing scheme

      That doesn't make sense. Cheers.

• 

  orangetrain on 11/06/2023 - 16:12

  +4

  Can we please stop throwing money at the bubble expecting it to become cheaper?

  • 

    Switchblade88 on 11/06/2023 - 19:46

    +4

    I'm all for taking money out of the bubble by getting rid of negative gearing.

    • 

      humilem servum tuum on 11/06/2023 - 20:29

      +1

      And we should bring back death taxes and gift taxes for inter vivos transfers and deceased estates targeted at the wealthy.

      https://www.smh.com.au/business/the-economy/how-do-death-tax…
      https://treasury.gov.au/sites/default/files/2019-03/Universi…

      • 

        UnternamenBernhard on 12/06/2023 - 03:46

        Indeed. And I am your humble servant. I like the cut of your Latin jib, I mean artemon. "inter vivos" Spectacular. Obviously not Australian or educated at one of the few good schools remaining in Australia or of the older, better generations born before me.

      • 

        orangetrain on 12/06/2023 - 16:56

        Inheritance taxes you mean. There's no tax for dying and the wealthy like calling it a death tax to scare people.

  • 

    AustriaBargain on 12/06/2023 - 01:15

    What about incentives for first home owners that only pay off if the home is a new build in a new lot and if they live in it for at least 10 years. Even if they all sell the homes after 10 years, that's still 10 years of them being out of the rental market, putting downward pressure on rents for everyone else, plus a new home is in the supply side. And it's not like a government can just instantly unbalance a million new homes over 10 years by allowing three million more Indian migrants into the country or anything…

• 

  humilem servum tuum on 11/06/2023 - 20:40

  +1

  In gaming speak, forget giving a buff to supposed new home buyers. Just issue a nerf to the owners with multiple residential investment properties i.e. limit the number of properties a household/family can own. That will open up the housing supply quick smart. Anything else just gets passed onto existing tenants and every other taxpayer not involved which isn't the intended demographic.

• 

  ssfps on 12/06/2023 - 00:13

  +1

  13 Yes
  3 Yes, with caveats
  0 Unsure
  54 No
  4 Don't Care

  Ah, so 54 people ITT have IPs, 13 are wanting to buy their first home, and 7 own their PPOR but aren't interested in this particular pyramid scheme.

  • 

    UnternamenBernhard on 12/06/2023 - 03:47

    Brevity is the soul of wit.

  • 

    CrowReally on 13/06/2023 - 12:21

    Can you explain what you mean by "pyramid scheme"? You've used it more than once on this page, I don't understand how it would apply.

    • 

      ssfps on 14/06/2023 - 01:19

      Every day buying property gets more expensive, and at first glance most people kind of assume the economy is a closed system, zero sum game, etc, but money is always being created. Economists (especially those hired by the government and bank) talk about money creation and destruction 'in balance', but it's not in balance, it's overwhelming created. Hence in 100 years we've gone from a daily wage being < 1 dollar to hundreds of dollars. One of the most common mechanisms for this money creation (currency devaluation) is through mortgages.
      So - people buying property drives up the price, increasing other's "equity". Equity in this sense is a bit ephemeral, like market-cap, so there is an incentive to get in early. Once you've got an asset (mortgage), others buying property drive up your equity. And, as we've covered, this isn't (just) a supply and demand balance causing the equity increase - it's a devaluation of currency caused in part by the act of buying property (cash purchases excluded).

      You could find incongruities to the way 'pyramid scheme' is often used to describe outright scams, but this shares many similarities IMO, and I like the diminutive connotation referring to the market in this way.

      Another metaphor is referring to real estate as a "bubble", but that sounds too innocent and fragile to me - in reality people in the market benefit from others entering, and every market is manipulated/stabilized/crashed by those with the power to, to their benefit.

      • 

        CrowReally on 14/06/2023 - 09:10

        Alright, so it's actually got nothing in common with an actual pyramid scheme (which places reliance on gaining funds from newly recruited members directly, and features several tiers of this structure in place, much like a, well, you know, a pyramid).

        If you want to talk about your pet economic theory that's fine, but don't bait your hook with trash like this.

        • 

          ssfps on 14/06/2023 - 22:54

          @CrowReally: None of the facts i stated are my "pet theory", it's economic fact. The only "pet" part of my post is the metaphor i used…
          so does it rub you the wrong way because
          1) you hate metaphors in general?
          2) do you enjoy economic naivety?
          3) do you just hate this metaphor ("bait"), presumably implying you thought i was suggesting real estate is legally fraud, and now you're surprised?

          Maybe ponzi scheme would be a better fit, but just to be clear, when people use "ponzi scheme" colloquially, they don't usually mean something is necessarily illegal.

          • 

            CrowReally on 15/06/2023 - 09:02

            @ssfps: I was just treating it as a teaching moment. When you bait your hook with garbage and someone bites and you're left explaining your inept metaphor, their thought process

            IS

            "This person has no idea what they are talking about, no point listening to any more of their garbage"

            and IS NOT

            "Well, that was weird, but that wasn't their main point, and now to give them my full attention".

            You did a stupid, and now you are compounding that error.

            • 

              ssfps on 17/06/2023 - 01:39

              @CrowReally: It's okay to be ignorant, and it's okay to be angry at how some information was packaged, but it's not going to stop me from unpacking your loaded response and pointing out the poorly veiled emotional bias.

    • 

      ssfps on 14/06/2023 - 01:34

      Also, since you're asking, and the topic of this thread is how to "fix" the market.

      As far as I can see, the primary action that is a prerequisite before any other policy or redistribution can possibly work, is to eliminate the ability for banks to create money via loans (along with other bond trading shenanigans, although that's beside this point).

      • 

        CrowReally on 14/06/2023 - 09:13

        Thanks, but I'm not asking.

        Also, "I'd remove this part of an existing system" without mention of what effect it would have or what you would replace it with is basically a useless theory.

        You want to know how I'd fix Sydney traffic? I'd get rid of the traffic lights. #yourewelcome

        • 

          ssfps on 14/06/2023 - 22:42

          @CrowReally: The sarcasm isn't that clever, because we know what effects it would have - after unraveling a bunch of schemes built around it, we would have (basically) no more inflation. There is hundreds of years of information on what various societies around the world look like when governments (and now, their appointed bankers) aren't printing money, and plenty of studies on what happens when they decided to print it (often to fund a war).

          • 

            CrowReally on 15/06/2023 - 09:05

            @ssfps:

            "Oh, it's all remarkably simple and obvious, and there's hundreds of years of data proving my point" he purred, neither providing proof of the former nor evidence of the latter.

            Which part of "Thanks, but I'm not asking" is giving you the difficulty? I'm guessing maybe the first word, because I'm sure people usually don't say thank you when you share your ideas with them.

            • 

              ssfps on 17/06/2023 - 01:34

              @CrowReally: Yet you reply - and I care as much about you not asking in this public forum as you care about history and economics.

              • 

                CrowReally on 17/06/2023 - 14:58

                @ssfps: Sorry for that distraction, I'll let you get back to replying to the people in this thread who have engaged with your comments.

                Their sheer number alone is validation of both your ideas and the coherency of your expression.

• 

  AustriaBargain on 12/06/2023 - 01:13

  I want to see the government deflate the investment property game altogether and give investors something else to invest in instead. Government backed bitcoin, whatever, I don't care. Just as long as it's not the homes we need to live in or the electricity we need to heat those homes or the food we need to eat.

  • 

    UnternamenBernhard on 12/06/2023 - 03:49

    +1

    We need a sovereign wealth fund. Singapore has one, Norway has one. Why not Australia- it could be the vehicle for those wishing to invest perhaps without removing negative gearing- which would be most attractive- but partial ban investment properties in certain zones or definitions of some sort.

• 

  Eeples on 12/06/2023 - 02:24

  +3

  If getting rid of negative gearing is a pill to hard for the Australian electorate to swallow maybe only allow negative gearing to be claimed on one investment property only.

  • 

    UnternamenBernhard on 12/06/2023 - 03:49

    +2

    Moderation in all things, moderation timeless wisdom indeed.

• 

  morse on 12/06/2023 - 06:20

  It would have to be a pretty good incentive for the investor to want to give up whatever investment benefits they are getting from the investment. Though it may be attractive to those with failed investments. Typically incentive schemes don’t really make things cheaper.

  • 

    AustriaBargain on 12/06/2023 - 08:05

    +2

    How about disincentive schemes…

    • 

      morse on 12/06/2023 - 09:44

      Yes, I think less tax break incentives for investments would make the investments less attractive, and would be more likely to have an impact on house affordability. I would be hard to achieve though and whether it would be enough to make a difference I'm not sure.

• 

  Sinnerator on 12/06/2023 - 07:57

  so govt paying rich people extra money to sell overpriced property to poor people, what could go wrong?

• 

  Mugsy on 12/06/2023 - 08:21

  No.

  Prices are high enough as it is for investors to make good money. And I have an investment property btw.

  Governments just need to build more affordable housing. In Qld you can blame the Newman government for their mass asset sales for creating a bigger mess here. They weren't good at forward planning and seeing the bigger picture.

• 

  mattyman on 12/06/2023 - 08:55

  +2

  The government just needs to cut negative gearing for more than one investment properties. This would ensure that there are still properties to rent while also providing extra properties to buy.

  The government should also be building more housing, encouraging more competition in the lower end of the market which will help with prices overall.

• 

  ColtNoir on 12/06/2023 - 09:59

  No, there’s enough government intervention price inflation in the property market here. Let’s not add some more

• 

  backpaqer on 12/06/2023 - 10:10

  +2

  Embrace Italian culture, 5 generations in one house. That's where we're headed

  • 

    Ghost47 on 13/06/2023 - 14:17

    Mamma mia!

• 

  Emcaljoe on 12/06/2023 - 10:22

  +3

  Scrap stamp duty for first home buyers, double it for people who already have a property (or ramp it up incrementally based on number of properties).

  • 

    ssfps on 14/06/2023 - 01:29

    Stamp duty shouldn't exist for any PPOR, like capital gains.

• 

  2esc on 12/06/2023 - 10:38

  +1

  "no more investors means no more properties available for rent".

  Well that statements a bit of rubbish in the small town i live in numerous investors have bought in my town to either airbnb, holiday homes, rent out potential home buyers have found the house values dramatically rising.

  In the last 3 years my house in that time has gone up 35% in value.

  My neighbour is a local real estate agent says this has pushed a lot of first home buyers out of the market a reduction in rentals available due airbnb and the holiday homes people had bought as potential covid escape (We are not a prime holiday destination). The street opposite me now has 5 houses used as base camps for 4x4 weekend warriors from Melbourne all purchased in the last 3 years taken out of the rental market of a small town.

  My neighbour says there are 6 airbnbs he knows in this small town so thats more out of the rental market.

  Yes there is a need for investors but i more harm than good in some areas?

• 

  payless69 on 12/06/2023 - 12:21

  I am going to listen to the voice:
  Move to the bush.
  Call everybody brothers and sisters.
  No more worries….