Ridiculous Australian house prices.

[nomadpete]

9 hours ago, onetrack said:

People are making windfall gains on their properties they just sold, and can therefore bid up the next property they're buying - because they expect to make huge capital gains on that one, too.

Not so sure about this, OneT.

At the moment there  are increasing numbers of boomers coming up to retirement age. They mostly are past wanting bigger flashy homes in high demand locations. Any that I know, are doing the opposite. Since they are not likely to be buyers in the market, how are they driving prices (demand) up?

[old man emu]

8 hours ago, Jerry_Atrick said:

just because it worked in the UK doesn't mean it will work in Aus. There are demographic, cultural, and structural differences.

I assume that all of us taking part in this discussion are what might be called "traditional Australians", meaning having descended from British immigrants of the 19th Century up to the beginning of WWII.  If that is correct, then it forms the starting point of my thoughts on the cultural aspect of the housing market.

 

From the beginning of European settlement up to the mid-20th Century, the population generally was composed of people who were simply making ends meet. Of course, there were the better off, but these were not so much better off than those around them. Australians never had the surplus money to be investors. Also we never developed the habit of haggling over prices which is such a part and parcel of the culture of other peoples. People dealt with things on a day-to-day basis, eeking out an existence, working for The Man. 

 

It wasn't until the final quarter of the 20th Century that the influences of post-war migrants and better universal education, and more means to make a lot of money fast from the application of the products of digital technology that resulted in the children of the Boomers entering into the investment field. The Boomers, who benefitted from the massive increase in price of the house they bought at low price and which they had finally paid off, learned from their children and sold off to down-size and live off the money demand had added to their original outlay.

[facthunter]

When money tightens the "cheaper" houses become more sought after.  IF you have a portfolio of shares the ones that are  sold at a loss are deducted from your profit. Builders can lose on some jobs and that also deducts from the  profit made on others. That is how it should be. The cost of making the money has to be deducted from the  amount made. That's pretty basic.  Nev

[red750]

One thing that puts people behind the debt curve is constantly changing and upgrading. Sure, there are some capital gains when you sell a property, but you usually want something a bit bigger and fancier, (until you reach the stage of downsizing), and end up payng more for it. A new mortgage, bigger debt, and often, higher interest. A never ending chase.

 

I have only ever owned two houses, and sold the first when I was transferred interstate in my job. I have lived in my present house since 1978, and tell the real estate agents who come knocking, that I will be carried out in a box. The house will pass to my kids. That's how the house I paid $50,500 for in 1978 is now worth about $1,360,000. At my age, I have no ambitions that require  lot of money, so I don't need to draw on the equity (100%), and am living comfortably on the pension, with virtually no debt. I may not be cash rich, but I am comfortable.

[Old Koreelah]

7 minutes ago, red750 said:

At my age, I have no ambitions that require  lot of money, so I don't need to draw on the equity (100%), and am living comfortably on the pension, with virtually no debt. I may not be cash rich, but I am comfortable.

Me too Red, but don’t be surprised when the rules are changed to push us old farts out of our big old houses. Baby Boomers who own their home are comfortable and protected by tax rules, while many young are struggling to get a start. I predict a move to scale back age discounts and subsidies. One day, a brave government will scrap negative gearing and protections of the family home.

[red750]

I share the house with two adults, my eldest son and my daughter. My daughter has never known any other home. She came into the house in a bassinet in 1980.

[octave]

There are also implications for those who go into aged care   The house is subject to a means test. We have just been through this when my mother went into aged care, we had to sell her house for her (which is fine) 

[facthunter]

To put capital gains tax on one's home would be unfair as all the costs have not been allowed as deductions like it would be if it were run as a business  You are nor really as rich as you might think. There's been a lot of Inflation over the periods we are talking about Money value is relevant to what you can PURCHASE with it ,NOW.  Nev

[Old Koreelah]

Inflation was once deemed a curse on the economy. Now governments want inflation; that seems like the only way they can keep debt under control.

[facthunter]

IT DOES help you to pay off long term debt.  The LENDER loses out a bit, but over all high inflation is  a nation destroyer.   Overseas debt becomes impossible to repay without deep injury to the country. Remember Greece.  Nev

[nomadpete]

1 hour ago, Old Koreelah said:

Me too Red, but don’t be surprised when the rules are changed to push us old farts out of our big old houses. Baby Boomers who own their home are comfortable and protected by tax rules, while many young are struggling to get a start. I predict a move to scale back age discounts and subsidies. One day, a brave government will scrap negative gearing and protections of the family home.

Old K the negative gearing doesn't help us oldies. Only the higher income earners.

I always expected the rules to change when I finally retired.

Edited August 27, 2023 by nomadpete

[Marty_d]

Death duties are one answer.  May not be popular but if the settings were right it could work.  Removes a lot of the inequality where some kids inherit massive amounts that their parents worked for but they played no part in earning. 

Plus means that people who want to stay in their homes can.

[spacesailor]

Sell your house to the kids early. 

Then that death duty is , ? .

I must get rid of my ' shares ' shortly , or they will be taxed away from those inheritors .

spacesailor

[Jerry_Atrick]

The UK has death duties on estates > £250K. It also has gift tax - if you gift more than £15K in any one year to catch out moving large quantities of money to people to offload death duties. In addition, if your house is sold materially below market value, then the purchaser may also be subject to a top up tax.

 

The tick was to settle estates into trusts; that way legal ownership of the estate never transferred  and therefore death duties wreen't payable. But in the UK a trust has a maximum lifetime of 80 years and at the dissolution of the trust, captial gains tax is payable.

 

As a revenue stream, it is not bad, but it does punish poorer people becuase they are the ones who can't afford to pay the tax and end up havin gto sell, while the wealthier ones often have succession planning in place to minimise the burden and ensure the assets stay in the family. And, the house and all its upkeep, taxes, rates, etc have all been paid for after tax. Maybe a capital gains tax on the assets passed down would be fairer, because at least the cost of the asset and miantenance has been taken out.

 

Also, given the vast majority of the buyers and sellers do not involve deceased estates, I am not sure what impact it would have on the price of property. In serfdom times, it was very different and property was held only by the rich - and inheriotance tax was a way to prise open the property market.

[red750]

How is this for ridiculous?

 

When I sold my house in NSW, when I was transferred back to Victoria in 1978, the house I sold was a single storey, three bedroom house with no garage, not unlike this house next door.

 

 

I decided to look up my old address on realestate.com. This is what the place looks like now. (See the above house on the left.)

 

 

In 1982, I was working in the Systems Development area of the Commercial Bank when it merged with the Bank of NSW. I was involved in the integration of the CBAL's Personnel System into that of the BNSW. For two months I commuted weekly to Sydney and had the opportunity to move and stay in Sydney for a second time. However Sydney house prices had greatly outstrippd Melbourne, and my wife did not want to move again, so I left Sys Dev and went back into a branch banking position in Melbourne.

 

Having just looked up the value of my house, I was surprised to see the current median price for my old address was $20,000 less than the median price for my current house.

 

 

[spacesailor]

We are Not allowed to sell ! .

That's the word from our grand & great- grandchildren .

IT'S THEIR ' HOME-BASE '

FOR ,

" IF-EVER " THEY NEED THE OLDIES " .

spacesailor

[Old Koreelah]

This thread could do with an introduction to Real Estate Agents:

 

 

[Bruce Tuncks]

Death duties ( inheritance tax ) is a no-brainer. Of course we need one. In Australia, I remember well how silly old farts moved to Qld so as to keep their money away from the taxman. For awhile, Bjelke-Peterson's Qld was the only place in Aust where there was no inheritance tax. Even though we knew it was wrong, we all approved of our state govt giving up this tax.

If you want to subsidize your kids, do it while you are alive says me. Then you will appreciate their gratitude.

AND, there are cunning ways to avoid the tax anyway....  for example, a farm can become incorporated and the shares can be ownership shares ( give these to the kids ) and management shares ( keep these for yourself ).

[facthunter]

It stuffs up Businesses. IF you've earned and not stolen the money you have and already paid the tax on it. it should be yours to do whatever legal thing you want to with it. It's people who pay NO Tax here while enjoying the benefits of our stable country who should stop expecting to freeload on the others. Nev

[facthunter]

IF you don't like Paying "Ridiculous House" prices don't buy ridiculous Houses. A Tin shed near a beach used to do.    Nev

[spacesailor]

Like " Rainbow Beach " Queensland. 

Council had a big job to get them , ' none ' paying rates squatters out .

Now even that Beach has been ' evicted. 

So ! No squatters .

Same goes for " Byron shire" nsw.  No '' transient worker " is allowed to sleep rough .

spacesailor

 

[Jerry_Atrick]

I have to admit in my younger days, I aspired to have one of those mansions along Brighton Beach (not all - it doesn't matter how much money one has, if they don't have taste, they don't have style, either).  I never got there before leaving these shores. These days, my aspriations are far more modest.

 

I think it depends on the situation one is in, as to the type of house that is right.  The below is the house our daughter was born in and we stayed for another 8 years:

Despite it looking small, we extended the living room and put a thumping loft conversion in (quite ugly at the rear, to be honest). The back yard was modest by the 1/4 acre block standard, but decent for London. This is in an outer, bland part of Richmond. Originally a 3 bedroom, it was 4 + a study, with the 4th lof bedroom easily converted to 2 master sized bedrooms. That became the family room, and I think it is as perfect sized house for a younger family with 2 - 3 kids; enough space for the kids to muck around inide and out and have their friends around, a bit of sapce for the parrents to hide or entertain the parents of the other kids, (I also don't know why they have alarms - must be an insurance requirement as it is one of the safest place I have lived. Have left the front door open on going away for a weekend and countless times left the key in the motorcycle; nothing taken).

 

When we moved to the South West, we couldn't find our right property to buy, so we lived in this for a year:

Far more modest size 3 bedroom house and a smaller garden. Thankfully I was still working in London all week, as it was too small.. Many houses are this size. I think they would be alrtight with one kid, but definitely tooo small for two that are school aged. But for a couple, it is a perfect size (to me).

 

You've all seen the house I am in now; yes it is big (almost 6,000sq feet of interior living space, plus the 2br barn converted cottage). Funny, the kids (now adults, really) say they miss the smallest house the most.

 

 

 

Edited October 27, 2023 by Jerry_Atrick

[nomadpete]

Horses for courses.

[facthunter]

Buying what you can afford has a touch of realism that I see as wanting but the system just loads costs onto the Land side of things. That PLUS bigger houses fully furnished makes something you spend most of your life Paying off. There MUST be more to LIFE than just owning a house that looks just like so many others ticky tacky Boxes built of Match sticks Cardboard and chalk. with Ply and shavings doors.  Nev

[spacesailor]

BUT , on the other-hand,  to pay your mortgage is just like , paying rent .

With , that big I mean ' Huge ' bonus at the end , 

NO MORE RENT .

When I played off my Dept , people said I should have bought a new car .

WHY.  are they just jealous  .

spacesailor