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

  • morse on 18/01/2021 - 12:22
    +3

    Most people investing in property probably aren’t going to be too concerned about the overall societal impact of their investing. The investors are just operating within the current social and economic framework to look after their own interests. This is where I think government regulation comes in. At the moment gov incentivises property investment, so I think it’s unlikely it will swing the other way, but I’m not completely opposed to the idea of government intervention to make home ownership and renting more affordable.

  • dogboy on 18/01/2021 - 12:31
    +1

    Capitalism breeds a$$holes unfortunately. I like how in Sweden you are not allowed to have investment properties and all rentals are controlled by the government.
    When I was looking to buy my first house here, I lost count of the number of times investors swooped in and stole the cheap properties that first homeowners need. It is very difficult to break into the housing market when this is the case. I think the government should regulate this to at least give first home owners a chance.

    • tsunamisurfer on 18/01/2021 - 13:20
      +5

      I lost count of the number of times investors swooped in and stole the cheap properties that first homeowners need.

      The word stole was incorrectly used in this sentence.

    • sakurashu on 19/01/2021 - 14:45

      I didn't have any issues buying my first home in Brisbane - perhaps your city is more competitive and more expensive?

  • life is suffering on 18/01/2021 - 12:36
    +2

    how about a limit on a number of properties you can own? is it too extreme?
    There are other investment vehicles as well.

    • Youfah Mizzum on 18/01/2021 - 13:54
      +4

      I think this is where the Govt should be looking.
      And also gearing (whether +ve or -ve) i.e. the tax deductibility of expenses should be ratioed the more properties an investor owns.
      So for property 1, 100% tax deductibility as it is now.
      Property 2, 80% tax deductibility.
      Property 3, 60% tax deductibility
      Property 4, 40% tax deductibility.
      Property 5, 20% tax deductibility

      And if you're keen to own a 6th investment property (or more), then tough titties - no deductibility from here on in.
      The problem with my theory is that when a property is sold, which one becomes the nth property. I guess the sort order would be date acquired.

      • tsunamisurfer on 18/01/2021 - 14:18
        +2

        Imagine telling Woolworths that in their first store they can claim 100% of their expenses as deductions., 80% on their second…..and on their 6th store thereafter, employee wages, electricity, cleaning, security, rent are not tax deductible?

        • life is suffering on 18/01/2021 - 14:27
          -1

          need a corporate version as well

          • Kikkoman56 on 18/01/2021 - 15:51
            +1

            @life is suffering: Then people would set up "companies" to try to avoid it…

          • tsunamisurfer on 18/01/2021 - 15:54
            +2

            @life is suffering:

            need a corporate version as well

            No we don't.

            Being able to claim the cost of earning an income against the income is the core of our (and almost all developed countries') tax systems.

            Taking that away would have horrendous impacts on the economy.

        • deme on 18/01/2021 - 15:05

          Why not? Taxation for individuals is not flat rate why should it be for corps

          • tsunamisurfer on 18/01/2021 - 15:41
            +1

            @deme:

            Why not? Taxation for individuals is not flat rate why should it be for corps

            My comment was about deductions. What has that got to do with tax rates?

    • ihbh on 18/01/2021 - 16:53

      Number or value?

      E.g. 2x 1 bedroom units in Blacktown vs house in Mosman?

      • life is suffering on 18/01/2021 - 16:56

        number I would say. Value will increase so that would make people happy

  • TheBilly on 18/01/2021 - 12:45

    The number of people who own homes has been relatively consistent from the 60s through to the 2000s in spite of the rising house prices during this period so you can assume that the house prices are not resulting in less people buying houses - I have linked below. The data changes slightly when you look at the percentage of home ownership in different age brackets where you see it drop in lower age brackets such as the 30's and 40's. But once again you cannot assume that the drop in home ownership in say a middle age of 30 to 40 is purely to do with rising house prices - there is no maths at this stage to back this up because you cannot physically do a study that links the two. For example; there are a number of factors such as access to international travel, the internet and online spending, mass/social media and marketing, cultural changes, education costs, corporate careers, that may also affect this age brackets desire or ability to purchase property - so mathematically you can't find the link and label one item as being the sole reason in the drop of property ownership.

    https://www.aihw.gov.au/reports/australias-welfare/home-owne…

    One theory I have is that no matter when you bought a home - 1960s to 2000s. The process that results in home ownership required financial sacrifice such as saving for a deposit, only purchasing needs, eating at home, renting cheaper accommodation, buying 2nd hand goods, re-using things as opposed to throwing them away, buying 2nd hand cars - ultimately a big material sacrifice. That stands true today, however younger people prefer the immediate gratifications such as buying a brand new car, travelling overseas regularly, buying out lunch at work rather than packing. Out of my group of friends everybody that owns property pretty much sacrificed all of the above to buy said property, I don't have any friends that have managed to buy property and also live lavishly, it's either or, the ones who are big spenders are still renting and cannot afford to save for deposits.

    • netjock on 18/01/2021 - 13:00
      +7

      Ownership isn't a problem but debt to earnings ratios are. Household debt to income is much higher now than it ever was.

    • WizMuncher on 18/01/2021 - 13:04
      -3

      Ok, trot out that old chestnut, we scrimped and saved, lived beneath our means - and by the way bought a house that has been demonstratively shown through statistics to be a mere fraction of what you need to pay these days.

      Yes all you youngsters need to tighten your belts, start darning your own socks, stop eating avocados, wear a hair shirt and generally defer all immediate gratifications in the hope that by the time you retire, you may own your own house.

      What a joke! By the way I bought my house in 1999 and payed it fully off in three years. That would be impossible these days. At least I've got the dignity, (not to mention) the empathy not to pass it off as some kind of massive achievement, whilst I put my foot on the throats of younger people just looking to find somewhere to live - and have the cheek to chastise them!!!

      • TheBilly on 18/01/2021 - 20:51

        Ok, trot out that old chestnut, we scrimped and saved, lived beneath our means - and by the way bought a house

        As somebody who has paid their house off in 3 years I am confused as to how you can't grasp the concept that you have to live below your means to save money and then you need to save money to buy a house. Its the most basic concept. If you eat more calories than you burn you get fat. If you spend more money than you earn, you go broke. 1-2 = -1.

    • Autonomic on 18/01/2021 - 15:42
      +1

      Only a slight drop in house ownership but it's clear the proportion of "owned with a mortgage" is way up.

  • ihbh on 18/01/2021 - 12:50

    It's just a rich get richer thing right?

    You don't seem to understand investing in general and investing in real estate in particular - I assume you think that because prices have risen a lot over the last three decades, it's been caused by investors? Well the key driver has been the long term fall in interest rates, which are pretty much at rock bottom. Don't worry, it's all down hill/sideways from here for many years. Investors who jumped in recently will be subsidising tenants.

    There are unsophisticated investors who have bought many properties and they've helped the tenant because they've suffered massive losses. See the 2012 investor of the year for example: https://thenewdaily.com.au/finance/property/2016/02/10/inves…

    • netjock on 18/01/2021 - 13:32

      it's been caused by investors? Well the key driver has been the long term fall in interest rates, which are pretty much at rock bottom

      Actually true. Because people don't think "right now rates are 3% but if they go to 6% can I afford it? I should borrow max at 6% not the current 3%"

      But you are also right about interest rates. It seems to be mass amnesia to the risks. A lot of people would have paid their loans down but even if <5% of people can't pay their mortgages the whole property market will come crashing down. Luckily for a lot of people that a lot of other people might go under before they do and the government will have to come to some kind of a bail out solution.

    • gromit on 19/01/2021 - 08:17

      There are unsophisticated investors who have bought many properties and they've helped the tenant because they've suffered massive losses. See the 2012 investor of the year for example: https://thenewdaily.com.au/finance/property/2016/02/10/inves…

      you actually see people that are going to end up this way with a small market hiccup all the times, sites like news.com.au and realestate.com.au promote them as massive success stories, the reality is any mug can make a profit when everything is going up, the true smart investors are the ones that still make a profit when the market goes sideways or down.

  • covfefeaddikt on 18/01/2021 - 12:53
    +8

    I don't begrudge people for investing in property, but I am angered by the government incentivising property investment at the expense of all taxpayers and affordable housing. Foreign buyers definitely shouldn't be able to buy investment properties in Australia though, at least not without special tax treatment.

    • paul11 on 18/01/2021 - 15:51
      +3

      Yes, if foreign buyers are barred from purchasing investment properties, prices will slash by 20-30%. The government will never do it, because of vested interests of a few.

      https://list.juwai.com/news/2019/11/top-10-chinese-picks-h1-…

      • whooah1979 on 18/01/2021 - 16:08

        Foreign ownership is good for our GDP. They come to visit and we collect their 💵. They send their children here to get an education and we collect their 💵. They buy our newly developed real estate and we collect their 💵. They set up shop here and we collect their 💵. They tell their family and friends back home how great Australia is and we can expect to collect more 💵.

        Who doesn't the like more 💵?

        • paul11 on 18/01/2021 - 16:19
          +4

          The "we" in your statement above is not really the "we the average Aussie". Its just a few elite who are benefitting and the majority are suffering due to sky high property prices. For the Uni's, the VC's are paying themselves and their top management upto million dollar salaries. Some of the highest in the world. How does it benefit us all ?

          Average aussie is sinking deeper and deeper in debt. Who do you think its benefiting?

          • whooah1979 on 18/01/2021 - 17:06

            @paul11: A normal budget is funded in simple terms a) GDP revenue and b) taxes from Australians. I(we) prefer foreigners to spend as much💵 here as they can so that we may keep our taxes as low as possible. It doesn't matter who buys our products and services as long as they keep the 💵 flowing in.

            Average aussie is sinking deeper and deeper in debt.

            People are responsible for their own financial situation. Afterpay, credit cards, finance Euro cars, boats, holidays, the latest android/iPhone/iPad, PS5, RTX 3080/RX 6800 XT, a $1m home with 4/5 bedrooms + the works that they can't afford when a $500k home is witinh their budget.

            Who do you think its benefiting?

            Stakeholders are happy.

    • jinroh on 19/01/2021 - 23:22

      Foreign buyers definitely shouldn't be able to buy investment properties in Australia though, at least not without special tax treatment.

      Yes they've been treated differently:

      1. Foreign buyers are not allowed to buy second hand property - Source: https://firb.gov.au/residential-real-estate

      2. Foreign buyers are paying 2.5x or more in stamp duty than locals (based where I live in VIC, I assume other states will have similar rules) - Source: https://www.sro.vic.gov.au/foreignpurchaser

      3. Foreign buyers have different income tax bracket. Basically the first 2 lower tax bracket is removed, so they're paying 32.5c from their first $1 income earned in Australia - Source: https://www.ato.gov.au/rates/individual-income-tax-for-prior…

  • nailsforlunch on 18/01/2021 - 12:58

    Supply wouldn't really go up that much because people that rent aren't going to be able to magically buy houses and get buildings developed as they are now.

  • Seraphin7 on 18/01/2021 - 13:03
    +7

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

    No. If you've earned it, you've also earned the right to spend it (or invest it) as you see fit.

    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.

    Not sure where you get that from. Most landlords I know are doing it as an investment.

    It is true that rental properties service a segment of the overall market, but I don't know any landlord who is even attempting to claim they are doing it for altruistic reasons.

    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.

    Would it? If not for investors (and renters), a whole stack of supply simply wouldn't exist. Markets typically adjust to balance supply and demand. If "since the dawn of time" there was a ban on owning more than one investment property, you would find that the overall level of housing affordability would be more or less where it is now.

    The only way you'll get "much higher supply" and "lower demand" would be to forcibly take assets off people. This is a popular economics course at Robert Mugabe University.

    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.

    That's lazy rhetoric. Wanna get "rich"? Spend less than you earn over several years … invest … gain qualifications, skills, experience, etc. to gain higher income, etc. The majority of people out there who are "rich" have done the above, not simply been gifted it by some long lost uncle who's had a squirrelled away in a Swiss bank account.

    • WizMuncher on 18/01/2021 - 13:18
      -1

      "Would it? If not for investors (and renters), a whole stack of supply simply wouldn't exist. Markets typically adjust to balance supply and demand. If "since the dawn of time" there was a ban on owning more than one investment property, you would find that the overall level of housing affordability would be more or less where it is now."

      This is unbelievable. And completely insane. The whole point is that people need somewhere to live. Are your really arguing that somehow if you took investment out of the equation that supply would simply cease to exist?

      And on that completely irrational proposition, you pronounce that housing affordability would be approximately the same? WTF?

      No, people don't get rich by scrimping and saving. Your concept of wealth is skewed I gather. I won't go into it here. Also, I don't mean to upturn your apple cart, but inherited wealth is very much a real thing. It is disingenuous to suggest otherwise.

      • Seraphin7 on 18/01/2021 - 13:38
        +2

        Are your really arguing that somehow if you took investment out of the equation that supply would simply cease to exist?

        Yes.

        People don't create assets that there is no one there to buy at a price that is profitable to the creator of the asset. All else being equal, that will take supply out of the market.

        If there is then a reduced supply of assets, you will then have one of two things take place on the demand side … prices will be driven up because of excess supply (noting that "price" includes more people living in a smaller space such as families sharing a single property), or the demand will migrate to competing products (effectively people will live elsewhere).

        In other words, you'll find that the "market clearing" price will actually be more or less what it is now. You need to understand that this is the outcome of (say) 50 - 100 years of socio-economic development … not what might happen in a theoretical bubble where no one in Sydney (for example) is allowed to own more than one investment property overnight.

        Also, I don't mean to upturn your apple cart, but inherited wealth is very much a real thing. It is disingenuous to suggest otherwise.

        Yes, it exists, but if you go and count up the percentage of people who are "rich" (perhaps measured by those who own investment properties), you'll find that the majority didn't inherit these property portfolios.

      • jerrus on 18/01/2021 - 15:59

        I was on a local council and delt with DA approvals. Developers creating new housing do so if they make money on the deal, part of the reason we now have so many apartments in Sydney is that the value reached a point were the developers could make money aquiring the land building them. This point would not have been reached (or not as soon) if investment was more restricted.

        Also note that investors also have to pay state land tax which home owners don't.

  • Jolakot on 18/01/2021 - 13:10
    +6

    The system in general is broken, and it can be largely fixed without too much hardship or radical change.

    I think people realized this when the Chinese started buying up real estate everywhere and we cracked down on it with limits of what could be bought. But somehow we all collectively missed that domestic investors cause just as much harm.

    Investment that causes growth/job creation is a positive; an investor buying a dilapidated old house, knocking it over, and building 2-3 new townhouses creates economic growth and jobs. That same investor buying that house, doing the absolute bare minimum to make it habitable and renting it out to cover loan interest causes at best neutral growth. Even worse would be that investor buying the house and mothballing it for 20 years.

    Easy solution: Tax the hell out of all vacant properties and to a lesser extent unused residential land, and disallow the purchase of residential property unless it will be your ppor or there are concrete plans to improve the property within the next 12 months, with heavy penalties for not following through. Existing residential properties can be grandfathered for 5-20 years depending on zoning and how long it's been owned.

    Apartments and commercial space can still be bought and rented as usual, because landlords do have a part in the system where occupier ownership isn't always practical or desired. But no landlord should be allowed to drive up prices while providing nothing in return.

    • netjock on 18/01/2021 - 13:35

      But no landlord should be allowed to drive up prices while providing nothing in return.

      In return they are enriching the last landlord or new builds the builders and trades people.

      Investment that causes growth/job creation is a positive; an investor buying a dilapidated old house, knocking it over, and building 2-3 new townhouses creates economic growth and jobs. That same investor buying that house, doing the absolute bare minimum to make it habitable and renting it out to cover loan interest causes at best neutral growth. Even worse would be that investor buying the house and mothballing it for 20 years.

      12 months to build it then almost no jobs for 20 years. Great job creator.

      I think people realized this when the Chinese started buying up real estate everywhere and we cracked down on it with limits of what could be bought. But somehow we all collectively missed that domestic investors cause just as much harm.

      Chinese might have had a hand in it but probably just domestic investors pumping it up for each other to feel good.

      • Jolakot on 18/01/2021 - 13:48

        In return they are enriching the last landlord or new builds the builders and trades people.

        If they're enriching builders and trades people then fantastic, buy your bit of land or knockdown job and enjoy your investment. The only houses that should be investment properties are houses that were built or substantially renovated by the current owner to be investment properties.

        12 months to build it then almost no jobs for 20 years. Great job creator.

        12 months to start the build with flex time to finish. Then many years of on-going maintenance to keep it rentable, and eventually the cycle repeats from densification. It's literally the exact same as it is now.

  • GG57 on 18/01/2021 - 13:18

    What is really crappy is the number of 'holiday homes' that people have, that are not used for any income production, but just kept empty for 80% of the year.
    No negative gearing.
    No rental income.
    Not used by anyone apart from family members.
    Maybe a thought that there might be some capital gain somewhere in the future, or they will probably just pass it on to the next generation.

    That is truly wasteful.

    • Seraphin7 on 18/01/2021 - 13:47
      +3

      Is it more or less wasteful than putting in through a pokie? Thankfully, Western democracies still generally allow people to direct their money wherever they see fit … not where others "who know better" see fit to direct it.

      • GG57 on 18/01/2021 - 14:01
        +1

        Is there any correlation between your response comment and my comment?

        • Seraphin7 on 18/01/2021 - 14:04
          +3

          Yes. You assert that it is "wasteful". Why? Why is it any more wasteful than simply spending it on any other form of consumption?

          I'm simply suggesting that what people want to do with their money is their business. It's never been clear to me why people want to place value judgements on what people do with their own money.

          • GG57 on 18/01/2021 - 14:06
            -2

            @Seraphin7: I haven't stated that money is being wasted.

            I assert that the holiday house is a waste, in that someone could be living in it.

            • Seraphin7 on 18/01/2021 - 14:09
              +2

              @GG57: What does that mean? Should people not have guest/spare bedrooms because it is similarly "wasteful'? Should people not have a spare anything because someone could be using it? Where does the definition of "wasteful" stop?

              • GG57 on 18/01/2021 - 14:14
                -1

                @Seraphin7: I thought I was being quite descriptive.
                If a house, which is in a totally liveable condition, is not housing anyone for 80% of the year, surely that is a waste. The resource is not optimised to the full extent.

                • Seraphin7 on 18/01/2021 - 14:21
                  +2

                  @GG57: My car doesn't have anyone driving it for 80% of the year. Is that a waste?

                  My toilet doesn't have anyone using it for 99% of the time. Should I get a share toilet with 99 other families so as not to be wasteful?

                  Any number of my possessions aren't being "optimised to the full extent" by this definition. Does that make them a waste? Or is housing in someway "special" and subject to different rules?

                  • GG57 on 18/01/2021 - 14:25

                    @Seraphin7: I'm talking about holiday houses.

                    • Seraphin7 on 18/01/2021 - 14:27
                      +1

                      @GG57: Agreed. But my question is why is "wasteful" to own one type of asset that you only use 20% of the time, but it's not wasteful to own a different type of asset while still only using it 20% of the time?

                      • GG57 on 18/01/2021 - 14:32

                        @Seraphin7: Because shelter (housing) in one of the primary physiological needs, and housing exists that could be used to provide that.

                        Having a car, or a toilet, or a dozen business shirts, is not related to a physiological need. Plenty of examples of waste, but not part of this discussion.

                        • Seraphin7 on 18/01/2021 - 15:09
                          +3

                          @GG57: Trying to bring this thread together with the exchange below, if there is demand for housing in the particular area, housing will be built to provide for it.

                          The areas we're talking about aren't exactly Hong Kong or Singapore or some other massively population dense area where no development is possible. My experience with locations with a large proportion of holiday houses is that they're effectively surrounded by enormous tracts of unused land.

                          The logical extension is that the holiday houses built in those areas have been to … wait for it … accommodate demand for holiday houses. If there was demand for "residential property", developers would be more than willing to accommodate that demand.

                          There might be plenty of people who might say "I/someone should be able to live in that place" (that someone else has paid for), but when it comes to actually laying down their hard earned, they become conspicuously quiet.

    • netjock on 18/01/2021 - 13:56
      +2

      'holiday homes' that people have, that are not used for any income production, but just kept empty for 80% of the year.

      Point of holiday homes isn't it. Usually they are in places that people don't want to live all year round.

      • GG57 on 18/01/2021 - 14:00

        But it is wasteful, in that it is depriving someone else from living in the house that is already in place.

        • Seraphin7 on 18/01/2021 - 14:17
          +2

          Your assumption is the house would otherwise exist. These properties effectively exist solely for the "holiday house" market. If not for its use as a holiday house, it probably wouldn't exist … or more correctly, out of 100 houses in "holiday house" community, some material percentage of them simply would never have been built if not for use as holiday homes.

          • GG57 on 18/01/2021 - 14:21

            @Seraphin7: I think that is a very big assumption, and is certainly not the case in the area I have direct knowledge of. I'm not talking about people buying holiday houses; I'm talking about the current ownership.

            A total number of houses in this area = 400.
            Number of permanent households = 150.

            That is 250 existing homes that could easily house 250 families.

            • Seraphin7 on 18/01/2021 - 14:26
              +1

              @GG57: I've no doubt they "could house 250 families" … and if those 250 families wish to buy them, they can live in them.

              Or they would likely be able to acquire land very close by and build their own home.

              The probabilities of it are that 400 families don't want to live there for various reasons, most likely because there are not sufficient employment opportunities to sustain them … and the number that can be sustained is somewhere around 150.

              This is the whole point. The houses only exist to service the holiday home market.

              • GG57 on 18/01/2021 - 14:35

                @Seraphin7: People can't buy them because they are not for sale. The owners are selfishly holding onto them.
                People may not be able to afford to buy land, or build a home. That is why a lot of people rent.

                The houses don't exist purely to service the holiday home market. There is a waiting list at all of the local real estate agents to rent or buy, but the owners of those holiday homes are not renting or selling.
                That is the waste.

                • Seraphin7 on 18/01/2021 - 14:43
                  +1

                  @GG57:

                  The owners are selfishly holding onto them.

                  The owners simply don't wish to sell them. There is nothing "selfish" about that.

                  There is a waiting list at all of the local real estate agents to rent or buy, but the owners of those holiday homes are not renting or selling.

                  What is the waiting list like? Are there 250 names on the waiting list all willing to pay "market price" for these properties? If there is all this pent up demand, why aren't developers moving in to build new properties?

          • netjock on 18/01/2021 - 14:55
            +1

            @Seraphin7: I am not sure how it could be a "holiday house" if it is meant for full time occupation.

            Plus who would have their holiday house in say metro area of any city. That is where the shortages are. Not in some seaside holiday town.

        • netjock on 18/01/2021 - 14:54
          +1

          Hence

          Usually they are in places that people don't want to live all year round.

  • bobbified on 18/01/2021 - 14:00
    +2

    If you look at the recent fight over the availability of toilet paper, it's obvious that no-one cares about anyone else other than themselves.

    • netjock on 18/01/2021 - 14:59
      +2

      Story of Australia.

      Look:

      1. Panic buying toilet paper
      2. Panic buying canned and dried pasta
      3. Panic buying vehicles
      4. Panic buying investment property
  • brendanm on 18/01/2021 - 14:23
    +1

    I think the government should acquire all the land currently in private hands, then knock down the buildings on it. They could then build huge apartment blocks with 1 or 2 bed apartments, and give one to each family. They will all be identical, so no one gets envious of anyone elses apartment.

    • rgr on 18/01/2021 - 14:54

      LOOOL

    • netjock on 18/01/2021 - 14:57

      Could easily have happened, if ScoMo kept eating out of the hands of the CCP. That is what the CCP did. They told all the peasants they will take all the land from the land owners and redistribute them equally.

  • andresampras on 18/01/2021 - 14:50

    I'm rather impressed that none of the comments so far refer to the OP as a 'commie' or a 'bleeding heart' or similar.

    • Lockdude on 18/01/2021 - 14:56

      I like to think it's because I'm well-spoken enough, giving everyone a fair go at expressing their opinion, and not being caught out by any trolling?… Or maybe it's just a coincidence.

      • andresampras on 18/01/2021 - 15:11

        I'd say it has more to do with the education level of the audience, in the sense people have actually read and understood what you were saying before posting a reply.

        Your post, copy-pasted in various parts of the internet, would get vastly different responses.

    • deme on 18/01/2021 - 15:00
      +2

      It's because we don't like in USA

      • andresampras on 18/01/2021 - 15:13
        +1

        There's a lot of American influence here. Happy to be corrected, but I have a feeling that political party supporters calling each other 'lefties' and 'right-wing' is an American influence.

        • deme on 18/01/2021 - 15:16

          Agreed but we haven't got to the hypersensitivity over words level like USA.

          • andresampras on 18/01/2021 - 15:45
            +1

            @deme: Aus is usually a few years behind the US in a lot of things. Give us time to catch up :)

            In seriousness though, hopefully seeing what's happening in the US will force most of us to take stock of our attitudes to other people.

            OP, well done on a thought-provoking post.

    • netjock on 18/01/2021 - 15:04

      Or "pensioner tax"

      Shorten got the short end of the stick when they wacked him for negative gearing and franking credits.

      People don't get if you had $1m property at retirement and yield is about 3 - 4% gross it is worse than holding shares. For starters you can't somehow slice $100k off the value to get the pension. No franking credits come with it.

      At least with shares you can sell $100k go on a bender and get on the part pension.

      • aussie bargain on 18/01/2021 - 16:13

        Doesn't it depend on how you structure the investment in the first place?

        Most property investors (I think) would be after the yield OR capital appreciation. One would be lucky to get both.
        From memory, 3-4% yield is pretty low, where properties yielding 3-4% annually would normally have much higher capital gain. We need to calculate the total gain to assess the value of the investment

        I would assume that if you are pensioner with an IP worth $1Mn only yielding 3-4% gross, then it would be better for you to realise the capital gain in that property and then buying an IP with a higher yield. The assumption there is that pensioners would be looking for a regular income stream (e.g. high yielding properties).

        It is true that you can't sell "part" of the property (unless you subdivide). However, the same can be said for SOME share investment, e.g. shares that haven't been split. For example, if I bought 1 unit of Berkshire Hathaway shares in 1997 at approx $37k, I may not be able to sell half of that share for $174k now.
        My opinion is that we need to be mindful of these limitations when we invest.

        • netjock on 18/01/2021 - 18:10

          I would assume that if you are pensioner with an IP worth $1Mn only yielding 3-4% gross, then it would be better for you to realise the capital gain in that property and then buying an IP with a higher yield.

          Genius when you have to pay marginal rate of tax on 50% plus agent fees THEN stamp duty to re enter the market.

          From memory, 3-4% yield is pretty low, where properties yielding 3-4% annually would normally have much higher capital gain

          Problem with property is either you cash it in or nothing. It isn't like you can slice a piece and cash it in gradually.

          e.g. shares that haven't been split. For example, if I bought 1 unit of Berkshire Hathaway shares in 1997 at approx $37k, I may not be able to sell half of that share for $174k now.
          My opinion is that we need to be mindful of these limitations when we invest.

          Problem is ALL property can't be split into smaller pieces. Subdivided into say 3 yes but you are not going to get your money at T+2 neither are you going to get your money without a substantial investment.

  • deme on 18/01/2021 - 15:00

    Yes. For the same reason as making money off hoarding water/food/toilet paper is abhorrent.

    Hoarding a necessity such a shelter for rent seeking is unethical.

  • SF3 on 18/01/2021 - 15:08
    -2

    virtue signalling?

    • andresampras on 18/01/2021 - 15:14

      Ah there we are. Nice and trite.

  • Top G on 18/01/2021 - 15:26

    Yes it says something when one of the fundamentals of the Australian economy is flipping and speculating on housing stock. Which should be more considered a common good.

    Tax schemes like negative gearing promote this but standing against it has proven to be political suicide so noone wants to stand against it. Watch the 'century of self' documentary , at least the first 60mins if you wanna learn more.

  • brad1-8tsi on 18/01/2021 - 15:29
    +1

    NB: Not an investment property owner. All my wealth is in my PPOR and shares.

    If there is no demand, where does the supply come from? Do renters usually go from a rental into a new build?

    Housing affordability has become difficult but it isn't just the supply / demand equation. The cost of building (especially compliance) has risen dramatically.

    EG: I did my first major house renovation in the 1995. I put in a DA, it was passed and I made the structural and visual changes to the house and then submitted the occupation doco. Approval and compliance / certification costs were about 5% of the build cost.

    I'm currently converting an attic storage on a town house into a bedroom.
    The build will cost $80k.
    Certification costs will take up another $30k.
    That's
    Architect concept drawings
    Survey
    DA documentation
    DA submission fee
    Project Management fees
    Structural drawings
    Engineers Certification
    Fire engineers certification
    Hydraulic Engineers Certification
    A few others that I've forgotten or haven't arisen yet.

    If you are doing a greenfields build the council slugs you even more. Plus developers don't do simple 12 umit, 3 story walk ups anymore. So there's a whole conga line of experts taking a cut.

    • jerrus on 18/01/2021 - 16:04
      +1

      This is the unseen cost of housing in Australia, people should look into housing costs in texas vs california.

      In Texas they have much less regulation and restrictions on the use of land, this does cause issues but the average home in texas is a lot cheaper.

  • Ghost47 on 18/01/2021 - 15:36
    +1

    I don't understand why people feel the need to have more than 1 or 2 (maybe 3 if you want to push it) investment properties which they can negatively gear and then use the rental income once it's paid off, then again I'm not the greedy type.

    Owning properties takes more work than people think, IMO.

    • whooah1979 on 18/01/2021 - 15:58

      “Nothing in the world is worth having or worth doing unless it means effort, pain, difficulty… I have never in my life envied a human being who led an easy life. I have envied a great many people who led difficult lives and led them well.” T.R

      • Seraphin7 on 18/01/2021 - 16:25

        I don't understand why people feel the need to have more than 1 or 2 (maybe 3 if you want to push it) investment properties which they can negatively gear and then use the rental income once it's paid off

        If you take off the value judgement of "greed" the simple reason is that they (1) have sufficient wealth to do so and (2) their favoured investment mix is sufficiently tilted toward property than any other asset class.

        From that point, why should one be limited in the number of investment properties they can own as opposed to any other asset class?

        In an alternative world, would I be allowed to own one investment property or two? Who gets to decide on the limit? What is the rationale for the limit?

        Would I be limited in its value? If the limit is (say) $1m, why can't I own three investment properties that add up to $1m? What happens when the one (or two) allowable becomes worth more than $1m? Am I prevented from improving/renovating the property if that would take its value above $1m?

        Of course, the problem is as soon as you attempt place these sorts of limits on behaviour, you just end up distorting the market in ways that simply leads to inefficiency for everyone (at best) and all sorts of dubious/illegal behaviour (at worst).

    • brendanm on 18/01/2021 - 17:06

      Haha greed. What about Coles or Woolworths, hoarding all the food and making a heap of money on it. Why is an individual buying investment properties automatically greed?

      • Ghost47 on 18/01/2021 - 17:09
        +1

        Doing those kinds of things are also greedy IMO. Just because I didn't state it doesn't mean I give those kinds of thing a pass, based exactly on the definition of the word "greed".

        • brendanm on 18/01/2021 - 17:10

          If you remove all the "greed" you simply end up with communism. Everyone works for the collective, everyone has the same things. Taking risks and innovation give no reward.

          • Ghost47 on 18/01/2021 - 17:13
            +1

            @brendanm: Yeah never was the type to go to extremes like this to be honest. Any call for equity automatically results in someone screaming communism or socialism.

            • brendanm on 18/01/2021 - 17:19

              @Ghost47: This is because it is a free market. For every success like Coles own Woolies there are thousands of failed businesses. It's not easy to be successful, so why should people not be remunerated for it?

              At the end of the day the price is set at an amount the market will bear. Anyone is free to start up a business that sells the same thing as others, and sell their products cheaper, and make less profit. Hell, you can do it if you want. Start a not-for-profut supermarket. Or is it not worth the large amounts of time, energy, and stress?

              • Ghost47 on 18/01/2021 - 17:22
                +1

                @brendanm: I'm living very frugally, making plenty of sacrifices and saving diligently for a house (or a place to call my own).

                Stop acting as if you're the only person who has worked hard and bought a house as if you expect other people are just asking for handouts.

                • brendanm on 18/01/2021 - 17:24

                  @Ghost47: Where did I say that? I said that people should make profit from risk and innovation.

                  • Ghost47 on 18/01/2021 - 17:26

                    @brendanm: Why would you go on some stupid tangent about opening a supermarket to compete with Coles and Woolies, and then ask "or is it not worth the time or energy blah blah blah" as if I'm expecting a handout?

                    • brendanm on 18/01/2021 - 17:28
                      -1

                      @Ghost47: I said they make profit. You said they were greedy. I said you are free to start a supermarket and make less money, but it would be a lot of effort to low reward, so not worth it.

                      Not sure what that has to do with a handout, except in your mind.

                      • Ghost47 on 18/01/2021 - 17:37

                        @brendanm: So you condone people who, for example, resold toilet paper during the pandemic, or scalped PS5s at launch?

                        If you think these things are innovative and require hard work you're clueless about what innovation and hard work really are. Scalping is not sophisticated and only the most unoriginal people consider that sort of thing to be an "innovation".

                        I'd rather not lower myself to that sort of level.

                        • brendanm on 18/01/2021 - 17:46
                          -1

                          @Ghost47:

                          So you condone people who, for example, resold toilet paper during the pandemic, or scalped PS5s at launch?

                          I don't care what they do. You realise they only make money if people are stupid enough to buy at extortionate prices? If people choose not to buy, they can lose a lot of money. That's the risk.

                          I hope you realise risk and innovation are two different things?

                          • Ghost47 on 18/01/2021 - 18:07

                            @brendanm: The thing is, people are often stupid enough to pay extortionate prices for whatever the product or service is, and if they don't the seller just lowers the price incrementally until they get a bite.

                            Of course I realise risk and innovation are two different things, but I also realise that the two also share a relationship.

                            • brendanm on 18/01/2021 - 18:49
                              -3

                              @Ghost47:

                              The thing is, people are often stupid enough to pay extortionate prices for whatever the product or service is, and if they don't the seller just lowers the price incrementally until they get a bite.

                              Then the scalper making money is the fault of the stupid people. It's a thing because there is a market for it. There would be a lot of people who lost a lot of money on masks and toilet paper.

                              Of course I realise risk and innovation are two different things, but I also realise that the two also share a relationship.

                              Can share a relationship. You can have risk with very little innovation as shown above. You can also have innovation with very little risk.

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