Housing Shortage

[octave]

17 minutes ago, spacesailor said:

AND his super disappears each name change .

 

 

I don't really understand this. The employer (unless grossly negligent) does not hold your super. I have had the same super fund for over 30 years and I still have this fund.   Whenever I changed jobs I elected to keep my super fund.  My last employer went out of business but this had no effect on my super fund which is between me and the fund. I am not even sure how a company could withdraw your super, my wife can't even draw out my super (unless I snuff it). 

 

I could see a situation where a grossly negligent company did not deposit your funds or make their co-payments but you would have to be monumentally unaware.   I, when working for employers checked my balance regularly.

 

 Indeed, sometimes people who have many short-term jobs and don't take an interest can lose track of some of their accounts.   That is why you can for free track down your lost super.    I have done this, not because I had actually lost any super but just in the hope that there was ann account that I had overlooked, but sadly no.

 

Searching for lost super

 

https://ministers.treasury.gov.au/ministers/jane-hume-2020/media-releases/there-138-billion-lost-and-unclaimed-super-could-any-it-be

 

 

 

 

 

[facthunter]

I'm supposed to be a lefty yet I stand for non interference in the Market more than you people do.. PAY tax on nett profits after allowing for all applicable losses and COSTS..  Nev

[spenaroo]

Im buying because I need a place to live and its easier to get a loan then a rental

(still not easy, I have a 40% deposit - and was almost knocked back)

do I think the market is way over inflated - yes, definitely.

do I see it as correcting any time soon - not a hope. which is why I bought knowing its likely 100k more then it should be

reality is people are paying the prices because its what's needed to get a roof over head.

and while there is vacancy rates of less them 1% and people lined up around the block at every open inspection - nothing will change. supply and demand

Negative gearing isn't entirely my concern.
the bigger thing is pension and means testing.

so many retirees I know would like to downsize. but doing so puts them in a worse financial position.
kids moved out, would rather an apartment or unit in walking distance to everything then a 4 bedroom house in the outer suburbs - but while the primary residence isn't means tested - the profit from sale would be.

Surely the government should do what it can to assist the redistribution of existing homes,

to help line up with the changing generations

[spacesailor]

Employers hold that super for 3 months or more when knowing that are going out of business. 

How, do you get a cent out of an insolvent business! .

But, they buy new cars for their mates .

One daughter has to chase her boss to get her super 6 months .

Front desk , of a doctors surgery .

spacesailor

 

[willedoo]

1 hour ago, spenaroo said:

so many retirees I know would like to downsize. but doing so puts them in a worse financial position.
kids moved out, would rather an apartment or unit in walking distance to everything then a 4 bedroom house in the outer suburbs - but while the primary residence isn't means tested - the profit from sale would be.

The profit from the sale doesn't affect the pension for a period of up to 24 months depending when the new residence is bought. The exemption is for up to two years if you intend to use the money to buy another home, but cuts out when the new residence is bought. For example, if you sold up and bought the new place 6 months later, the exemption ends then and the balance left over is then treated as an asset if it's over the allowable asset limit for a pension which currently is $301,750 for a single person and $451,500 for a couple. After that, you lose $3 per fortnight for every $1,000 you are over.

 

 

[old man emu]

5 hours ago, onetrack said:

I fear we're heading down the Tulip Bubble/Mania path.

Who is going to suffer if the bubble bursts? I can't see renters suffering unless it is because the place they rent gets sold and they have to move out. Is it wrong not to have sympathy for those who gambled and lost on property?

[Marty_d]

You can't live in tulips,  and the population is not going downwards.  There's not much reason for the bubble to burst. 

To anyone who says negative gearing and capital gains discounts don't affect you, well yes they do.  It's an uneven playing field where one type of investment is getting tax breaks that other types don't,  and it's not an investment that DOES anything for the economy - it's not a business employing people or a start-up or research that'll improve life. It's just an existing residence and its value is being inflated by speculative investors rather than just being a home for someone. 

I don't know what the answers are but if you ever want your kids and grandkids to have a home of their own, then something needs to change. 

[nomadpete]

7 hours ago, Marty_d said:

You can't live in tulips,  and the population is not going downwards.  There's not much reason for the bubble to burst. 

To anyone who says negative gearing and capital gains discounts don't affect you, well yes they do.  It's an uneven playing field where one type of investment is getting tax breaks that other types don't,  and it's not an investment that DOES anything for the economy - it's not a business employing people or a start-up or research that'll improve life. It's just an existing residence and its value is being inflated by speculative investors rather than just being a home for someone. 

I don't know what the answers are but if you ever want your kids and grandkids to have a home of their own, then something needs to change. 

Sorry to disagree Marty, but negative gearing is not always so negative in the ways you say. I don't profess to know the numbers across the board, but for myself and a workmate, we didn't  take existing houses away from owners, we did provide employment and we did add to the available housing pool. We bought land, and comissioned builders to build a couple of houses that would not have otherwise been built.

Further, there are substantial financial risks along the way. For me, the first 10 years saw zero capital gains (early 80's). Recently there has been a bubble but it isn't always like that.

Certainly  there are many investors who buy existing properties. But there are some who are not damaging the property prices.

I'm more concerned by the blind eye that's turned to foreign investors. I object to foreign ownership of property.

[old man emu]

9 minutes ago, nomadpete said:

We bought land, and comissioned builders to build a couple of houses that would not have otherwise been built.

That is what one would hope for in response to the benefits of negative gearing. However, it seems that very few investors take that path. It seems that the investment in housing properties simply involves the transfer of ownership of existing dwellings. 

 

Given the incredible number of dwellings going up on the outskirts of the Sydney metropolitan area, the money must be coming from somewhere, and the dominance of certain ethnicities in those areas makes onw wonder how much of that money is a short term injection from foreign sources, only to be returned to it souce, with interest, in the not too distant future. Admittedly, a lot of the initial money does create local employment, but there are also a lot of foreign workers on building sites.

[red750]

I may not have made good decisions on a lot of things, but on this one I think I got it right.

 

I only moved house once, necessitated by an interstate transfer in my job. I bought a 4 bedroom brick house and have lived here for 45 years. Two of my kids never moved out, still live at home, now supporting me. If I get sick, I have live-in care. When my employer was taken over and I was surplus to requirement, I put my long service to clear the mortgage. When I leave this mortal coil, the kids will inherit the property.

 

1. No mortgage, no interest.

2. Primary residence, no land tax.

3. Kids don't need to borrow. No capital gains till they sell.

4. I don't need a nursing home (not yet anyway).

 

Win, win, win, win. And I get to tell real estate agents to take a hike.

 

(P.S.) I typed this post about 3.30 pm yesterday, but just before I hit 'Submit', there was one hell of a blast, like a bomb going off, internet and TV went down, and a torrent of rain fell in a few minutes. Didn't get services back till this morning.

[Jerry_Atrick]

While there are outliers, which I would argue is your scenario, the reality is most small time residential investors are after existing properties  - economists refer to them as rent takers (these are also those that purchase established commercial properties, too).

 

I agree that there are risks, but I think it is fair to say that negative gearing as it is implemented is a huge incentive because it allows the investor to offset it against other PAYG income up front, as opposed to any other investment. This means people who could not normally afford to hold the cash losses through to the end of the year can, and this brings more demand to the market, which in turn artificially drives up prices.

18 hours ago, facthunter said:

I'm supposed to be a lefty

Perish the thought

... 😉

 

18 hours ago, facthunter said:

Yet I stand for non interference in the Market more than you people do.

I agree absolutely. But this should infer treating markets equally, otherwise you will distort the allocation of resources against them. I don't know of any other asset class that allows an offset of expected losses against PAYG tax payavle.. therefore, rather than investing in equities, bonds, gold, wine futures, etc. I will take that cash and invest it in the housing market as it gives me a better, artificial cash flow. Therefore, allowing such offsets when you can't have them with other asset classes, I would argue, is tantamount to market interference.

 

18 hours ago, facthunter said:

PAY tax on nett profits after allowing for all applicable losses and COSTS..

Hear, hear! Also, IMHO, I think PAYG workers should have the same right. Australia does (or at least did) a lot better in this area than the US and the UK.. Of course, I took applicable as reasonable.

 

17 hours ago, spenaroo said:

I'm buying because I need a place to live and its easier to get a loan then a rental

(still not easy, I have a 40% deposit - and was almost knocked back)

What the gubbins? Even if you paid 2x an official valuation, that is a 20% deposit on the asset that would be recoverable, which should stand it in good stead. So, I can only surmise that there was something else; for example, the property is of a peculiar nature that the lenders can't or won't assess the risk, you may be self employed with not enough history, or that it is a larger repayment to income ratio, Thanks to the 2007/8 GFC and the reckless lending in the US, which did catch on in other countries, gone are the days the banks just care if they can recover their money. They legally have to satisfy themselves their retail borrowers can cover the mortgage without going into stress if they lose their income for a period of time.

27 minutes ago, old man emu said:

That is what one would hope for in response to the benefits of negative gearing. However, it seems that very few investors take that path. It seems that the investment in housing properties simply involves the transfer of ownership of existing dwellings. 

I just did sums on a house in Sandringham.. even with negative gearing you need a reasonable but not fastidious income to make it worthwhile. But the reality is, more people are in the reasonable income bracket than when we were kids. Also, like anything else, it takes people the gumption to get off their posteriors and actually do it. I have advised a few younger people in Aus to save for their depoist on a rental; and then improve that property to get a better valuation and use the now lower debt:equity ratio to fund the next leveraged purchase.. do this a few times as your personal income tax will go to zero and you can build accumulated losses to offset future years.. Also, if you don't want to live at your parents, rent a cheap place.. you don't have to pay maintenance or rates, and the maintenance and rates of your investment properties will be deductible as well.  They are all enthusiastic when I speak to them. Few do it.. the few who have, are doing nicely. I just wish I listened to my own advice.

 

12 minutes ago, red750 said:

I may not have made good decisions on a lot of things, but on this one I think I got it right.

The good decisions are the ones that are right for you. Money can buy a lot, but if you're happy or content, you have done better than 95% of the population! Well done and forget about Toorak... which IMNSHO, is a poop-hole, anyway,

Edited February 13 by Jerry_Atrick

[nomadpete]

55 minutes ago, Jerry_Atrick said:

allows the investor to offset it against other PAYG income up front, as opposed to any other investment

On that point, I think it only assists a PAYG earner. I suspect that bigger investors use trusts, etc, to achieve similar or better tax arrangements. Is that the case, Jerry?

[Bruce Tuncks]

I gotta tell this story for Jerry. In England, this old lady went to her local to get her regular bottle of sherry. The new young girl refused to sell to her without "proof of age" in case they would get convicted for selling to the underaged.Now the old lady (who was over 80), had neither a driving license nor a passport. The manager backed up the girl, and the old lady went home bereft. I reckon the wokes have gone too far.

Edited February 13 by Bruce Tuncks

[spacesailor]

My 29 year old grandson was knocked back getting smokes, no I'd no fags. GREAT ,

spacesailor

 

[Jerry_Atrick]

20 hours ago, nomadpete said:

On that point, I think it only assists a PAYG earner. I suspect that bigger investors use trusts, etc, to achieve similar or better tax arrangements. Is that the case, Jerry?

Mainly, yes.. but may not be entirely true. Companies have to pay provisional taxes when they start earning profits, and I guess negative gearing applies to them, too. So you can at least defer paying provisional taxes, or estimate losses and have them removed altogether.

 

Trusts were invented for two reasons. They hide ownership and more importantly, transfer of ownership, which is often when taxes are applied. For example, if you settled the family estate into a trust, then as the original family members passed, there is no transfer of legal ownership and therefore no death duties payable. The remaining family members are beneficiaries of the estate and are the real owners, but as legal ownership hasn't changed hands, they get to keep it all or dispose of it as they want (at which point, tax will be payable). It was also designed to provide financial security of bastard children  - those born out of wedlock, which was a no-no in olden days. These were blind trusts.

 

I have no idea of Aussie Trust law, nor am I well versed at tax law, but I do know that in the UK, trusts have now have a limited lifespan of 80 years. So, tax will have to be paid eventually.

 

The other reason for trusts are for investment vehicles - pooling all the money together for the benefit of the contributors. Much easier to manage than a company, for example, forever serving change f shareholder forms and recalculating shareholdings. In fact, I was thinking of setting up an investment trust here to invest in Aussie (mainly Sydney and Melb) residential properties. At the time, though, the returns were too low.. May think about it again,

[facthunter]

Trusts tend to draw the Crabs (as they should).  nev

[spenaroo]

interest rates, were a huge factor in my loan application difficulty, as was the increased cost of living expenses, had to re-do all my workings out and budgets
 

rates doubled compared to when I got a loan 18 months ago,

which has to be stress tested at a few percent over,

plus the banks are getting out of owner occupier loans...

 

CBA chief financial officer Alan Docherty said during a market briefing webcast (14 February) that the major bank has made a choice to “not participate in unprofitable mortgage lending” which shows up in the “divergence between balance share and revenue share over the past year”.
 

After the release of the financial results, the Commonwealth Bank chief executive, Matt Comyn, said the lender was not leading pricing activity in the sector.

“We have made very deliberate choices about where to compete and how best to,” Comyn told analysts.

The bank revealed its home loan book balance shrunk by $2bn in the most recent six-month reporting period because it was taking a “disciplined approach to managing margins to deliver sustainable returns”.

This occurred in the months after CBA wound back programs designed to entice customers, a posture that many of its peers then copied, leading to tepid competition in the mortgage market and a willingness by lenders to let customers go they deem higher risk or less profitable.

“We’ve sought to particularly compete in some areas, obviously retention of our customer base and probably investor over owner-occupier – there are higher margins there,”

[facthunter]

Profit is GOD. The near zero interest rates were NOT sustainable and could not last. "X" number of rate rises tells you nothing but the actual values DO. If the RBA rate is around say 3.5%, that's about what I would consider normal.. We went to 19% under Keating's "recession we" Had TO Have" .  Nev

[spenaroo]

23 minutes ago, facthunter said:

Profit is GOD. The near zero interest rates were NOT sustainable and could not last. "X" number of rate rises tells you nothing but the actual values DO. If the RBA rate is around say 3.5%, that's about what I would consider normal.. We went to 19% under Keating's "recession we" Had TO Have" .  Nev

I agree,

accept the current mortgage rate is about 7%

[old man emu]

28 minutes ago, facthunter said:

We went to 19% under Keating's "recession we" Had TO Have"

Get things right. It was NOT the government of the time that caused that recession. Once again, it was corporate greed acting through Wall Street in October 1987. Keating did utter those words, but how do we know that he wasn't commenting on the global economy which was in recession at the time. It's has been repeated many times since Federation that Labor gains the government just at a time when the world goes to crap. I guess ScoMo can at least claim that his Prime Ministership was one of the few times when the fundament hit the air circulator during the reign of the Conservatives, and we all accept that the mess wasn't of our government's initiating.

 

Although this video is from the Seven Network, it seems pretty unbiased in the fact that it seems to conclude that what Keating did during his Prime Ministership started changes for the better that have taken a long time to come to fruition. Of interest are the comments of Seven's financial expert David Kosh.

 

[spacesailor]

Keeting " was " the individual that made " Multiple millions " of dollars for the " banks " by " foreclosures " .

So many the banks couldn't put them all on the market together It would have collapsed the property market. 

Many families have not recovered after all this time .

Nor forgotten. 

Lucky me . To have survived that " Bastardry " .

spacesailor

[onetrack]

Keating was the "bastard" who engineered the takeover and wipeout of the Govt-owned Commonwealth Bank by the private banks - a coup still celebrated in those bank boardrooms, I'll wager.

By getting rid of the "handbrake" on the private banks greed, we got shafted right royally for more than two decades, by the outrageous private bank behaviour in the early 2000's - none of which greed and outright theft has ever been justly punished. Most senior bank executives of the "Big Four" deserve to be in jail.

[old man emu]

Privatisation is the process of transiting a public service or good to the private sector through a variety of mechanisms that was commenced by the Federal Government in the 1990s, receiving bipartisan support.  In Australia, the greatest influence on privatisation were the policies of the Thatcher government, who “unleashed a wave of privatizations that transformed the economy” and became a model for other Western economies.

 

The Hawke-Keating Labor governments were instrumental in implementing deregulation policies that resulted in modernizing Australia's economy.Emerging industries replaced traditional ones that suddenly became non-competitive, as productivity in the finance, education and legal sector increased, as real wages grew concurrently. The decision to transition the Australian Dollar to a floating exchange rate in 1983 increased stability and confidence in the economy, as part of the deregulation program, that laid the foundations for a modern economy.

 

Privatization was implemented by successive governments, including the Howard government in 1996 to 2007, which saw record rates of continuous economic growth, a testament which economists attribute to the economic reforms of the Hawke-Keating Government.

 

The Commonwealth Bank of Australia (CBA) was privatised in three stages, from 1991 to 1996. It was initiated due to the burden of government investment to ensure the viability of the Bank, which was "a net cost to the taxpayer". The profits accumulated from the sale of Commonwealth Bank equated over $7 billion by 1996. This policy was considered sensible by economists at the time, due to the competitive environment which CBA was operating in, rendering it inefficient.

 

The telecommunications industry underwent the process of deregulation in Australia in 1997 by the Howard government. When Telecom and Telecommunications Corporation amalgamated in 1992, Telstra was formed.

 

On 26 March 2014, The Liberal Abbott government Minister for Finance Mathias Cormann announced that Medibank would be sold through an initial public offering in the 2014–2015 financial year.

 

People should investigate the actual political and economic circumstances that influence government decisions. Note that the commencement of privatisation in Australia was supported by the Opposition at the time. Note that the process was continued by the Conservatives. Note that privatisation lead to record economic growth. Note that experts in economics considered the commencement of privatisation was a sensible step. Note also that Keating's actions were carried out in under the influence of the global economy.

 

So pillorying Keating because the Reserve Bank upped interest rates to incredible levels is simply echoing conservative propaganda. You have to congratulate Keating for divorcing himself from his deep-seated political character and taking the hard decision in the interests of the country. 

[red750]

That's a hell of a lot of notes, O.M.E.

 

I was with the CBAL when the Commonwelth Bank was referred to as CTB (Commonwealth Trading Bank). The CBAL (Commercial Bank of Australia Ltd.) was absorbed by the Bank of NSW and the combined bank enamed Westpac. It was referred to at the time as a 'merger', but it was a takeover. CBAL systems were thrown out and replaced by BNSW systems, and 90% of CBAL staff, me included, were told "We don't need you any more. Best of luck." A couple of guys I knew drank themselves to death.

[willedoo]

7 hours ago, facthunter said:

We went to 19% under Keating's "recession we" Had TO Have" .

You're playing an old worn out violin Nev. Why does this rarely get mentioned?:

The highest interest rates from 1982 were: Fraser government (when Howard was treasurer), 21.4 per cent in April 1982; Hawke government, 19 per cent in December 1985 and Keating government, 7.9 per cent in December 1994.