Isn't It Kind of Crappy Towards Society to Buy a Lot (if Any) Investment Properties?

Lockdude on 18/01/2021 - 10:48
Last edited 18/01/2021 - 10:49

So, I'm by no means an expert in this, so I thought I'd come to this forum to get some opinions from people who hopefully know what they're talking about, people defending their own behaviour to make peace with their god, and people who don't know what they're talking about, but want to talk about it anyway.

So here goes: Isn't it kind of crappy to buy a bunch of investment properties? I get the feeling landlords feel like they're doing lower income households a solid by providing them with a roof over their head - but I've never understood that. If so many people didn't go out of their way to own so many more properties than they needed, housing would be a lot more affordable right? The supply would be so much higher, and the demand would be lower. The threshold for buying a house would be a lot lower, and people could enter into the market earlier.

It's just a rich get richer thing right? Buy investment properties, and it inadvertently pushes up the price of your own home. You make it harder for people to buy a home, and in doing so, can raise the rent you charge.

I currently don't own any home, but my savings are getting to a point (finally) where I can start to think about the longer-term future. And having been a renter my whole life, as were my parents, the thought of buying extra homes to line my own pockets at the expense of another just seems like a real jerk move.

Knowledgeable experts, unknowledgeable experts, and moral justifiers, please share your thoughts.

Poll Options

  • 594
    Buy as many investment properties as you'd like
  • 213
    Just buy a house to live in - invest in other things
  • 74
    One investment property is fine
Financial

Comments

  • whooah1979 on 18/01/2021 - 10:58
    +9

    Nobody wants to work 9 to 5 + overtime to see their earning be eaten up by inflation year after year. Investing in appreciating assets is the only way to get in front of that. Precious metals, real estate, arts, derivatives, digital assets, collectables, etc, are some of the most common investment instruments used in the game of protecting one's wealth.

    • wallet72 on 18/01/2021 - 11:14

      I agree with you, but it's interesting that every example you listed is only as valuable as the market thinks it is. Look at real estate, if you have an investment property that's worth $500,000 today, then watch the value plummet when the government announces the new 6 lane freeway running behind you back fence.

      • CrowReally on 18/01/2021 - 12:23

        "it's interesting that every example you listed is only as valuable as the market thinks it is"

        Not sure if this is a tongue-in-cheek comment, but that's how the market works. e.g. Everyone 'decides' what gold is worth to them, and then that becomes the gold price, etc. Homer Simpson chose to wait until after October to sell his pumpkin shares and found out the rest of the market had decided pumpkins weren't in as much demand, and so on?

        • Bargainz on 22/01/2021 - 00:20

          You have to be extremely naive to think there is a free market in anything these days. Everything is manipulated by government and even private investor groups which use its economic wealth the set prices and demand.

          • CrowReally on 22/01/2021 - 09:08

            @Bargainz: I know, the international cabal of price fixing on 600ml orange juice bottles is a thing to be reckoned with … or so I thought, right up until I discovered the private investor groups that control the price of shovels. And don't get me started on the stranglehold Zurich has on second hand copies of One Piece DVDs sold on GumTree. They also control "only used once kettle bell set", but we know where the real power lies.

            The worst part is that "they set prices and demand". Normally it's just "they set prices" and then we decide if we want to pay that or not (which is what the supply/demand free market thing that used to exist conveniently handled). Now, some maniacs in a mountaintop mansion who control the price of A4 reams of paper can set the price to $80 each, and then, in the old days, we would be like "Fff, that's too much, I ain't paying that", but now they push the little 'demand' slider up and of course we're like, "MUST. BUY. A4. PAPER" and that's that, we've spent all our life savings buying thousand of reams of A4 paper, because they control that as well, because they're corporations, and that's what they do, the corporations, they sit there in their… In their corporation buildings, and, and, and see that, they're all corporationy, and they make money. Mhm.

      • Scrooge McDuck on 18/01/2021 - 18:43
        +2

        every example you listed is only as valuable as the market thinks it is.

        As opposed to…?

    • leiiv on 19/01/2021 - 10:22

      What I can't understand is that the economic system doesn't have to be that way.
      Why not make wage and salary increases to always beat up inflation and make investment returns to be less than inflation? That will discourage wealth hoarder.

  • Ocker on 18/01/2021 - 11:01
    +1

    I worked hard for my money and I will invest it as I see fit

    • Lockdude on 18/01/2021 - 11:03
      +58

      Sure, that's a good every-man-for-himself attitude. If you're the only entity that matters, then it entirely makes sense. But that's not the question I'm asking.

      • whooah1979 on 18/01/2021 - 11:11
        +2

        Buy as many investment properties as you'd like

        That one of the options in the poll.

        • Lockdude on 18/01/2021 - 11:13
          +5

          You know what? You're right. My poll options haven't aligned particularly well with the question I ask in the title. Sorry about that. I guess my intent was to ask about its impact upon society, but then the poll is a real 'personal choice' kind of thing. I think either way it provokes interesting discussion, but I like to be fair and reasoned with what I say, and my comment about "But that's not the question I'm asking" wasn't right. I don't agree with your way of thinking, but that shouldn't stop us from having a fair discussion about things. So sorry again!

          • nikey2k27 on 18/01/2021 - 15:27
            +1

            @Lockdude: it not all winning with house look at regional market Townsville house price went down 100,000 you pick up cheap house but who know if it will go up. i have two mate one put 300,000 in stock market in 2008 and other one got investment house in Townsville for 350,000 one now has 1.5million in stock other has house worth 300,000.

          • Scrooge McDuck on 18/01/2021 - 18:57
            +1

            @Lockdude:

            My poll options haven't aligned particularly well with the question I ask in the title.

            You also asked a leading question in the title and your poll options are unscientific too.

          • TheBird on 19/01/2021 - 16:33
            +2

            @Lockdude:

            You know what? You're right. My poll options haven't aligned particularly well with the question I ask in the title. Sorry about that. I guess my intent was to ask about its impact upon society

            Most arguments can be swung one way quite easily if you keep it in a bubble of its own. Within the whole context of property, you have some solid and valid arguments, but the world isn't that simple as blaming it on the investors. Investors are more of the symptom of the system and circumstances, than the problem itself.

            I haven't seen anyone mention this, but the a combination of the job market, economic opportunies and the attached related demand that has more of an impact than investors do.

            If you want some correlation of this, look at what happens to mining towns and their nearby neighbours when those mines shutdown. Real estate plummets, even when there were a large number of investors owning properties.

            I would hazard a guess (I'm no expert, so it's a guess at best) that if you limit ownership, you'll limit the number of properties developed, which, if we continue to increase our population numbers, it can lead to an increase in homelessness. If you eliminate negative gearing, I believe the end result will mean you'll increase the cost of living for many people (increase the cost of delivering a product or service, you increase the end cost), sending more people into poverty. I don't think either of those is appealing since if it happens, it will happen to those least able to afford to fend for themselves.

            The system we have isn't perfect. Far from it. I'm yet to hear of a system that is better than what we currently have.

            Sure, that's a good every-man-for-himself attitude.

            One last point. Expecting someone to look out for other peoples interests before their own has been secured isn't realistic.

            It's definitely an interesting discussion.

            • ozbjunkie on 19/01/2021 - 19:51

              @TheBird: Before their own have been secured? If I had 3 houses I'd be pretty sure my interest were doing just fine.

              • TheBird on 19/01/2021 - 22:17

                @ozbjunkie: What you need is contextual depending on the needs, obligations, habits and chosen lifestyle of the individual/family.

                You might be doing fine even if you were losing money from 3 houses. That's your business I suppose.

                • ozbjunkie on 20/01/2021 - 07:46

                  @TheBird: While your point is valid, I think that the issue is more that wants and desires are unlimited, housing is limited, and the individuals with most power to increase their property holdings are those with existing holdings.

                  I don't expect people to act outside their best interests. I do expect policy decisions that help ensure affordable housing, although I am coming to realise that expectation is somewhat naive.

                  • TheBird on 20/01/2021 - 15:16

                    @ozbjunkie:

                    I don't expect people to act outside their best interests.

                    That was basically my point.

                    I do expect policy decisions that help ensure affordable housing, although I am coming to realise that expectation is somewhat naive.

                    It's nice to expect, or even want. I don't think anyone wants unaffordable housing. The issue is how do you achieve it? You could go down the rabbit hole path that New York chased which caused misery for both the tenant and the landlord. You could go down the communist path and have houses supplied by the state (for those worth most in the eyes of the state). You could go the free market way and let the market decide. You could regulate rentals. You could tax the bejesus out of it.

                    I'd be curious what system would be best that wouldn't comprimise the long term quality of living for the majority, without unexpected consequences.

                    • ozbjunkie on 20/01/2021 - 17:02

                      @TheBird: No idea how to achieve it honestly. I lack the knowledge and possibly the intelligence.

                      One solution for me would be to notice that since the explosion in house prices mostly tracks and explosion in debt and increasingly low interest rates, until median house price to median income ratio in Sydney is at times greater than any other city (I realise London New York and Tokyo are also up there), that any return to less extreme ratios may require higher interest rates which might decrease house prices in a "soft landing over time".

                      I realise that higher interest rates might harm other parts of the economy and might also not fit with the current economic system of limitless monetary expansion and growth within a finite ecological system which necessitates a 2-3% inflation target for stability (for lack of a better word).

                      However, altogether I think those ratios must come down as 5-10%pa increases in house prices while incomes are essentially stagnant in real terms for several decades just moves Australia towards a socioeconomic caste system of property owners and non owners, with a lower proportion over time of the population able to access the property owner caste.

                      Holes in my thinking? I'm sure there are many. Would genuinely appreciate you pointing them out since you seem pretty well versed on the topic.

                      • TheBird on 21/01/2021 - 03:05

                        @ozbjunkie:

                        One solution for me would be to notice that since the explosion in house prices mostly tracks and explosion in debt and increasingly low interest rates

                        The low interest rates are to help the economy stall… or currently to try to fend off a freefall. While low interest rates has been the thinking since the fiat system was invented, you only need to look at the last 12 years to see that it hasn't stimulated the economy as many would have expected, and it has had some unexpected side effects. But time will tell. I'm not hugely versed in finance, more of a passing topic of interest from time to time.

                        I realise that higher interest rates might harm other parts of the economy

                        While I was young, I lived through the late 80's, where high interest rates made real estate prices skyrocket.

                        incomes are essentially stagnant in real terms for several decades

                        They're only stagnant in some small areas. In others, wages are decreasing in spending value, particularly in the unskilled/marginally skilled areas. Many other areas, like tech, medcine (I believe) and finance are booming. You don't need everyone to be buying property, just the ones who have a surplus of $$$ to be able to afford property to live/looking for a safe place to park their money and prices will continue to climb.

                        finite ecological system which necessitates a 2-3% inflation target for stability (for lack of a better word).

                        My understanding is those numbers are designed to prevent capital from staying stagnant and incentivise to invest. The theory is investment creates jobs, opportunities and efficiencies. The stability comes from other areas, depending on how its done, causes its own issues but that gets into areas I completely don't understand why it works the way it does.

                        I think those ratios must come down as 5-10%pa

                        I'm not sure what this is in reference to. I'm somewhat assuming you're meaning an owners equity ratio in property or some sort of price regulation?

                        Australia towards a socioeconomic caste system of property owners and non owners, with a lower proportion over time of the population able to access the property owner caste.

                        I'm anticipating, that without further government intervention, it'll veer more towards disciplined, highly paid, highly educated and those entrepreneurs who learn to create massively scalable value (a lot of tech & finance - if you look up new self made billionaires all but a few are from those categories) who will end up owning more.

                        I'm not sure I like it, but we want a system that rewards people from achieving and contributing. I know it's far from perfect. Take for instance who thinks that an actor (or those complaining tennis players) that's paid tens of millions per year is worth more than the army of nurses, cops and countless other professions.

                        Personally, I think high paying jobs is what is pushing up real estate prices. It might be a reverse correlation, but look at collapsed mining towns. All the high paying jobs leave an area and real estate prices plummet.

                        There's another point. There's always danger when government gets involved with setting the price of goods. How would you feel if you had a willing buyer to pay, lets say $800k for your appartment, though the government puts a cap on its price at $500k. It would suck if you purchased it for $600k earlier. What if you were happy to move to an abandoned mining town for cheap prices, but the government stipulates the the price is $400k for that property and not the $100k that the market is willing to spend. The property stays vacant. Simiar with rent control.

                        The world isn't perfect. It is what it is. It's also exciting times. We've reduced more extreme poverty in the last 30 years than any other time in history. We're not there yet, but it's a step in the right direction.

                        These kinds of conversations are so much better in person.

                        • ozbjunkie on 21/01/2021 - 14:19

                          @TheBird: Median house price to median incomes ratio was just being mentioned as a relatively fair way of comparing the price of property across countries and across time.

                          The point about growing house prices and stagnant/falling wages was just meant to mean that the situation is unsustainable.

                          But as you rightly pointed out, it's entirely sustainable, just doesn't lead anywhere good (unless one has a scalable business or is otherwise rich).

                          Interesting points. Indeed better in person.

                          • TheBird on 21/01/2021 - 14:40
                            +1

                            @ozbjunkie:

                            Median house price to median incomes ratio

                            That makes much more sense now.

                            The point about growing house prices and stagnant/falling wages was just meant to mean that the situation is unsustainable.

                            It is unsustainable for everyone, but on another point, can you imagine what would happen if everyone moved into a single city.

                            just doesn't lead anywhere good

                            It still could.Social and technological improvements and breakthroughs can come from anywhere. It's often that the solutions present themselves when a particular pain threshold has been exceeded. Take for instance, high speed mass transportation systems could be a game changer for this topic.

                            This pendemic has showed that the ability to work remote may also be part of a potential solution. When city working is no longer geographical based, a change to a different type of imbalance may happen.

    • Alderson on 18/01/2021 - 16:12
      +15

      No man/woman is an island. Keep that in mind. Everyone has only been able to get where they are today through heavy reliance and interaction with the rest of society. The 'I can do whatever the hell I want' attitude grinds my gears, because if everyone thought like that, life would really suck. And I'm not saying you shouldn't be allowed to buy an investment property. Just saying in general you shouldn't be so dismissive of the question OP is asking. We should at least stop and think how our actions affect everyone else.

    • Scrooge McDuck on 18/01/2021 - 19:00
      +3

      I worked hard for my money…

      So hard for it, honey.

      …

      So you better treat her right!

  • holdenmg on 18/01/2021 - 11:02

    There are exceptions to this such as organisations or non-profits or co-ops that rent from a stable of properties w/NRAS that are generally rented at a discount to market.

  • AustriaBargain on 18/01/2021 - 11:07
    +20

    Absolutely. A tiny minority of people living the big life under the backs of an entire country and economy is kind of wrong in the first place. People should be able to get rich, but if you keep getting richer while many more people are struggling to even live a meager life, then the society you are profiting from is clearly pretty broken. I suppose what happens is many people do realise that and try to fix it, so you band together and vote Liberal to try and protect the broken system to keep it broken specifically in the same way that it profits you in the first place. And a side effect of voting Liberal is that you have terrible internet in all of your houses instead of gigabit NBN, for example. Also your news is boring and constantly frightening at the same time, because Liberals couldn't stay in power without News Ltd. News Ltd existing and thriving means people like Trump get elected. Is ALLLL that worth it just to keep a broken system broken? If we fixed the system then do you think you wouldn't be clever enough to get rich off the fixed system, if you aren't that clever then why do you deserve to be rich now, why not fix the system and let people clever enough to thrive in a fixed system have their shot.

    I think whenever a question like this is asked, the person asking it already knows the answer. There's nothing wrong with getting rich, but once you start voting Liberal to keep society broken then you're kinda going too far. If your riches depend on holding society back then that's not a good thing to be supporting. You could donate some of your eventual riches into services for the underclass in your community, if you're having trouble sleeping at night.

    • Lockdude on 18/01/2021 - 11:11

      Just to be clear, I'm far from rich, and do not own any property. I'm lucky enough to have a job that pays well enough, such that in a year or two I could own property. My current life situation has just gotten me thinking about this question more and more. And as soon as I thought about investment properties, I started feeling pretty uncomfortable. As others have noted, it's a good investment, but the harm it does to society really bothers me. I guess I'm really looking to make sure my understanding of the situation is correct - and perspectives like yours really help. As do the perspectives of others who have commented.

      • AustriaBargain on 18/01/2021 - 11:16
        +2

        You really could just donate money to charity if you do get quite rich off property one day. Well funded support programs for women in drug recovery could change their kids lives. Then it's not just you profiting, it's you and dozens of families that really need help at a key moment in their lives. And if the market turns and you don't make any profits at all at the end of the day, then you haven't gotten rich off society anyway.

        • Lockdude on 18/01/2021 - 11:17

          Hmmm, great point. Thank you :)

      • Stewardo on 18/01/2021 - 11:28

        How is your superannuation invested?

    • Speckled Jim on 20/01/2021 - 09:20

      True, but there was real momentum following the GFC (that Bush-enabled clusterfock). Trump was the bastard man-child of the failed 2008 Tea-bagger movement, itself an extreme right-wing response to the GFC bailouts and "keeping the White House white".

  • mskeggs on 18/01/2021 - 11:11
    +8

    The two options aren't people that own a house and those that want to buy, have plenty of savings, but can't quite afford a deposit.

    Lots of people can't afford to buy, and some don't want to buy. So there will always be a need for landlords.

    Buying property as a speculative asset, which loses money in the mean time to get capital gains that are taxed lower is evil, and should be discouraged, because it is unproductive and drives up costs for a human need. It should be discouraged by our tax system.

    • Lockdude on 18/01/2021 - 11:15
      -2

      Yeah, it's becoming clearer to me there is a need for landlords (which I think I only suggested wasn't in the hypothetical extremist sense). I guess I'm realising it's all the people with 'portfolios' of real estate which bothers me.

      • mrhanky71 on 20/01/2021 - 16:26

        Do you think that these people were just given these houses?
        The money used to pay for it was at some stage earnt by trading their own time and labor.
        People aren't born with portfolios.

    • Scrooge McDuck on 18/01/2021 - 20:41

      Buying property as a speculative asset, which loses money in the mean time to get capital gains that are taxed lower is evil,

      That's how most investments work. An investor loses the opportunity of their money in the present to purchase an asset hoping for gains in the future. It makes no qualitative difference if leverage is involved. With no leverage, an investor loses the income the investment capital would have otherwise earnt and so doesn't pay tax on this amount either.

      Capital gains are treated as income in the financial year they are realised. Our progressive tax system causes their tax liability to be greater than if capital gains were averaged over the term of the investment for all investors outside of the top tax bracket (otherwise it is equal). So some level of discount is justified to balance the accumulation of income to one year. I won't defend the specifics of our tax system, I think it's an overly complicated hodgepodge.

      because it is unproductive

      Investing in the construction of new properties is directly productive. Investing in existing properties increases their market value and so is indirectly productive by incentivising the previous.

      and drives up costs for a human need.

      The human need is to have a home available to live in, not to own that home. Plenty of people meet their needs adequately by renting; some of these have the resources to own a home but don't want to invest in property (you acknowledge this in your comment).

      • mskeggs on 18/01/2021 - 20:53

        Very few investments lose money like a negatively geared property. Mostly, such investments are seen as very dubious.
        The CGT discount makes a world of difference in this regard, and incentivises investment in both new housing (agreed productive) but also existing housing stock (non-productive). Existing housing stock greatly outnumbers new builds, so the bulk of the advantage is not directed to new builds.
        I agree providing rental accommodation is useful. I disagree giving tax concessions for the capital gain on existing properties is a good use of my forgone tax dollars. I makes it harder for those who do wish to buy, and does not add to housing stock for renters.

        • nightqueen on 19/01/2021 - 09:39

          If the government remove negative gearing on all investments, that would effect business owners that take loans to start their own small business and people that borrow to invest in shares?

          • mskeggs on 19/01/2021 - 10:33

            @nightqueen: There is a difference between removing negative gearing from everything and removing it from existing housing.
            In any case, it is the CGT discount driving the behaviour - as it makes it sane to lose money on an ongoing basis with full tax offset, so that you can make a capital gain that is only half taxed.

            • nightqueen on 19/01/2021 - 11:16

              @mskeggs: CGT discount applies to all capital gains on any asset, a person could borrow to purchase shares or crypto and claim a tax deduction for the cash flow loss for a capital gain.

              To just remove negative gearing and CGT discount on existing housing sounds unfair and inconsistent tax treatment for different assets. Why would it be beneficial for existing housing asset to have 'special' treatment'?

              • mskeggs on 19/01/2021 - 12:02

                @nightqueen: Because the combination of negative gearing of property income against wages income, reintroduced in the 1980s, plus the CGT discount introduced in the late 1990s, have combined to distort investment into real estate in preference to other assets.

                If the tax system resulted in a great switch into (for example) people seeking non-salary benefits to supplement their income because those benefits were taxed advantageously, we would change that (FBT in this case).

                Tax policy isn't something that is moral or values based, but is a tool to fund government. For easy management, it's good to stick to fewer exceptions, but if the tool isn't having the outcomes desired, it can be changed.

                We currently have stamp duty concessions for new real estate for some buyers. Nobody seems upset that these concessions created exceptions.

                • nightqueen on 19/01/2021 - 15:12
                  +1

                  @mskeggs: From memory, the ALP lost the last election with policies of changes to negative gearing (for new properties only) and to cut CGT discount from 50 to 25%, the electorate rejected these policies and voted in the liberal nationals. Based on that result, the majority of australian voters don't want those changes

                  Why does the combination of negative gearing and GT discount distort real estate asset as a preference compared to other assets?

                  Yes as you said, more exceptions means more paperwork and more administration to 'qualify'

  • tsunamisurfer on 18/01/2021 - 11:18
    +5

    Isn't it kind of crappy to buy a bunch of investment properties?

    Isn't it kind of crappy to buy a bunch of AfterPay shares? It just makes it more expensive for me.

    Isn't it kind of crappy that people are buying Toyota RAV4 Hybrids? It just makes it harder for me to get one.

    The answer is No and has been no since the dawn of time.

    If so many people didn't go out of their way to own so many more properties than they needed, housing would be a lot more affordable right?

    No, you have made the assumption that renters will automatically be able to afford to buy if investors were out of the market, if investors were out of the market, wouldn't there be less rental properties hence making rents higher?

    It's just a rich get richer thing right?

    Not really. Capital gains and strong rental returns are not guaranteed at all. Just look at the losses suffered last year.

    The Rich get Richer and Poor get Poorer is a myth.

    The rich get richer, and the poor also get richer just slower.

    And having been a renter my whole life, as were my parents, the thought of buying extra homes to line my own pockets at the expense of another just seems like a real jerk move.

    Where are your savings?

    Are they in shares? If so, my first sentence applies where you have grabbed something at a lower price thereby preventing others from buying said shares.

    Are they in term deposits earning 0.75% when the CPI is about 2%?

    Do you have a job? If so, aren't you taking a job from someone else?

    I see nothing wrong with investing, let the market decide who gets what, its the fairest way of determining the spread of resources.

    • Lockdude on 18/01/2021 - 11:24
      +10

      Ah, I screwed up and didn't reply to you. I'll just copy the comment again then:

      Of all the arguments you list, the "do you have a job?" is the most interesting one. I think the fundamental difference between housing and AfterPay shares is that AfterPay shares isn't a fundamental human requirement. A house is (don't give me exceptions of homeless people and those living in jungles etc - in Australia it is). I'm going to have to mull over longer about the job thing. But I think my conclusion will also be it's pretty irrelevant here. Promoting job growth etc is a completely separate set of problems to housing, but also, it does have its problems too - of course.

      • tsunamisurfer on 18/01/2021 - 11:43
        +10

        I think the fundamental difference between housing and AfterPay shares is that AfterPay shares isn't a fundamental human requirement.

        Housing may be a 'fundamental requirement', but home ownership is NOT.

        You can rent, flat share, etc. Or move to areas where it is cheap, there are plenty of cheap properties away from the expensive cities.

        I'm going to have to mull over longer about the job thing.

        There is no need to mull, no one has done anything wrong.

        When I get a better higher paying job I have climbed over someone to get it.

        When I have bought that last loaf of bread at the bakery, I have prevented someone else from getting one.

        Most things are finite and acquiring one unit means someone else misses out. It’s not illegal, it’s not immoral, it’s life and most people are OK with this.

        COVID and toilet paper is a great example.

        People are willing to go that extra mile to acquire said item, not necessarily with the intent of depriving others but to ensure they have what they (perceived they) need.

        • morse on 18/01/2021 - 12:10
          +11

          Most people frowned upon toilet paper hoarding. As they did medication, baby formula etc stockpiling. The stores intervened and most people thought that was reasonable.

          You’re correct about human behaviour, people do prioritise their own interests, as such society, the government and corporate entities often intervene so people’s basic needs are met and we live in a more pleasant world. I guess OP is asking for perspectives of if housing falls into that category.

        • deme on 18/01/2021 - 15:03

          Quantitative easing shows the economy is not zero sum as you state.

          • jerrus on 18/01/2021 - 15:52
            -1

            @deme: Lets "print" more money that'll work! If Australia has only 100 identical items of value and $100 they are worth $1 each if we use QE and make an extra $100 they are now worth $2 QE is a zero sum gain but with the disadvanteges of discouraging saving etc.

            Note I am not saying the economy is a zero sum gain, the economy is just how much we produce and that can change with efficiencies and increased worker participation

            • deme on 18/01/2021 - 21:31
              -1

              @jerrus:

              acquiring one unit means someone else misses out
              Note I am not saying the economy is a zero sum gain

              You do not know what zero sum means.

              • jerrus on 19/01/2021 - 13:50
                -1

                @deme: My comment related to Quantitative easing, which you cited as showing the economy is not a zero sum game I agree that it isn't but think QE has nothing to do with it and is itself, at best, a zero sum game. (and I see I wrote gain, should have been game)

                If your going to suggest someone doesnt understand a term then the polite thing to do is define it or suggest some reading otherwise people might think your a little smug.

                • deme on 19/01/2021 - 14:04

                  @jerrus:

                  acquiring one unit means someone else misses out
                  Note I am not saying the economy is a zero sum gain

                  In game theory and economic theory, a zero-sum game is a mathematical representation of a situation in which each participant's gain or loss of utility is exactly balanced by the losses or gains of the utility of the other participants.

                  You could have googled this definition it's the top result.

                  • jerrus on 19/01/2021 - 14:40

                    @deme: That's the definition I've been working from, the first half of the quote your atributing to me is from @tsunamisurfer. and is not my position. I don't think the economy is a zero sum game, my point is that quantitative easing doesn't show/prove this and it is in fact an example of, at best, a zero sum game.

                    • deme on 19/01/2021 - 16:29

                      @jerrus: Your comment contradicts itself.

                      • jerrus on 20/01/2021 - 11:38
                        -1

                        @deme: Quantitative easing is not "the economy" so no contradiction (assuming that is your point, again your response was unclear) and you should at least admit you wrongly attributed the comment "acquiring one unit means someone else misses out"

      • WizMuncher on 18/01/2021 - 11:49
        +7

        Well said. However (and you definitely anticipated this), you will be hated because you are right. Simply because you are right. And any small error you make will be pounced upon - you don't even have the option to say I made an error or misspoke. People will cling to it until their dying breath.

        Sorry to be so cynical, but that's how it is. There are a lot of people here with vested interests. They like to blend in with people like us. It's sickening.

        When you have liberal politicians that own upwards of 60 houses - it doesn't take a genius to understand that they have no desire to make housing more affordable. Add to that the greedy investors who minimize their tax and aspire to become slumlords and vote for the same self-serving liberals - the RBA keeping interest rates at record lows, and a government refusing to reform the tax system. It's a perfect storm.

        • Lockdude on 18/01/2021 - 11:59

          It's all right. I don't think it matters what others do, so long as I act the way I wish others would. I actually apologise in a comment above to someone I disagree wtih. I got a quick reply when I made a mistake, but no reply or acknowledgement of the correction. I actually think it's pretty hard to argue with someone who agrees when they're wrong. Makes for short conversations with closed minded people.

          Anyway, not everyone on here is closed minded. I think I'm right, but I wouldn't have come here if I wasn't looking for an opportunity to have my mind changed. Most people arguing for lots of investment properties though either are just voting and not commenting or bringing in unrelated topics to change what the point is. Which kind of reassured me in my thinking more than anything else.

          I have had my thinking opened up a bit already, especially around the necessity of landlords, and the potential increase in rent with fewer rental properties. I don't think either of those points justifies the extreme we've found ourselves in, but in the 'utopia' I hope for that will never be achieved, those things should be considered.

          I live my life thinking there's nothing wrong with a utopian goal, so long as I'm not expecting to achieve it. So often people don't consider progress to be a win, and consider that a good reason to not try at all. It really bothers me too…

        • Rescue 26 on 18/01/2021 - 13:05

          Don't let the facts get in the way of your Liberal bashing. According to your favourite rag, The Guardian,
          "Twenty-nine lower house Coalition MPs have declared interests in a total of 49 investment properties, compared with 26 Labor MPs, who declared 40 properties." This was according to their financial interests declaration in 2019. And considering there are more coalition MP's than there are Labor I reckon the percentage of Liberal (Coalition) MP investment property owners versus Labor would come out pretty even.

        • sakurashu on 19/01/2021 - 14:34
          +1

          I think you need to look at the stats of home ownership in Australia - it's complete fabricated nonsense that all the rich people are squirelling away 60 houses and that's why houses are expensive. A majority of home ownership above 1 are "mom and dad" investors with a single second property that's more like their generations version of super - yeah how dare they??

          There are also heaps of perfectly reasonable points as to why the existing system doesn't want housing to crash - a huge portion of everyone's super is in housing and companies like CBA who hold a huge number of Australia's mortgages. If housing prices crash it isn't a woohoo for the poor and a big middle finger to the rich; the country would be in complete shambles.

    • morse on 18/01/2021 - 11:56
      +6

      The difference with Afterpay shares, RAV4 hybrids and residential property is that housing is essential/ basic human need so I can see where OP is coming from. Generally I would say people should invest in whatever they like, but I can see here where government intervening in the market (which it already does, but incentivises investing in property) could be justifiable.

    • Autonomic on 18/01/2021 - 12:43
      +3

      Isn't it kind of crappy to buy a bunch of AfterPay shares? It just makes it more expensive for me.

      Isn't it kind of crappy that people are buying Toyota RAV4 Hybrids? It just makes it harder for me to get one.

      Neither of these are necessary to live or have a fixed supply.

      • tsunamisurfer on 18/01/2021 - 13:18
        +1

        The difference with Afterpay shares, RAV4 hybrids and residential property is that housing is essential/ basic human need so I can see where OP is coming from.

        Neither of these are necessary to live or have a fixed supply.

        Like AfterPay and RAV4’s Home ownership is not essential for life.

        People can opt not to own and happily rent like the OP’s family has done for 2 generations.

        Shares and RAV4s definitely are finite, the evidence is clearly there so I needn't elaborate.

        • Autonomic on 18/01/2021 - 14:43
          +5

          You can make more RAV4s. You can issue more APT shares. You can't make more land within reasonable commuting distance to work

          Rent prices are directly tied to house prices. Driving up house prices decreases access to housing for both renters and home owners.

          • whooah1979 on 18/01/2021 - 15:45

            @Autonomic:

            You can't make more land within reasonable commuting distance to work

            You're right, but the future for urban real estate is vertical housing. Parramatta 🚀 and Liverpool 🚀.

          • tsunamisurfer on 18/01/2021 - 15:52

            @Autonomic:

            You can make more RAV4s. You can issue more APT shares.

            Companies can flood the market with unlimited products and shares but they won't, I would hope that doesn't need to be explained further.

            Rent prices are directly tied to house prices. Driving up house prices decreases access to housing for both renters and home owners.

            I used to believe this.

            But its not always true.

            There has been times where it has been more financially viable to rent than buy.

            I know in Perth previous to this crisis, there was a time where rents were dropping but the house prices remained high. I met with a Financial Advisor who was able to break it down during a talk and the numbers were right.

            https://www.canstar.com.au/home-loans/rent-or-buy/

            I actually read a better article than the above where they used some Perth suburbs/properties as an example, but I cannot find it again.

            When renters rent AND invest the savings between mortgage repayments less rent, they are often in a better position. Shares have outgrown property (other than Sydney) for a while now.

            • Autonomic on 18/01/2021 - 16:10
              +1

              @tsunamisurfer:

              Companies can flood the market with unlimited products and shares but they won't, I would hope that doesn't need to be explained further.

              They're going to make as much as they can sell. You've lost me with this point. You can't flood the market with property.

              Sure, you may be better off renting rather than buying in some situations. Rent prices are still correlated to housing prices.

              • tsunamisurfer on 18/01/2021 - 16:27

                @Autonomic:

                You can't flood the market with property.

                Agreed, nor can (will) one with RAV4s and shares.

                Sure, you may be better off renting rather than buying in some situations. Rent prices are still correlated to housing prices.

                What do you mean by correlation?

                In Perth we are experiencing rents increasing between 10% - 20%, I can tell you houses have not appreciated by 10-20%.

                As I mentioned previously rents previously dropped significantly (from their boom highs) in Perth but prices remained stagnant in some areas so slight drop in others.

    • dsar on 18/01/2021 - 20:55

      I see nothing wrong with investing, let the market decide who gets what, its the fairest way of determining the spread of resources.

      Ya know markets fail as well right. In addition, the market doesn't care about fair, just efficiency (when it doesn't fail).

    • [Deactivated] on 19/01/2021 - 21:42

      Isn't it kind of crappy that people are buying Toyota RAV4 Hybrids? It just makes it harder for me to get one

      It depends on what and whether it's a necessity for life. Buy all the afterpay and rav4 hybrids you want. What if it was water? What about when the Chinese were stripping shelves clean of paper formula and mothers literally couldn't get any? Your answer to is that/would that be crappy is no?

  • GG57 on 18/01/2021 - 11:22
    +2

    There are some people who own multiple properties, as a business. Same as there are some that own warehouse or factory spaces or office spaces or car parks, as a business.
    They would argue that they provide a service, in providing the properties for rental. If they didn't do it, they would argue, then some people wouldn't have anywhere to live.

    • Lockdude on 18/01/2021 - 11:23

      Wrong comment! I'm having a bad time, haha.

    • WizMuncher on 18/01/2021 - 11:51

      I believe the OP was referring to housing - you know - where people need a roof over their heads. But nice try, you do have a valid point - it's just got absolutely nothing to do with the OP's question. #whataboutism

      • GG57 on 18/01/2021 - 13:14

        No, same scenario.
        I know someone who has a business owning and renting out ~10 houses. That is their livelihood.
        They also have a warehouse in their portfolio.

        None are negative geared.

  • raptormesh on 18/01/2021 - 11:32
    +4

    Why are you against Australia's official religion?

    • holdenmg on 18/01/2021 - 11:34
      +1

      What… AFL?

    • ribze1 on 18/01/2021 - 22:30

      This has nothing to do with Aussie Rules football

  • Muzeeb on 18/01/2021 - 11:37
    +1

    I love the news articles about these 30 something people with 25 investment properties.

    They never ever mention their debt.

    • tsunamisurfer on 18/01/2021 - 11:49
      +3

      That is correct, people read loandlords / investors, the vision shifts automatically to the evils of tax minimisation, tenants as indentured slaves, and the ubiquitous hand rubbing as renters fight over each other to rent in desired locations.

      Most investors of this type are mum and dad investors, most have debt to service.

      Not all use negative gearing, I don’t even like negative gearing. I don’t want to go out of my way to lose $1 just to claim back 47c.

      Not all properties appreciate or even achive rental returns.

      It’s unfortunate that people will easily label people greedy.

      • dsar on 18/01/2021 - 21:19
        +2

        Most investors of this type are mum and dad investors

        That is correct simply because there are mums and dads in the world (larger set). Just like saying, there are more teachers and nurses who negative gear than CEOs and surgeons. Absolutely the correct. However, the proportion and the tax benefits are skewed to the higher end of town.

        • sakurashu on 19/01/2021 - 14:36

          Why do you hate teachers and nurses tho?

          • dsar on 19/01/2021 - 14:51
            +1

            @sakurashu: I don't…? The impact of these tax benefits affects everyone including those who don't negatively gear.

      • BobLim on 19/01/2021 - 08:42
        +3

        mum and dad investors

        Never understood this - surely the biggest corporate bastards ever known have mostly been mums and dads? Does having a child somehow make you less evil/selfish/whatever?

        • sakurashu on 19/01/2021 - 14:38

          When people use the phrase "mum and dad investors" they mean everyday people - some of these biggest corporate bastards might literally be mums or dads but they aren't everyday people. If most investors of this type are everyday people and not big corporate bastards - it's nowhere near as reasonable to pick a fight with them

          • BobLim on 20/01/2021 - 02:22

            @sakurashu: It doesn't matter to me whether the party in question is a 'mum and dad', orphan, grandparent, childless virgin, oppressed minority, foreign diplomat, or serial killer - until any of these characteristics make any practical difference to the outcomes of their behaviour (an example might be discriminatory policies relating to marital or child-rearing status).

            I suspect professional childless couples would generally have greater wealth than their breeding peer equivalents regardless. Are we supposed to somehow feel sorry for the poor parents working so hard to 'get ahead' (of whom?), in preference to any other considerations? Seems to be the implication.

            The issue in question should be the policy settings and the associated practical outcomes. The demographics of the participants in-between is irrelevant.

            • sakurashu on 21/01/2021 - 12:28
              +1

              @BobLim: My clarification is important in response to the general demonisation of these parties i.e. "it's all those rich bastards with 60 properties", which is simply an untruth meant to sway people emotionally in the other direction.

              You talk about practical outcomes and then claim that the demographics are irrelevant - if the demographics means that you'll screw over 70% percent of the populace with your policy rather than 5% you can't claim that the demographics of the affected is irrelevant? Nobody cares how you feel or whether you feel sorry for poor parents, but policies need to look at the wellbeing of the majority or the wellbeing of the most people. The entire idea of the phrase being "everyday people" as I tried to explain previously is that they aren't a specific small minority of people like your other examples (orphans, virgins, minorities etc.). The phrase is used because most people are/were "mums and dads".

              Should society reward people for having kids? Yes - just like it should reward all socially positive behaviours - the practical outcomes of which, on the whole for society, are positive.

    • ribze1 on 18/01/2021 - 22:30

      The bank owns 25 properties.

  • orangetrain on 18/01/2021 - 11:41
    +5

    If you don't agree with the prices, start your own country! /s

    Until government gets rid of incentives and add negatives for holding property with noone using it, we'll continue to see highly inflated prices.

    • WizMuncher on 18/01/2021 - 11:56

      Brilliant idea!!! Just start your own country. Together with building an Army and resourcing it with labour, equipment and munitions, writing a constitution and finding somewhere to base your country - well housing should be cheap, lol!!!

      How about improving the country we have right here? I know, an insane idea - but if enough people support it, it could work.

      • azngamer on 18/01/2021 - 12:17
        +2

        not sure if whoosh, but orangetrain was being sarcastic, hence the "/s"

  • Almost Banned on 18/01/2021 - 11:56
    +1

    Do you feel the same way about other necessities?
    Do you think that people should only buy enough food for themselves, and that buying more food than they need personally disadvantages other people?

    • Lockdude on 18/01/2021 - 12:01
      +15

      In the extreme - yeah. Remember when the supermarkets ran out of food at the start of COVID? I took issue with that too. I worry the property market is reaching that sort of extreme. When the shelves are empty so you're paying top dollar from scalpers. However, buying a few extra cans of soup because they're on sale? Or meat to shove in the freezer - sure. Go for it. There's plenty of similar products on offer at reasonable prices. There's also alternatives to buying a can of soup. I'm not sure what alternatives there are to buying a house? Renting? Well, okay, go pay for food off someone else, only for them to expect equivalent amounts of food back at the end? Does that analogy not make sense? Of course it doesn't. Because taking one issue and conflating it with another is a good way to distract from a main point, and it doesn't make any sense. You can't use logic for any other circumstance here. Talk about the issue at hand.

      • TheBird on 19/01/2021 - 17:55

        I worry the property market is reaching that sort of extreme.

        Not to excuse hoarders, but there are major differences to that argument. One category is a consumable product where real estate isn't. With consumable products, the manufacturers can make and ship more. You have many other alternatives. When you're talking investing in property, when someone buys a property, they typically either live in it or rent it out.

    • WizMuncher on 18/01/2021 - 12:10

      I absolutely believe people should only buy what they need, with a contingency. Buying a trolley full of toilet paper, or rice or whatever is hoarding. During wartime things are rationed for a reason.

      If someone just cleared a shelf of rice and someone who just wanted to buy one bag and now their kids will go hungry - what do you characterize that as?

      It's pathetic that type of behaviour and it should be treated with the utter most contempt.

      • Gronk on 18/01/2021 - 12:21
        +1

        I absolutely believe people should only buy what they need, with a contingency.

        But therein lies part of the issue - who defines what constitutes a sufficient contingency? Part of it comes down to the individual situation (usage rate) but there's also a personality aspect to it because some of us are comfortable to fly closer to the sun than others…

      • saltypete on 19/01/2021 - 09:25
        +1

        Ah.. there’s the rub. The mums and dads were thinking of their future needs in retirement.
        I don’t think investors in this class are looking at being ugly rich, but often feel that they understand real estate more than shares or super.

        Excuse the bluntness, but if you are thinking only of you present daily needs, what is the point of being sentient ?

      • sakurashu on 19/01/2021 - 14:44

        People aren't going without a roof over their heads because investors own 2 properties.

        If you truly believe that people should only ever buy what they presently need and nothing more and then only think of the welfare of others I'd love to see you live like that. No investment, no future planning and donating everything above what you strictly need for the truly needy. It will never happen - you will argue you need to invest in some way, or save up money for your future just in case you need it. That's what these people who have bought a second property have done - they have created their own version of retirement savings; all you want to do is piss on them for it - why?

        The general public has shamed the hoarders during COVID because it's pretty clear they're in the wrong - you just have a bone to pick with landlords and you need to get over it

  • netjock on 18/01/2021 - 11:58
    +1

    Isn't it kind of crappy to buy a bunch of investment properties? I get the feeling landlords feel like they're doing lower income households a solid by providing them with a roof over their head - but I've never understood that

    Yes, if you are buying residential property. People buying unproductive assets (creates almost no jobs) is just rent seeking. Even worse when you are negative gearing when you basically live in poverty for a pot of gold at the end which all your neighbours are in the same position. That is why sharemarket looks like a gamble because there is variable performance where as residential property you are all just as relatively rich. Unless you sell up and move to a lower cost country you're just as well off as everyone else and going backwards.

    No, if you are buying commercial property. Reason is companies don't like holding onto property assets on their balance sheet. If they lease it makes it look like more income on lower assets = high return on assets.

    The example I always use with people is: if property was $200k cheaper and you didn't have to find another $40k deposit. The deposit if spent today in the economy for things like services (goods from China aside for now) then over a whole year (assume 200 working days) is $8m which supports 80 ($100k) jobs. If you buy an established residential property it basically creates job for nobody.

    • rgr on 18/01/2021 - 12:09

      there is a counter point (the governments point) to be made that when you are buying a property, you will have to buy things to fill that house like TVs, furniture, amenities and then maintenance and renovations so you get tradies, builders etc to come in, thereby 'stimulating' the economy. plus a property manager to manage your rental

      • WizMuncher on 18/01/2021 - 12:16

        Completely besides the point, and only showing your desperation to try to justify (the government, most of whom own large residential property portfolios).

        You are assuming that home owners don't purchase those goods and services as well. Besides, a home owner is far more likely to spend more on these things - and you know - I'm sure no one is crying for property managers.

      • netjock on 18/01/2021 - 12:58

        there is a counter point (the governments point) to be made that when you are buying a property, you will have to buy things to fill that house like TVs

        Only if you are renting it out fully furnished. Doubtful.

        maintenance and renovations so you get tradies, builders etc to come in, thereby 'stimulating' the economy. plus a property manager to manage your rental

        How much do you spend on these people? I spend less than a few $k max a year.

  • Donaldhump on 18/01/2021 - 12:18
    +2

    no different to any other asset class

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