Is The Government Doing a Good Job around Housing Affordability?

The more I read the news, the more I think that the current government is doing nothing for 'anyone' on housing affordability (yes I know rates are part of the problem). I also believe that there is a mild form of 'cronyism' that has polluted our debate around housing affordability. I sometimes think that Scott Morrison is still working for the property council of Australia and has not realised that he is treasurer. I don't even think that the most loyal liberal supporter actually believes he is doing anything about the housing affordability debate besides talking in circles!!

(Rant) His latest attempt at putting more money into the housing market by freeing up super contributions of younger people is so transparently poor that economists and some in his own government are unable to support this. Now if housing was more affordable I think that it would be a good idea to free up money for young people, but at the current time this will just be a transfer of wealth to developers with little hope for growth in the short term.

I believe in abolishing negative gearing and reducing the CGT discount but let's have a debate around all the options. More importantly lets make it fair so that we don't crash the housing market. Let's reduce the incentives slowly to avoid a crash.

I am keen to know what other people think!!!

Do people believe that prices will continue going up? (I don't)
Do people believe that housing is a good investment now? (I don't)
Do people believe that Scott Morrison is the right person to right the imbalances and make the right choices for the country? (I don't)
Is there a way of changing policy without waiting to vote out the liberals (and I am sure that this will happen in the next election.)?
How can we force the governments' hand? A politician once said that to enable democratic process, people need to get organised? How does one do this?

It would be great if buyers would exit the market. Normally price is a natural deterrent but yet there are still large amounts of buyers out there who think they will miss the train. Unfortunately it is the first time buyers who will really pay the price for entering the market at the wrong time, less so people 'shifting' from one house to another.

I would appreciate any thoughts!


Anybody interested in who used negative gearing should read.

Here is an article about our politicians.


  • +1

    if you class "nothing" as a "good job" then I guess so

    Canada has taxed empty property for years. There has been an empty house bought by a chinese investor 2 houses up from mum and dads for 20 years. Its been a problem for longer then that

    • +17

      That is so untrue.

      Demand is a function of many things including
      * taxation,
      * foreign investment policies (who can buy property in Australia),
      * investment in infrastructure (how far do people want to live away from jobs),
      * interest rates,
      * jobs,
      * immigration (added)

      Supply is a function of among other things:
      * land supply,
      * supply of existing stock ….
      * land taxes relating to penalising empty homes Incentivise release of speculative purchases,
      * incentives to hold onto land (like the pension test excluding the family home))
      * stamp duties stop people relocating to smaller dwellings

      All of this is controlled to some degree by the government either state or federal.

  • +6

    Following on from what ozzieblue said
    Best thing Govt can do about housing affordability is to get rid of all the concessions…..
    I mean get rid of negative gearing
    Get rid of first home buyers grants
    Get rid of first home buyers stamp duty concessions
    Get rid of foreign buyers
    Get rid of stupidly low interest rates

    All of these artificially push up property prices.
    Getting rid of them ALL will allow the property market to drop back and find a natural equilibrium that is fair for investors and home buyers alike.

    • +4

      Agree. As a wanna-be First Home Buyer, I would happily give up my FHBG, in return for abolition of NG and the CGT discount. I think foreign investors are not as much of a problem as they are made out to be, and as soon as the market cools or the incentives are not there, they'll buzz off somewhere else anyway.

    • +2

      I'd go further and say they should streamline the market. The current real estate market is a joke. It's hard to find what price places have sold for & are renting for, transaction costs are immense, advertised prices are practically lies, etc. It's an exceedingly inefficient market.

      IMO they should abolish stamp duty, and replace it with a land tax on all properties (and a penalty tax on vacant properties).

      • I have already paid stamp duty on my house. I don't fancy double taxation by now paying a land tax too, although I'm sure there will be no complaints from government.

        I agree that there should be a penalty tax on vacant properties. It would be really easy to detect them. Little to no gas, water, or electricity usage? It's obviously an empty property. Empty property owners can turn on heaters on timers to get power use up, but going to the property regularly and wasting gas and water is going to be quite a hassle.

        • Of course, swapping stamp duty for land tax would have to be phased in somehow to avoid unfairly punishing recent buyers.

          I never really thought about how to detect empty properties, but I'm not sure utility consumption is a good idea. People will rig up dangerous timers as you've suggested and end up flooding or burning down apartment buildings.

          I'm sure some "big data" gurus could figure it out pretty well from tax/medicare/rental address databases.

        • @abb: Detecting empty properties through utility bills is already being done. One example is public high schools and zoning. Adelaide High School has a great reputation, and some parents are desperate enough to get their kids in that they'll rent a property within the school's zone and not live there, simply to qualify their child for the school.

          The government and the school know parents are gaming the system, leading to overcrowding, so as part of the application process utility bills can be required if there's suspicion of fraud.

        • @Cluster: I guess I'll start advertising my dangerous timer-based automatic gas/water/electricity wasting machines in Adelaide then ;)

  • +8

    When you get Anaesthetists lowering their taxable incomes below the tax threshold is criminal

    In the latest full year of data, the number of investors with only one property grew by 1.7 per cent – just a bit ahead of Australia’s population growth of 1.4 per cent.
    But the number of investors owning five properties grew at 7.8 per cent or nearly four and a half times that rate
    Shadow Treasurer Chris Bowen seized upon the data to point out that “331,357 investors with taxable incomes [after deductions] of $37,000 or less negatively gearing properties. It also shows that three male anaesthetists [not a low income profession] averaged a net rental loss of $35,756 each with taxable incomes of less than $18,200

    • +3

      yes this is not right.

      The thing that really annoys me is the people who are purchasing property purely with a speculative motive.

      They hold it and don't rent it purely so they can flog it quickly without the hassles of selling with tenants. There is a term for it, … 'flipping'.

      There are quite a few articles around this…

    • I agree it is wrong, although bear in mind that by reducing taxable income to below $18,000, half of the $37,000 negatively geared amount falls into the mere 19% tax bracket, and the other half into 32.5%. They really don't save that much.

      In comparison, an average Sydney home owner living in a $1 million dollar house has seen his or her residential property going up by 16% just in the last 12 months alone, and essentially consistently above 10% growth for many many years, although this person would pay 0% tax on the $160,000 "income", regardless of their personal income tax rate. Now if you live in a $10 million dollar home…

      I would think the latter is even more unfair than negative gearing…

  • -1

    Negative gearing is not the issue. MOST properties are not negative geared. To completely remove negative gearing would have little impact. It's simple supply and demand.

    Australia, and in particular Sydney and Melbourne, are no different to every other first world city in the world where it is super expensive to live where demand is high and supply is low. Sydney is cheap compared to some first world cities.

    The best thing the govt can do is release more and more land and the town planners align to the shifting population areas and keep up with transport, roads, hospitals, shopping centres. Also the Govt encourage employers to have more hubs across greater Sydney so people on the outskirts don't have to travel so far to work.

    Long term planning is key. But I don't ever get the feeling that the NSW Govt (Labor or Liberal) can plan a picnic. It's always too little too late.

    • +9

      Negative gearing and CGT discount are the 1000 pound gorilla in the room

    • +3

      Most properties are not negatively geared.
      True, but how many auctions did those wannabe be negative gearers failed to win?
      How many tens of, or hundreds of thousands dollars more did the eventual owner occupier buyer end up paying?

  • +1

    Every rise of 25 basis points costs the federal budget about 500 million more in lost tax revenue, 2014 figures put the total budget hit at $3.6 billion so you can only imagine what that would be up to today with investments increasing 25% since then
    since interest rates are trending upwards

  • +6

    This is an absolute cracker of an article
    Unfortunately cant copy and paste

  • Nope, but you and I cannot do anything about it

  • There are many options to reduce the price through policy change (I am pretty sure politicians are lot more aware of this and smarter than many of us here). No politician will do as they will loose the vote from the one who got affected. The one who benefited won't remember or won't understand the gain and no guarantee they will vote for the same party. So both side politician are acting they are concerned and acting they are trying to do something. They are waiting for organic/natural crash. If that happens lot of people will be affected and politician will cash out heavily (depends who will be the ruling party at that time). This is how all the corporate's are working nowadays and so is the politician (lack of true leader who are decisive and ready to make some people unhappy for long term benefit)

  • +6

    According to our ex-treasurer, get a good job that pays good money.

  • Definitely with you with the Super part. The blatant policies at fuelling their own investment portfolios are the ones that push up prices by injecting more money into it via bidding/demand than dealing with the actual price.

    It's not just affordability, but the fact each house purchase now also eats way more of the disposable income than it used to. Giving buyers more money to bid does not change that aspect that will cost society big when no one has any free money left to buy all the —junk— great deals posted on OzBargain.

  • +4

    The problem is the economy as a whole.

    Foreign investment is what keeps it prosperous. We had a once in a hundred year opportunity to build the country of the back of the mining boom, however all revenue was used to buy votes by both sides of government.

    Unfortunately now we no longer affordable and livable regional centres because they have no economies. This draws people to the major cities to get a cut in the service industries which are fuelled by rising property prices. We don't make anything, have no IP, sell low priced commodities which come from lands being sold to foreign interests, so all we have to offer the world which is originally Australian is our real estate.

    Negative gearing and CGT discounts are just typical political excuses to mask the real issue of a faltering economy which was set up by poor planning and representations in Canberra. This is a long term issue for Govt which they still haven't corrected from the GFC, hence why we have so many obscurities in government as we speak (Xenephon, Hinch, Hanson & co). At this rate there will be budget deficits for decades to come.

  • +1

    Property prices have been a hot topic for a while now.

    To answer you directly, in my opinion they aren't doing a good job around 'affordability' as there is nothing the Government can do now that would reduce prices slowly and sustainably. The reason for this is that all the major financial levers they have at their disposal are too significant to pull. Some of the suggestions/rumours floating around:

    Increasing interest rates, owner occupiers that have already mortgaged themselves through the roof would have an incredibly tough time if rates increased as steady as they were falling.
    Negative gearing or CGT changes that would affect investors would also cause a dramatic impact.
    Accessing Superannuation for first home buyers would also fuel huge demand as first home buyers represent a smaller than ever portion of property purchases. Imagine if all first home buyers suddenly had access to their super, saving for your deposit would be easier.

    These aren't small changes in the slightest. Because we have record levels of mortgage debt, the levers are just too heavy.

    I think that as a market economy we sometimes forget that, these are homes that people live in at the end of the day. Maybe the data we should be looking at instead of prices is how prices affect our way of life?

    Side note - As some other OzBargainers have mentioned in the thread, it is difficult to envision significant change when the people in charge of deciding change have multiple investment properties themselves.

  • i dont personally have a second property so dont really have a vested interest here. But why is it that Australians seem to expect home ownership as a right? Plenty of cities internationally that work well with hi percentage of renters. If you want to buy, buy further out, or buy smaller. Or if you/your job is in a position to… relocate cities if you're so desperate to buy. Or even buy in another city and rent where you want to live.

    • +1

      You will tend to find that in cities with higher percentage of people renting they have better tenancy laws where in Australia the tenancy laws haven't changed that much. Even when considering larger percentage of the country is living in rental accommodation.

    • -2

      Agreed. Everybody wants to live within 10km of the cbd and complains prices are too high.

      • +2

        Hardly, blocks of land an hour (2 hrs if during peak hour) from Sydney CBD are going for $500k. Personally at that distance it hardly even classifies as living 'in Sydney' yet it's one of the most expensive places in the entire world. Certainly not like there's a land shortage in Australia.

    • I find at least in Melb suburbs with high percentage of renters are turning into a shit hole, because renters who don't plan to stay (e.g. students) don't care as much for the suburb. Particularly inner north. Apartments shooting up everywhere (thanks Matthew Guy …) and graffiti is on the rise. I don't live there anymore and wouldn't anymore, it's a pity of its former self. For those wanting a guess it's inner north suburb.

      With ridiculous townhouse or apartment prices to march ofcourse.

  • +3

    There is plenty of relatively cheap land at the end of the train lines. Unfortunately you wont be able to walk to the local cafe and catch a tram home from work or cycle to the botanical gardens to see some outdoor thatre on a nice sunny day. You'll spend hours on the train or freeway every week and a trip to the city on the weekend will be a treat. This is my lifestyle and I accept it as I will never be able to afford a $2M house in Richmond or Sth Yarra (Melbourne). It would be nice to live close to work but there are bigger problems in the world. Maybe the problem here is that people need to understand that living in the heart of Sydney or Melbourne is only for the rich or the renters, the rest of us live out in the Burbs. Start out here then if you do well start working your way closer in

  • +2

    The answer to all of this madness is to stop buying inner city property. If we all stopped paying the crazy prices the market would adjust accordingly. After a while, the anesthetist flipping his 8th investment property can only hang on so long with no buyers before he has to drop his price. Have a look at the areas where the mining boom dried up, there are houses there now selling for a fraction of what people paid for them….and they still cant sell. Demand is outstripping supply and so prices go up. The reason land is cheap out in the burbs is because there is more land and less demand. If you want to own your own home buy where you can afford, if you want the inner city lifestyle but cant afford it…suck it up snowflake. I'd love a ferrari and a private jet but here I am in Melbourne's outer suburbs….in my own home!

  • +2

    I'm a research economist, so I'll offer a bit more of a nuanced view. I'm also young and at an age where I could be looking at getting a property, so I'll offer that more opinionated view too.

    The problem, ultimately, comes down to this - people are obsessed with property.

    At a certain age, you talk to anybody and one of the questions you'll invariably be asked is "do you own a house yet?", it's even referred to as the Australian/American dream and I think that sort of obsession is unhealthy. At the end of the day, people need to forget the social aspects of owning property and see that the end goal is having a place to live. People need to become less averse to renting, and become more open-minded to alternative dwellings apart from suburban houses (e.g. inner city apartments). Far too many people want to buy properties for no good reason other than to be able to say that they own properties.

    Okay, so now with that out of the way, I think two very important points that are often missed when discussing 'housing affordability' are the effects on current home owners and the effect on rents.

    I think the first point is obvious - someone's got to lose, those looking to buy or those looking to sell. Changes to negative gearing and making properties less attractive as an investment class will all have negative impacts on rents - with less properties on the rental market, rent prices will be driven up and we may well end up with the opposite effect of what we want. Remember that demand on the property asset market forms the supply on the rental market. Ultimately, it doesn't matter who owns the property, but rather who lives in it, i.e. we focus too much on 'property ownership', not so much 'housing affordability', which I would assume to mean things such as rents.

    It's not apparent to most Australians, but we have one of the highest home ownership rates in the world. The whole obsession with home ownership is a very Australian/American idea. If you go to certain areas around the world, e.g. Europe, you'll find that many more people are renters and that there isn't the same judgement from others when you say that you rent. Here, it's almost as if renters are only those who cannot afford to buy.

    To answer the question directly - it's irrelevant, as I don't believe the government has any role to play in any of this. If 'housing affordability' is a government issue, then let's just have the government own all the land and simply dole it out to people so that everyone has a place to live and this all becomes a non-issue. Now, how many countries have succeeded in doing that?

    Now, to the flip side of my argument - yes, the generation growing up now does face significant challenges in buying property, but it's not one that cannot be overcome. This generation also earns far more than any other generation previous, generally faces far greater social privileges, and also have access to a greater amount of luxuries. I do genuinely believe that you can't have your cake and eat it as well - property ownership is a sacrifice. I do agree that some people have greater privileges than others (e.g. being able to live with parents is a huge one). You can't blow all your cash on nice toys and travelling around the world and then expect to also be able to afford a property.

    Out of everyone I know, all that have been serious about property ownership have gotten there by age 25. Everyone still complaining just blow all their money on other stuff and when they realise they don't have a house yet, they start whinging. I had $100k saved from around 2.5 years of full-time work at age 23, which is enough to put a deposit on a house. I blew $50k on a nice car because I honestly couldn't care less about a house, it's a lifestyle choice, not a problem. Most people I know who are in the same boat just blew their money on one thing or another.

    • couldnt agree more. Theres a negative stigma to renting which needs to be erased. Travelling, studying double degrees in rubbish and eating out/going out every weekend does not entitle you to home ownership.

    • +9

      I'm fortunate enough to be in a similar boat as you financially. I'm young, have a good job, have enough savings for housing if I was stupid enough to want to buy right now, etc. I didn't have the advantage of being able to live at home to help me save money, or a 'bank of mom and dad' to pilfer to get through uni. I worked damned hard to get what I have today, and saved obsessively to make sure I could go to uni and get a good job.

      But I'm also fully aware that my hard work wasn't enough. I was lucky to get into uni, lucky to have regular employment to get me through it, and lucky to be born even slightly on the right side of the poverty line as a starting point. Without those privileges, I'd likely be stuck along with the third of young Australians struggling to find work so they can make progress with their goals or just get a little bit ahead.

      I do agree that some people have greater privileges than others

      You say this, but I think you underestimate how much those privileges are necessary for home ownership/financial stability and how many people actually have them. To say that any young or old person that wants a house but can't afford it just didn't work or save hard enough is a slap in the face to a decent chunk of the population who did/do both of those things and still can't make it in the current environment.

      You're a research economist; I'm sure you probably know all of this. I'm just not sure why with that knowledge you continue to oversimplify the problem.

      • +1

        To be fair, its incredibly hard to discuss this topic without some degree of generalisation.

      • I didn't have the advantage of being able to live at home to help me save money, or a 'bank of mom and dad' to pilfer to get through uni. I worked damned hard to get what I have today, and saved obsessively to make sure I could go to uni and get a good job.

        That's great, I've had to work really hard as well.

        I don't come from a well-off family and my parents were never able to buy me any luxuries. I worked hard as an undergraduate to afford my first car, and I worked full-time hours as a graduate student (basically studying + working full-time) to be able to afford everything that I've been able to, so I really do respect people who put in the hard yards.

        But I'm also fully aware that my hard work wasn't enough. I was lucky to get into uni, lucky to have regular employment to get me through it, and lucky to be born even slightly on the right side of the poverty line as a starting point. Without those privileges, I'd likely be stuck along with the third of young Australians( struggling to find work so they can make progress with their goals or just get a little bit ahead.

        You'd find that luck is very strongly correlated with luck. Yes, you were lucky to get all those things (so was I), but don't you think that part of the reason why you stumbled across that luck is because of the fact that you've put in consistent hard work throughout your life?

        You say this, but I think you underestimate how much those privileges are necessary for home ownership/financial stability and how many people actually have them. To say that any young or old person that wants a house but can't afford it just didn't work or save hard enough is a slap in the face to a decent chunk of the population who did/do both of those things and still can't make it in the current environment.

        What do you mean by 'can't make it'? Part of the problem is this sort of exaggeration. Just because they don't own a property doesn't mean that they 'didn't make it', it just means they can't afford a luxury. I can't afford a Ferrari, does that mean I 'didn't make it', as well? When people can't afford rent, then fine, that's a problem, but right now, that's not the reality for a majority of Australians.

        You're a research economist; I'm sure you probably know all of this. I'm just not sure why with that knowledge you continue to oversimplify the problem.

        Because it's not a 'problem', home ownership is not a necessity for life, having a place to live is. That does mean that sometimes people will have to rent. It also means that sometimes people have to live in places where they may not like. It also means sometimes people have to give up other luxuries in life to be able to afford a house.

        Also, just a side note - I'm an economist, not a sociologist. I study markets and the outcomes of market participants, which is a separate discipline to politics and what "should" happen, i.e. I might study the effects on the housing markets with XYZ reforms. Whether those reforms are 'desirable' from a social equity point of view isn't really what I do - so no, I don't really know 'all of this' at all. It's a really different area.

        • +1

          psterio may I ask where you work?

    • Back in the time, people was not obsessed as the rent was generally acceptable compared to buying the properties.

      If the majority of the property was domestic and had right control, the rent rate could somewhat at the acceptable range even though it is higher growth rate than your salary / wage.

      If you are economist, you know the growth rate of property price increased the rent rate at similar rate but your salary / wage was not.

      Please keep in mind that not all earn six figures here. you say $100k is enough to deposit? Look around and check where and what you can get with that.

      • If you are economist, you know the growth rate of property price increased the rent rate at similar rate

        No it hasn't, property prices have increased much more significantly than rents have over the past decade or so.

        • OK. it's not a similar rate but still the steep increase occurred as people who bought with the increased (or bubbled) property price needs to get higher rent rates to make profits.

          Increase is keep on going yet you don't get same increase in your salary.

    • +1

      It is always said that removing negative gearing will impact renters, but is it really so clear cut? On my understanding, if you increase the cost of the investment by reducing or removing negative gearing one or a combination of the following will happen:

      a. house prices fall i.e. the price paid for the investment will fall until it again becomes attractive
      b. rents increase i.e. the income from the investment is increased to cover increase cost of holding the investment

      The housing market is complex, so I guess some mix of a. and b. will bring the market back into balance. But which, a. or b., would make up most of the difference?

      Housing is a necessity, at the same time there appears to be a very open and competitive market for rental properties. For landlords to increase rents they would need pricing power, do they have pricing power? Why would a landlords not increase the rent now if they could? Any changes would only impact the proportion of landlords who rely on negative gearing (what percentage of the market is this?).

      Whichever changes mroe, a. or b., at some point the cost of renting would approach the interest cost on a loan to purchase the same property. At that point purchasing becomes an attractive alternative for many renters. For every property that is purchased as a principal place of residence and not an investment there is one less renter. Thus reducing demand for rental properties. So I don't see how a large increase in rental would make up the difference.

      As previously stated be many people house prices are impacted by many factors. I don't think removing negative gearing would have a massive impact on prices or increase rents. But if the aim is to increase the proportion of owner occupiers at the expense of investors then removing negative gearing would appear to achieve those goals. What am I missing?

      (if changes to negative gearing had a large impact on sentiment/confidence then I could see a big negative change in house prices, but still don't see how this would result in a large increase in rental costs)

  • +3

    Unless you want to live in Sydney or Melbourne there is no 'housing affordability problem'!
    If everyone wants to cram into those two sardine cities, well then they have to pay the price.
    Australia is a big country, with plenty of affordable houses.

    • +9

      People go where the jobs are. I would love to not live in the big city.

      • Get in line ozzieblue ;)

  • +2

    I do not think the government is doing an adequate job with housing affordability.
    They are compromised by their own investments, property lobbyists, and history of inaction on this issue.
    Anyhow, the present state of affairs is starving the productive investment pool, and has created a severely risk-averse investment culture.
    My suggestions:
    1. Swap Stamp duty for annual land taxation.
    2. Change negative gearing, and CGT exemption to only apply to investments that have direct, productive (not flow-on or rent seeking) benefit to national GDP.

  • There are only two ways to make housing more affordable.

    Inject money into the system (like the treasurer is suggesting with super) or reduce prices.

    If you inject money into the system, then the super holders will be the losers in the short term as they are paying over the odds for housing.

    If you reduce prices, then sellers lose their un-realised gains. I think that this unfortunately is the best way to tackle housing affordability. A lot of sellers have already been the winners with their un-realised gains and those in the long haul won't notice. HOWEVER, those who have geared up and taken risks and who have entered the market recently will be the biggest losers.

    I am not sure that rent will be driven up by abolishing negative gearing or CGT. If it is grandfathered, then no existing stock will be effected (I don't agree with grandfathering but this is just too painful for politicians).

    A drop in property prices will drive rental yields up, encouraging (a) investment in property and (b) renters to buy. Less renters, less demand. Higher rental yield, higher demand for property. Equilibrium again.

    • Land is limited resources. Distance, Affordability and Amenities (including schools, shops, nice neighbourhood) you can only pick 2 out of 3. I think the fundamental things with Australian housing market are interest rate & population growth. No one wants to live further away from the cities, so it just become a battle of who can borrow more.

      With policy, investment loan should attract much higher interest rate (1-1.5% on top of residential rate) to reduce the borrowing power of investors.
      People should accept the fact that they will live in much smaller house compared to their parents.

  • -2

    Why do they need to? why should the government do anything.

    There is a large percentage of the population that will convince them selves that housing is always "unfair, overpriced and about to crash' even if it dropped 20% you would still have the latte sipping 40 dollar breakfast eaters complaining that it should be an additional 30% of while they book their next holiday.

    No sympathy or mercy for the lazy.

  • +1

    Phase out negative gearing.

    Change FHOG/ get rid of it.

    Stop lending millions of dollars to people who would be wiped out in moderate change of circumstances.

    The best thing the goverment can do is keep their fiddling fingers out of the housing market imo.

  • +1

    as above. places outside sydney and melbourne are still affordable.

    it is free market. increasing demand vs limited supply = prices go up.

    imagine if CBA share is selling for $5/share today, people would snap the shares within 1/1000000 of a second.

      • brisbane and adelaide are still affordable. there are also jobs but lifestyle and cafe options are not that good as in sydney and melbourne.

        i used to live in sydney cbd when i was still studying, sharing a room with 2 other guys. basically a sardine style living yet it cost $120/wk for the shared bedroom back in the 1990's to early 2000's. i bet not a lot of young people are doing not that extreme.

  • -2

    Honest question to those that keep pushing for the removal of negative gearing. If you force extra costs onto a landlord what do you think their natural reaction would be? I want you to think for a second, if your answer is sell their investments then think again.

    • +3

      What they would do is charge the maximum they can whilst still obtaining a good tennant. What they should be doing now.

      If they can't profitably keep the house without external subsidies then they would sell, unless they hope to get more value in the future.

      Maybe it will make them think twice about buying non productive assests and speculating on future capital gains.

  • What about cities where price growth is fairly close to (or under) inflation / wage growth? Perth, Darwin, Adelaide, Hobart and Canberra haven't been increasing in unaffordability not to mention regional areas.

    I do think it would be good to slow down Sydney and Melbourne for social benefit, but given the different housing markets in Australia it seems to me that it's not so much about federal policies but more supply and demand…

    Separately, on negative gearing, if I have 3 investments, one makes +$200k, one +$100k and one -$50k and no other income to speak of, how much money have I made in total and what is my total taxable income? are they the same figures or different?

    • You would calculate income (rent) less expenses (Interest,rates,insurance,maintenance,depreciation) to arrive at net income or loss for each property. From there it would be combined to give overall income (or loss).

      That figure would then be added to other income, (salary, interest, dividends etc less other expenses) to give overall taxable income.

    • Separately, on negative gearing, if I have 3 investments, one makes +$200k, one +$100k and one -$50k and no other income to speak of, how much money have I made in total and what is my total taxable income? are they the same figures or different?

      I think you're talking about capital gains, not negative gearing. If they are all sold in the same financial year, then +$250k will be added to your taxable income.

  • +1

    Yeah they are doing stuff all. They keep on skirting around the main issue, supply and demand.

    To increase supply, you need to release more land around Sydney AND build rail networks to make the commute to the city 20 minutes or less. They dont want to do that, too hard.

    To decrease demand, you need to stop the ability for people to rock up to an auction and drop 1.5 million of borrowed money. Thats 1.5 million the banks just made profit on for the next 40 years to the detriment of retail and manufacturing.

    However, problem is only really with Sydney. So the problem should be sorted locally not nationally. Maybe release some govt ads showing just how much 1.5 million dollars is (get a mansion, speedboat and take the next 10 years off work in a country town, probably longer).

    • +1

      From 2014 the banks have increased their lending from around 15 billion a month to 20 billion. This adds to the amount of money people can bid on housing.

      APRA is trying to put a stop to this, but banks want to make larger profits.

    • Lol at making commuting time less than 20 minutes. It's not only hard, it's also very expensive. Right now the rail system works so they don't care about upgrading it.

  • +1

    at the end of the day… may be 20% potential first home buyers wanting prices to go down, vs 80% property owners not keen for prices to go down. usually majority of power wins.

    • +6

      I am a home owner and i would be happy for the price to go down because i can buy another house and also my child has some chance of buying one when he/they grow up.Now i am stuck forever with only one house and my children will never be able to afford to buy one either.

      • +1

        … after letting them sell first to realise the profits :P

  • +1

    Apart from what everyone else has already mentioned about negative gearing, capital gains and foreign buyers there is also another factor which is population increase. Majority of that increase is by un-natural means aka immigration. This demand side factor should be open for discussion considering approximately 30% of the population aren't actually born here which inherently puts a major boost in demand for houses yet it seems to be political suicide to do so. Eventually SJW liberals need to ask themselves if they care more about their future kids, grand-kids, generations being able to afford houses over if we should continue accepting this high-level of immigration and if not what level should be acceptable (possibly 100,000 persons per year instead of 250,000 for instance).

    • +1

      Agreed, 457 visa's are being abused by some businesses. Also the EDUCATION sector is leaving the door wide open for people to come in. There are around 160000 Chinese students in Australia. I know of one (friend of a friend) who has purchases 19 properties.

      There are even people getting 457 visas for fast food work. (Yes, mcdonald's and burger king…)

      I have NO PROBLEM with highly educated or high skill trades coming in. Just be selective and make sure Australian workers are protected.

      Again the government is failing us big time.

      • I can vouch for the 457 being abused. The global corporate company I work for just filled a graduate entry level position with an overseas 22 yo grad student who had no previous experience! Yet youth unemployment is really high and could easily have been filled locally.

        Apart from that this company hires approximately 30-50% of its labour from overseas rather than training locally. There should be much more pressure/incentive put on these companies to train staff locally rather than immediately looking overseas.

  • The only way to solve the housing affordability problem is for state/federal government to invest in public housing. I don't mean the ghetto high rises like in the inner city Melbourne, I mean something lower-mid market. I like the idea of public/private housing where the government helps fund people into houses, but it has to be into decent outer suburbs or a new estate with good facilities (ie. the government needs to tip more money than usual into a housing development area). It doesn't need to be on a recklessly huge scale, just something to help out with the detached housing problem of low/unaffordable stock.

  • Having migrated to Australia, when I bought my house in 2010, I was surprised that the banks were willing to lend me a loan where the monthly payment is greater than 50% of my net monthly income. While this helped be to secure a house of my dreams, the banks shouldn't be lending so generously. The monthly mortgage payment should be around 30% of your monthly income. The banking sector along with NG should be blamed for the housing affordability crisis.

    • +2

      Hey they'd be happy to take the house from you. After all its your fault for signing the papers, that's what they will say ..

  • +1

    Or what about even just some reforms to tenancy laws?!

    This government does not give a rat's arse about the people who are forced to rent.

    Don't get me wrong - affordability is important, but equally important is improving the conditions that renters are increasingly forced to live in. It used to be that aussies rented while saving for a home and it was seen more like a transition stage thing or a lifestyle choice. Now that a whole bunch of people are forced to rent and cannot realistically expect to ever own a home, how is it that policy has not caught up with all the big problems of renting that make home-ownership such a crucial goal in the first place?!

    Considering that renters now don't just pay sky-high rents but also actually foot the bill for these schemes like negative gearing and grants, you would think that the potato-heads in power would at least make it less stressful and more stable so that this class of people may keep eking out a living and contributing to the very system that gouges them.

  • House prices are pushed up, designed so that mum and dad are both working until 65 and kids are in childcare/school. First house will not be ideal or you will grow out of it meaning you'll need to buy something else. Divorce will set you back even further. Anyway these are just my thoughts on it. If everyone owned a house and was mortgage free, less people would be working making Australia weaker in the financial sector, look at what's happening to Greece.

  • How many years have we got until the baby boomers die off? Perhaps this will help put a bit more supply in the market

  • -1

    what do you think is a reasonable expectation of people to be able to buy a house? should a 20 year fresh grad expect to be able to buy a property 5km away from the CBD? I think we need to establish what people want to expect and then work the model to fit what people are wanting and see what that looks like.

    • People want the median house price to be down to an acceptable level so it doesnt take 30 years to pay off. Based on the average Australians income prices are higher than ever. No one is disputing the fact that prime real estate should cost considerably more than non-prime real estate.

  • +3

    Renting is great!

    • Freedom of movement, suburb to suburb, city to city, whatever you want
    • Anything goes wrong, the owner pays for it
    • No rates to pay and I also know my accommodation expenses exactly and in advance
    • No fretting about interest rates
    • Inspections are no biggie and keep you in check so lack of cleaning doesn't get out of hand
    • Can invest free money in potentially higher return assets like shares, or safer assets like bonds/fixed interest
    • Investment mentioned above are usually high liquidity, settlement in 2 days. Also you can't sell just a few bricks in your house like you can sell a small percentage parcel of shares you own
    • Want to travel overseas for an extended period e.g year(s)? No problem, just don't re-sign the next lease
    • Got crappy neighbors? Moving elsewhere won't send you broke

    Quote from Fight Club: "The things we own end up owning us"

    • If that suits you then that's good (honestly), but the problem is people like the politicians assume everyone is like this and as the saying goes, "they know the price of everything, and the value of nothing". A persons' home, even one partially owned by the bank, has a lot of personal value attached to it. Not to mention all the things you can't do to a place while renting - without jumping through hoops and forking out for it yourself (in turn just being free upgrades for the landlord if they let you).

      • Yes some downsides as well, renting won't suit everybody. The owner can also sell on you. But even so, to me the downsides seem to pale in comparison to the hassle, expense and loss of freedom that comes with owning. I did own for about an eight year period, but I didn't think much of the experience, and I'm in no rush to buy another. Maybe I'll think about it again if a crash throws up enormous bargains.

        • As a renter you have more rights than the owner when you sign the lease agreement. eg.. If you sign a 2 year lease and after 2-3 months the owner decides to sell the property you're within your right to continue to the end of your lease. If the new owner wants you out then they would need to compensate you for all responsible expenses.

  • +4

    I think we're all missing the big picture when it comes to the "affordability crisis".

    That of course is the catastrophic consequence when this all falls apart. House prices are rising predominantly because of higher debt, and banks are more than happy to lend as long as the asset they are secured against also keeps rising. More debt = high prices = more debt..

    House prices are NOT supported by anything other than the hope that when you sell, someone else will load up with even more debt than you to buy it off you.

    Rents are increasing at a measly 2-3% (some years it's been a flat 0) - so much so that the rental yield on a home is less than 2% - some homes at 1.8%! This is at interest rates at 4% … wha??

    How does this situation end?

    1. Hope and pray that the price keep going up even though we're all at breaking point in terms of lending, RBA clamp down, OECD/World Bank warnings… ignore and pray. This can't physically happen BTW>

    2. Home prices remain stagnant until the fundamental "investment" quality catches up. The long term average rental yield is around 4-5% - we're looking at zero capital growth for 20 years.

    3. As per every other housing boom in the past - it explodes in our face. If we're unlucky, we have a Japan style melt down and be in the doldrums for 15 years….

    So overall, I could care less about people not being able to "afford" to buy their own home especially since the rental aspect is not even remotely as bad. What I DO care about is that the future of our economy is at stake with a unprecedented debt balloon that's essentially wasted so much of our productive capacity for so long…. a day of reckoning may be coming :(

    • +1

      House prices are NOT supported by anything other than the hope that when you sell, someone else will load up with even more debt than you to buy it off you.

      ssssshh you're not allowed to say that!
      You will be howled down by all those speculators investors who refuse to admit they're in a ponzi scheme with assets that they hope to increase in value purely on paper cos it sure as hell not producing anything, instead just robbing you of income to invested or spent elsewhere.

    • +1

      You definitely have to wonder about some people.

      I was talking to someone the other day who believed that all of the losses on a rental equate to 100% equivalent reduction of his tax. He couldn't understand why I don't have an investment property when "the government pays it off for you" lol! I explained that even if you are in the highest income tax bracket, then the maximum tax "benefit" is 45%, the rest is a loss that needs to be made up by an increase in the property price otherwise it's gone forever. The scary thing is that this guy has has bought and sold multiple IPs in the past, so how could he not already know this?

      Another person I know has held an IP for about 10 years now. He first bought it after taking advice from someone he knew who told him that on average property doubles every seven years. After the first 7 years passed and his property increase was zero, he was still ranting on about the 7 year "rule", even though I pointed out that for the "rule" to stay true, the property now has to quadruple in the next 7 years. This is a Brisbane apartment, so in 4 years from now (14 years from initial purchase) I expect I'll be telling him that now it needs to increase eight fold to keep to the 7 year "rule". Yes, he actually calls it a rule!

      I'm thinking that one of the best courses of action for government is to restrict any of the incentives under their control to new properties only. This should apply to grants, negative gearing, capital gains discount, access to super for deposit (if this happens), reduced fees e.g. stamp duty, anything else. Increase the supply of property and generate economic activity via building at the same time. Seems like a no-brainer.

  • +1

    Just my 10 cents….why don't the government allow first home buyers to do a salary sacrifice arrangement with a cap similar to what you can do with super.

    • I agree with this. If they allow savings for buying the first house with tax reduction, more people will start saving money rather than hope they could enough mortgage approval. If they also make some tax reduction for the repayments of mortgage for the first house, it will make it more buffer to it.

      Furthermore, I think at this time, government should prioritize the first home buyer than who looks for the 2nd+ houses or looking for investment.

      The current design is too much good for investors and has no way that the first home buyer could compete.

  • +2

    The gubermint isn't actually doing anything…oh, except talking and making excuses, denying self interest, etc.
    Their only suggestion is to allow people to access their super to buy a house. This is the height of stupidity, since it would increase demand (raising prices).

    If they want to increase housing affordability, prices have to come down, or at least stop rising (how is that not 110% obvious ?).
    To achieve that, the balance of supply and demand must swap.
    Clearly you can't stop demand for housing since people need a place to live, so you need to stop providing incentives for investors to speculate on housing, and or provide incentives for speculators to permanently exit the housing market.

    Negative gearing is a substantial incentive to speculators. It has to go, not necessarily all at once (although I say "rip that band-aid off", do it in one hit).

    The amount duty/land tax/transfer fees etc that the various levels of gubermint earn off inflated property prices is a further disincentive to them changing the rules; god forbid they had to find a few billion extra dollars to balance the budget (although that would be simply done by cancelling orders for F35's and dead duck submarines). (ref ABS $26 billion just for the Comonwealth in 2013/14)

    The main problem is, ALL the politicians in any position to do what is needed would lose out personally. They're all too greedy and gutless to pull the trigger.

    Whenever there is a change, there are winners and losers. The (potential) losers will always squeal loudest, especially in this case where they hold the power.

    disclosure - I own property, and have no issue with it dropping in value. I bought it to live in. If all property drops in value, I can still afford to

  • +1

    You can't tell me that supply is the issue. Just look around pretty much any suburb in Western Sydney and you will see massive unit block developments left, right and center.

  • I am 26 years old and most of my peers don't give a shit about housing affordability or trying to break into the market.

    Maybe it is my social group? But the younger kids need to wake TF up and realise this is our future. We need to actually start investing in our future because these wealthy politicians actually do not understand where we come from.

    None of my friends are into politics, none of them care about trying to buy a house. It all seems to be fleeting grasps of happiness, partying, drinking, holidays etc which is all fine but there is never talk or worry about the long term goals.

    The young need to wake up and realise this is our future.

    • +1

      Helplessness leads to apathy. Everyone is over it.

  • Well our Prime Minister has a lot of properties in his portfolio, he will not come up with policy that will hurt him.

  • +1

    Why is it the responsibility of the government to make houses affordable? Is it our 'right' to be able to own a home?

    In many vastly populated cities it is the norm to rent rather than own (London, New York).

    • -1

      100% agree with you

      • +4

        If the government actions had no effect on the housing market then I would say yes, they are not responsible for making housing affordable.

        However their actions have DIRECT effects on housing through tax, infrastructure etc.

        So as I am unable to change tax incentives or build infrastructure, I want them to pull their weight and change their policies to not encourage price growth through artificial means such as tax, speculation and immigration policy.

        Why should investors be able to change their tax bracket because they are making a loss on their realised income (RENTAL INCOME) and profit on their unrealised income (CGT).

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