Housing. How Do You Look at It and Not Go Crazy?

oztite on 16/10/2019 - 11:51

OK, so I found out my boss's boss recently sold a home in a prestigious suburb of Melbourne for about a $7 million profit over a 5 year period. He will pay zero capital gain tax on that profit. Adding income tax back in, you'd have to make approximately $3 million before tax per year to make the same amount of money during that period. That is equivalent to ridiculous amount of hard labour (like 100 hours a day), frugal living and ozbargaining for people like myself. And what did he do to earn that? Well, simply by living in pure luxury and being very close to the city and public transport, nice parks (maintained by all tax payers) and good schools.

My question is, how do you work hard and indeed ozbargain hard when this is the sad reality? What's the point? You'd never catch up. And this is not a one off "lotto" situation. You can apply this to all home owners within 25km of all major cities in all developed countries.

Financial

Comments

    • Numlock on 19/10/2019 - 17:26
      +1

      I AGREE

  • morebunnings on 18/10/2019 - 09:36
    +2

    There is probably some guy in china making $2/day carrying bags of coal out of a hole in the ground thinking 'theres some white dude in Australia that just spent $2000 on a phone. I make that much in 3 years and he spent it on a phone'.

    There are people richer than you and there are people poorer than you. How comfortable and happy you are is decided by you, and we are a hell of a lot better off than a lot of other people on this planet.

    • Eeples on 18/10/2019 - 10:08
      +1

      Most likely not China; it has brought literally 100s of millions of people out of poverty over the last 50 years or so.

      But there are plenty of $2/day guys in Africa.

    • weee on 18/10/2019 - 12:02

      lol most likely a Chinese dude fresh out of the plane bought the mansion from boss's boss

  • [Deactivated] on 18/10/2019 - 09:52

    This is how i see it:

    Given how much the market has gone up in the last 5 years, to make a $7m gain, normally you would have to buy a $7m property 5 yrs ago (with all the risks if market had gone down or flat).

    I respect those who are self-made to reach where they are with multimillion dollar properties and dont envy them.

    However, being a human with emotions, i do envy those who have it all the easy way but not making the best use of it (because their parents have done the hard way to get there).

  • jacross on 18/10/2019 - 11:09

    Envy is an inescapable cognitive behaviour but it is manageable.

    I choose not to make my life's mission 'catching up with your boss'. My life's mission is to maximise my utility (in a very broad sense that includes the utility I gain from pursuing non monetary goals and assisting others, and acknowledging trade offs and opportunity costs).

    I certainly wish I had've bought a house in the late 2000s rather than a unit in the early 2010s but I can't change that and dwelling on it doesn't assist me. Those who bought a house in the late 2000s haven't harmed me, they have just made a more fortuitous decision in retrospect.

    If you want to catch up with your boss, you probably won't. You should change your goal, or you will doom yourself to a life of bitterness.

    At least you aren't the person who bought the house off your boss for $7M more than they could have five years ago (I guess, depending on the actual value of the house).

  • pipe on 18/10/2019 - 11:42
    +3

    There is this collective belief that we just need to work hard to have a shot at being successful and it is taboo to call out super rich people for being undeserving. There are studies that show that this kind of attitude correlates with larger gap between the rich and poor.

    The reality is that it is mostly luck and your parents' luck.

    • OBEY YOUR MASTERS on 18/10/2019 - 12:14

      It's certainly luck if one of your relatives made the money for you. However, I find it hard to believe that luck is the determining factor for the person who made the money.

      • Tyrx on 19/10/2019 - 14:50
        +1

        There's obviously exceptions to the rule, but people significantly underestimate how their upbringing impacts their future income mobility. I'd recommend reading looking through this mathematical model made by some Italian physicists and economists. It shows that luck and opportunity are the primary influences to how wealthy you are. While talent does matter, it's at best secondary to the below three aspects;

        1) The income of your parents
        2) The postcode of your parents
        3) Who your parents associate with

        • OBEY YOUR MASTERS on 20/10/2019 - 12:57
          -1

          I think we might be talking about 2 different things here.

          IQ is correlated with income.

          Wealth is more of a random thing.

          Given that the vast majority of wealth is lost within a small number of generations I will go with the high IQ any day.

  • peterpeterpumpkin on 18/10/2019 - 12:58

    For me the real shocker isn't just the disproportionate growth in the upper market (who compete among themselves) but the fact people pay over $1 million to live in Sydney's outer Western Suburbs. Who are these people?! It's like being given a life sentence in maximum security prison and doing other prisoners' duties each day to earn the right to the same prison cell for life. And setting up your children in the same decked out prison cell should you get stabbed to death before your time.

    • Stimps on 19/10/2019 - 13:57
      -1

      Yep the force is strong in these people. They honestly believe property doubles every 10 years and their 1 million dollar dump will soon be worth 2 million.

  • netjock on 18/10/2019 - 20:51

    Why do you look at it and go crazy? You put a price filter and choose the best of the lot you can afford

    Pain comes from greed for what you can't afford. You can't have everything. Accept there is trade offs.

  • abuch47 on 19/10/2019 - 15:12

    Its all luck.

    hard work doesn;t make money. every body works hard.

    Its about having the smarts to find the niche/angle to make the most profit and then hide it the best and pay as little back to the society that created your wealth.

    a heap of often legal collusion/corruption helps as well.

  • Typical16-bitEnjoyer on 19/10/2019 - 20:47

    Those with wealth tend to increase their wealth.

  • huntress_love on 19/10/2019 - 22:48

    How can he paid zero capital gains tax, I thought you only get a 50% discount after owning it for more then a year?

    • ribbonsofnight on 20/10/2019 - 09:24

      PPOR

      • [Deactivated] on 21/10/2019 - 20:06
        +1

        Perinatal Periods of Risk (PPOR)

        • ribbonsofnight on 21/10/2019 - 20:38
          +1

          Platypus Public Opinion Research

  • Nanokillaz on 19/10/2019 - 23:46
    +1

    Similar to the consensus in this thread, the best advice I ever got was "Everyone is rowing their own boat". Who cares what someone else is doing and who cares what others think of you.

    • Dr Techno on 23/10/2019 - 23:20

      My boat is leaky… a little help.. pls.. :P

  • mini2 on 20/10/2019 - 07:03

    I go crazier when I can't get a bargain i.e. eBay lotteries than say looking at the real estate market.

  • DeafMutePretender on 24/10/2019 - 00:51

    Was talking to some old folks. They bought a decent size house and land package for barely $100,000 to $150,000 some decades ago.

    These days you have to spend at least $500,000 for a house almost half the size.

    Ridiculous.

    • coin saver on 24/10/2019 - 14:51

      Even at $100k anything less than $800k over 20yrs i would consider a loss.

  • seraphim2017 on 26/11/2019 - 12:31

    Be angry at the wilful ignorance of the political class to go after corporations that also happen to be capitalists (yes all the big ecommerce and tech companies) that pay 0.0002% corporation tax or whatever it is. Don't be angry at the housing market, be angry at the conditions that were seemingly deliberately manipulated or incompetently managed (you choose base don your level of tinfoil hattedness!) that allow a home to be an investment over a home.

    Money makes money.

    When we moved I looked at a house going for 990k and though woah, same house now is 3.2m so would have netted me early retirements IF i had the money/risk profile a few years ago. C'est La Vie!

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