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

                • p1 ama on 19/01/2021 - 23:11
                  -1

                  @Ghost47:

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

                  This is exactly why you don't have a house. Living frugally, making sacrifices and saving diligently are only netting you crumbs. Take the money you have now, put it into the a high yield asset market (e.g. shares), or leverage it and go buy a property out in a regional town somewhere, where you can afford it.

                  I've taught finance and investing at university - saving for a house makes no sense. Your savings are returning probably 1% p.a. whilst property prices are shooting up 3 - 4% p.a. It's like trying to catch something that is running away from you faster.

                  I bought a $1.5m house by age 30. How?

                  I started investing as soon as I had money, bought shares with my paychecks when I was 18, bought a $350,000 house with a $70,000 deposit when I was 23 after saving through university and 1 year of full time work. Sold that house for $410,000 3 years later when I was 26, mortgage was around $140,000, so I had around $260,000 equity (after fees). Bought a $720,000 house with that equity, then sold out 4 years later when I was 30, the house was $830,000, mortgage was around $320,000, so my equity was around $500,000 after fees. More than enough to get a $1.5m house by 30.

                  Didn't have to live frugally, didn't have to pay a dime in rent. All were my PPOR, so didn't pay any capital gains tax. Make the market work for you - poor people save, rich people invest. That's something I learned when I was young and never forgot it.

                  • Ghost47 on 20/01/2021 - 14:45

                    @p1 ama: Thanks for the advice but most of my money is in the market already actually. I have a pretty healthy emergency fund of about 2 years worth of living expenses (which could stretch further depending on how I lived) as well as accounts for splurging. I could place this cash into investments, but I’d rather also build up cash funds as well to place into a deposit (because if I sell my investments I’ll be starting all over again with the compounding interest).

                    Not everyone out there is clueless about growing their money mate. And TBH I’d rather not dump all my shares for a 20% deposit on a single $1m property.

                    Do you think people live frugally only to put money in the bank? Some people live frugally and invest that money instead. The gains I make by living frugally, spending less than I earn whilst also netting positive returns on my investments grows wealth faster than if I were to spend more on a daily basis and have less money to invest.

                    • p1 ama on 20/01/2021 - 21:35

                      @Ghost47:

                      Not everyone out there is clueless about growing their money mate.

                      Most people are, obviously not everyone (but that's a fairly obvious point). I did a lot of research into financial literacy when I was an academic. The majority of people are not familiar with exponential growth, compounding and how much "time in market" affects how much money they have in the long run.

                      If you're well educated, good for you, you already have a leg up on a really large majority of the population. You'd be surprised, but the Dunning-Krueger effect is strong when it comes to financial literacy. Most people who get offended when receiving financial advice are usually pretty bad with money. Not saying this is you, but this is what research shows.

                      Do you think people live frugally only to put money in the bank?

                      The majority of people do. Around 36% of the adult population owns shares (not including superannuation), so the majority of people actually do not invest, even when interest rates are extremely low.

    • gromit on 19/01/2021 - 08:32

      because even when paid off 1 or 2 properties are probably not going to sustain you. The end goal for most is income producing assets that negate the need to work beyond that (certainly the case for me). Yes owning property absolutely takes a lot more work than people think. Personally I diversify between property and shares.

  • aussie bargain on 18/01/2021 - 15:57
    +1

    There are so many aspects to your open-ended question, e.g.:
    1. Why people invest/save?
    2. Why people choose to invest in property (compared to other asset types)?
    3. The impact of so much property investments in Australia

    1. is straight forward. Most people want to save for a rainy day/better future, where they would want an asset as a mean of "holding value" that can hopefully appreciate. They can then hopefully either pass it on to their kids or use the asset to fund their future lifestyle.

    With 2, the trend in many parts of the world is that property is seen as a "safe" investment, where it is perceived by many cultures as a good investment (compared to stocks, etc). As with any other investment (e.g. shares, bitcoin, etc), whether it is a good investment is an arguable point because there are always pros and cons with everything.
    In Australia, tax policies have certainly made property investment quite favourable. Whether this is a good or bad thing is arguable (refer to explanation for point 3). The other tax treatment that is favourable in Australia (compared to many other countries) is the refunding of franking credits, but that's a different kettle of fish.

    Point 3 is probably something I struggle with the most because I can see that the worst impact is what it does to the next generation. If property prices keep going up, some commentators have said that there would be a huge divide between renters and landlords (as you have indicated). I worry about whether my kids would actually be able to afford a house at all.
    There are certainly some truth in the fact that negative gearing incentives make rent more affordable (not directly though).

    Overall, my opinion is that our capitalist economy coupled with Australian tax policies (and current interest rates) certainly encourages property investment to unhealthy levels. I think we shouldn't be that generous with negative gearing. Unfortunately, Bill Shorten and ALP in the last election doubled down on this with franking credit refund, so I think realistically this would be around for a long time.

    It's probably better for Australia to be less obsessed with property because my belief is that we can structure our tax policies to correctly target property investments. Answering the initial question of "Isn't It Kind of Crappy Towards Society to Buy a Lot (if Any) Investment Properties?" is actually an ethical question where I can ask questions like "Isn't it crappy for some people not having to work while others have to work 40 hours a week?"

    As a society, we need to understand and agree on what is "crappy" and then get the government to change that, e.g. Not having universal healthcare is crappy for most people but in the USA they haven't agreed that this is the best way. However, in Australia and UK and some other countries, we would probably be very upset if Medicare or NHS is taken away.

    In addition to this, as a society we also need to figure out what are the actual "functions" of a house/land and whether we want it to be an investment vehicle. Tax policies such as land tax etc can be used by the government to discourage property investments as it increases the cost of owning investment properties.

    In our capitalist economy structure, it is certainly not crappy towards society to buy a lot of investment properties IF you already own property. However, it is certainly crappy if you haven't owned a property. It is a matter of perspectives and opinions.

    • leiiv on 18/01/2021 - 16:09
      +2

      Unfortunately the gov has the policies backward and probably has not motivation to change them.
      I totally agree with your points. Holding an investment property should be discouraged by land tax etc, and at the same time creation of new property should be encouraged and subsidised.

  • leiiv on 18/01/2021 - 16:00
    +1

    At the end of the day, wouldn't this come down to supply and demand?
    In urban areas, we cannot create new lands unless we release the green spaces (less parks, open spaces, etc).
    Adding density by going high-rise is also often not supported by communities/councils (in my opinion, sometimes because of sentimental reasons).
    We can't create more supplies without compromises.
    I think the way to go forward is by stimulating and funding growth in smaller cities or towns or creating new cities. We can create Canberra from nothing, why stops there?

    • Lockdude on 18/01/2021 - 16:05
      +2

      So, the best reply I've seen to this when talking about scalpers in other products, is that the supply-demand chain breaks when people are limiting the availability of the supply, whilst adding no extra value. If you're taking a house, doing it up, and selling it on, that's a different story to buying a bunch of houses, doing little to it, then holding onto it. Sorry this isn't the best reply ever, it's late in the day and my brain is growing tired :P But I just wanted to throw that in there.

      • leiiv on 18/01/2021 - 16:29

        Well, the system works to the advantage of the scalpers. Just like in the property market..
        With the ticketed shows though, they can just use only on-the-spot ticket and remove the pre-booked tickets.
        Scalpers are not the cause, they are just consequences of the system. If people don't like them, they can change the system (But they don't want to change it).

    • jerrus on 18/01/2021 - 16:07

      I don't know if making another Canberra would be a strong argument for everyone ;)

      But seriously this is what they should do relocate the state government away from Sydney not just move some agencies to Parramatta.

  • jaimex2 on 18/01/2021 - 16:08
    +2

    Australia's main domestic product is dirt. Mining and Land banking is all we do these days since manufacturing went to Asia.

    • aussie bargain on 18/01/2021 - 16:18
      +1

      A country's main domestic or exportable product shouldn't matter to the "preferred asset of choice". One can argue that we have so much land in Australia that everyone should be able to afford a house (I think Dick Smith might have said that).

      If we still had all our manufacturing here (but tax, planning and migration policies are to be the same), I am pretty sure that we would still be in the same boat.

  • MementoMori on 18/01/2021 - 16:14
    +2

    Where will renters live if you didn't have property investors?

    (i.e. young people who can't afford and others who don't wish to buy for whatever reason, new to area, temporarily living in an area, etc)

    Government housing?

    • Drakesy on 20/01/2021 - 18:55

      The OP's original point was that they have an issue with multiple investment properties per person, effectively hoarding houses. 1 investment property is alright, just when 1 person owns 2, 3, 4, 5, 6 properties is when there's an imbalance. When you start a property empire you are literally giving nothing back to the economy.

      Every property that is bidded up by a speculative investor who will more than likely negative gear it is 1 less property that a family can own/move into permanently.

  • Subere on 18/01/2021 - 16:25
    +4

    There's a misconception that all landlords are rich moustache twirling villains.
    You'll find that most landlords are middle class and many will be renting too.

    Buy where you can afford, rent where you want to live. Is a mantra shared by many.

    Investors don't buy property as a scum move. They buy as an investment or for long term gains and retirement. Pension isn't going to exist and the retirement age keeps getting pushed later. So why wouldn't you do everything you can to help out your future self.

  • Ocker on 18/01/2021 - 16:26

    Reading some of the posts it is apparent that socialism is alive and well

    • Reddich24 on 18/01/2021 - 16:54
      +1

      I got bad news for you friend, medicare would be considered a socialised service. Those roads that your taxes pay for, also socialism. Obviously society needs to have a balance between socialism and capitalism but socialism is one of the reasons you're not working in crap conditions for even crappier pay.

  • sarahlump on 18/01/2021 - 16:40
    -7

    I never understood why lease agreements dont come with % ownership of the property.

    if i pay 25k a year to rent the house thats going towards the mortgage. I should own a % of the property. I think this should become legislation. cause people are buying houses, not living in them, and then getting people to pay the mortgage for them. instead of them being able to buy their own house.

    my opinion.

    • GG57 on 18/01/2021 - 16:46
      -1

      It seems it is a thing: https://www.realestate.com.au/advice/rent-to-own-home-scheme…

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

        That's called a scam.

        • Geordiejohn110 on 18/01/2021 - 19:25

          It's not a scam and 'rent to buys' have helped many individuals get on the property ladder.

          Not everything people do is to 'scam' someone else. So the people who do this make a profit - Yes.

          Have many rent to buyers locked in a price 3 years in advance and also made a profit as the Aussie market has risen. Also Yes.

          • brendanm on 18/01/2021 - 19:33
            +1

            @Geordiejohn110: It is a scam. The price is often above market, and it's set up so if, at any time, the person "renting to buy" isn't able to continue to the end of the contract, they lose all the money they have put in.

            • Geordiejohn110 on 18/01/2021 - 19:46

              @brendanm: Danielle Grubisa does a fabulous course on different ways into property investment, one of which is rent to buy.

              She's not only a fantastic barrister, but has also worked on all sides of this discussion (for banks repossessing properties / running debt classes to help people who've gotten into financial difficulties / on the investment side running seminars and helping investors with different strategies for wealth creation). Lots of different viewpoints.

              Like any contract you enter into, there are positives and negatives. Whether it's a PPOR purchase / rental agreement / rent to buy contract / car lease.

              Again, I'll stand by my comment. They've helped many people get on the property ladder.

              • brendanm on 18/01/2021 - 19:47
                +1

                @Geordiejohn110: I'm sure they've helped some. I'm sure they've screwed over plenty of people as well. You seem quite invested in this, I take it you offer a rent to buy scheme to people? For full disclosure.

                • Geordiejohn110 on 18/01/2021 - 20:02

                  @brendanm: Nope, never done it. I've thought about it though & know people who have done it (without any issues on both sides.

                  I generally purchase, renovate, rent for 5-8 years and then sell.

                  I agree that most people who take on rent to buy generally have a poor/no credit rating & these types of arrangement can help them overcome some of the challenges they face.
                  Generally they operate on a ' 'pay more rent on a weekly basis / lockin a purchase price in x years type' arrangement. They build up a payment credit history rating. The seller negotiates an upfront sale in x years (they make a locked-in $x profit). Some might ask for a $ upfront fee.

                  When you look at Australian house prices growth, most people would have gained.

                  Again, there's an old saying, 'You make your profit when you buy a house, not when you sell it'.

                  • brendanm on 18/01/2021 - 20:05
                    +1

                    @Geordiejohn110:

                    I agree that most people who take on rent to buy generally have a poor/no credit rating

                    Are these the sort of people who historically have the financial sense to look into this properly, and follow though 100%?

                    While they are still "renting" the "renter" is also responsible for all upkeep on the house.

                    • Geordiejohn110 on 18/01/2021 - 20:24

                      @brendanm: Most rent to buys, landlord looks after the property (general maintenance). Tenant has to ensure gardens are kept tidy. Like any landlord, you want your tenant to care for the property and treat it as if it was their own. But that doesn't mean repairs/maintenance etc.

                      By the financial sense comment, I'm assuming you are thinking that people in this position have a low financial intelligence. This generally isn't the case. Don't confuse someone's current financial position with their financial smarts. People might have a poor financial position for many reasons.

                      Again, most people who do this type of offering don't want to put themselves in the position of needing to take legal advice for offering a contract to someone where it wasn't a fair contract.

                      • brendanm on 18/01/2021 - 20:43
                        +1

                        @Geordiejohn110: There are so many things that can go wrong in rent to buy that its not funny.

                        Most rent to buys, landlord looks after the property (general maintenance)

                        There are lots where the tenant has to pay.

                        Again, most people who do this type of offering don't want to put themselves in the position of needing to take legal advice for offering a contract to someone where it wasn't a fair contract.

                        Of course they do, they do it because they make more money out of it. Just to start, the rent they are getting paid is generally well above market rate.

    • brendanm on 18/01/2021 - 17:08

      Buy your own house then Sarah. Landlords are putting up money up front, maintaining the property, and taking all the risk.

      • sarahlump on 18/01/2021 - 17:11
        -5

        putting up money? they put up a deposit? maintaining the property? most leases make tennants maintain the property? risk? what risk is there? tennants pay rent, its a thing.

        people buying up investment properties can have a tissue?

        • brendanm on 18/01/2021 - 17:15
          +4

          most leases make tennants maintain the property

          No they don't.

          what risk is there

          Property value dropping, tenant trashing the place, tenant not paying rent, not getting a tenant and being stuck with a vacant property.

          people buying up investment properties can have a tissue?

          Same thing for people who will whinge about renting but won't buy themselves.

          • Ghost47 on 18/01/2021 - 17:27
            -3

            @brendanm: Those are risks you recognised before buying the property. Complaining about said risks whilst buying the property and after having bought the property is stupid at best. Stop acting like a victim when you've chosen that path.

            • brendanm on 18/01/2021 - 17:29
              +2

              @Ghost47: No one is complaining, have a better read mate. Risk doesn't mean complaint. Risk means you have to get something out of it, risk for reward. No one would take the risk of buying a house for someone else to live in unless they got a reward for it.

              Stop acting like a victim when you've chosen to rent?

              • brad1-8tsi on 19/01/2021 - 08:45
                -1

                @brendanm: And this little section of the discussion is why I don't invest in property.

                Bleeding heart, self-entitled renters that think the landlord is rolling in money and that making a dollar with property is easy.

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

      It is called a mortgage. You basically rent off the bank and they call it interest.

    • gromit on 19/01/2021 - 08:34

      I am sure some people would be happy to do that. But expect a massive increase in the rental cost.

  • brendanq on 18/01/2021 - 16:57
    +3

    As someone who was a renter for years, and saved and saved and saved to buy my own place to rent out so that I hopefully have a comfortable-ish life in retirement, I respectfully disagree. As an ex-tenant, I also like to think I'm a decent landlord and know how to meet the needs of my tenant in a timely, appropriate and respectful manner.

  • Blue Cat on 18/01/2021 - 17:03
    +2

    Not sure if it is "crappy". We should be blaming the government for motivating everyone to do this. Government interventions (including negative gearing) have done nothing but drive prices up. If you let the market correct itself, it will correct itself. It just so happens our politicians are doing everything they can to keep the prices propped-up.

    Could it be the fact that most politicians have big investments in real estate???
    Nah, just a coincidence, I don't want to be labeled a conspiracy theorist so I will just say that it is just pure coincidence.

  • outlander on 18/01/2021 - 17:18
    +1

    Yes.

    "Investing" in property is the current generation launching an assault on the next. It would be little different to the next generation buying up medical supplies for life threatening conditions that disproportionately effect older people. Except you couldn't do that, because they can always make more medicine if the price got too high. Property is not so easy to generate.

    The easy counter to this, is squatting. There is a way to occupy property that occupies a legally gray zone, well suited to younger people. You get turfed out eventually, but the process can take months, and hopefully by then you have saved enough by not paying rent to make it worth it.

    • sangohan on 21/01/2021 - 01:46

      The easy counter to this, is squatting.

      so why not just steal from someone rich? Surely they can afford it!

  • Geordiejohn110 on 18/01/2021 - 17:19
    +1

    Not really. Many people purchase investment properties & then lease out on different govt schemes that allow junior doctors/police/military etc. To rent them out at a cheaper rent for time periods.

    Purchasing also helps increase a countries taxes (think about the $$$ in stamp duty etc that government collects).

    It also stimulates the building industry & just because you rent doesn't mean you can afford to buy a property.

    Investors also take a gamble. Most of the time, the outgoings dont cover income. Hence negative gearing. We also take a gamble that prices will increase.

    • WizMuncher on 18/01/2021 - 18:21

      None of those things are even remotely true. For instance stamp duty is a tax to disincentivize trading property like shares amongst other things. You should really understand that as a tax payer in a fiat currency country, it's about regulating behavior, not about funding. If you seriously think your tax dollars are funding anything, then go back to your kitchen table and finish your household budget. Don't be alarmed, you have esteemed company - most liberals don't appear to understand the economy, so why should you?

      • Geordiejohn110 on 18/01/2021 - 18:45

        1) I understand it as a tax payer and an investor in both shares and property.

        2) My household budget is fine. In fact it's grown considerably since investing in property over 20 years ago.

        3)I 'm not a liberal.

        4) stop acting like a know it all (profanity). I'm speaking from my experience of purching property both as a PPOR and as an investor

        Please make sure that when you comment, you also have a firm grasp on investing principles and the role investors play in the economy.

    • dsar on 19/01/2021 - 00:37

      Purchasing also helps increase a countries taxes (think about the $$$ in stamp duty etc that government collects).

      I get where you're coming from but I'm confused as to why you then mention negative gearing as it draws away tax revenue as well. If they got rid of negative gearing (or limit how much losses you can claim to 40% as suggested by the Henry Tax Review), think about the $$$$ the government can save to reinvest in other areas.

      It also stimulates the building industry

      You're not wrong but unfortunately, there are downsides to this as well. We don't do new things in Australia. We don't innovate and manufacture. We just trade houses like it's expensive painting and dig stuff out of the ground. If we stimulated other industries, Australia might be actually good at something.

      Investors also take a gamble. Most of the time, the outgoings don't cover income. Hence negative gearing.

      That's the thing! Would you start a business where outgoings don't cover income? Nope, unless there are some incentives for doing so. Negative gearing creates that bias to do so.

      P.S I don't know whats up with WizMuncher LOL

  • devank on 18/01/2021 - 17:22
    +5

    We are talking about such a small number here. Media makes it bigger than what it is.
    According to the 2011 ABS, about 8% of people own any sort of investment property. About 2.25% has more than one investment property and about 0.07% own six or more.

    These numbers are so small. Most people are accidental investors, who lived in a unit then moved to a house, but kept the unit as an investment.
    Larger ones would include companies and business.

    If landlords are not there, then the government need to provide more social housing. They will have such a large capital tied up in the real estate. Take Defence Housing for example. The government initially owns those houses, but they would rather give it to investors to free up their cash. The same story with NRES and there is Disable housing. This is one way of managing the country. Sure, investors will make a profit, but who is going to do anything unless there is something in it for them?

    • WizMuncher on 18/01/2021 - 18:28

      "who is going to do anything unless there is something in it for them?"

      Quite a cynical point of view. I donate a lot to charities, I suppose it's benefiting me enormously. But joking aside, it is sad that seems to be the prevailing opinion.

      • brendanm on 18/01/2021 - 20:06

        I donate a lot to charities, I suppose it's benefiting me enormously

        You get to tell everyone about it, and receive your internet virtue signalling points.

    • Geordiejohn110 on 18/01/2021 - 18:46
      +1

      I agree.

    • Drakesy on 18/01/2021 - 21:10
      +4

      Your data may be a little outdated.
      https://www.yourinvestmentpropertymag.com.au/news/how-many-p…
      Here we can see the effect that 7 years of continued price rises can have (16% of Australia own an investment property)

      Looking at it simplistically for every 100 people:
      • 16 own an investment property
      • 84 don’t
      Of the 16 that own a property investment, again, using the 100 people as the base, then:
      • 76 had a rental loss (they negatively geared)
      • 24 had a net rental profit
      • 71 owned just one investment property
      • 19 owned two properties
      • 6 owned three properties
      • 2 owned four properties
      • 1 owned five properties
      • 1 owned six or more investment properties

      and with 76% of the investors actually making a loss we can see that the market is literally full of people making giant tax breaks (ultimately taxpayers are footing the bill for their investment decisions)

      • devank on 18/01/2021 - 22:16
        +2

        General taxpayers are not footing loss-making investors directly. They get a proportion of their loss from the tax they paid. An unemployed property investor isn't going to get anything back.
        It is similar to a business. Your end profit is all income minus all expenses. That is what you pay your taxes on.

        Another point is that lately, many choose to rent and own an investment. It lets them live where they want to live and buy where they can afford to buy. That could be one of the reasons why the investor numbers have risen since 2011.

        Regardless, the percentage of mum & dad investors who own multiple properties are tiny. It is pointless bashing that tiny percentage.

        • dsar on 19/01/2021 - 00:43
          +1

          An unemployed property investor isn't going to get anything back.

          I think this is wrong (however, anyone please correct me if I am!). The losses can't be used against salary/wages (as this property investor is currently unemployed), however:
          1. Use it to reduce their taxable income from other sources
          2. Carry the losses forward

          Again correct me if I'm wrong!

          • devank on 19/01/2021 - 10:22
            +1

            @dsar: Yes, but against their own income. That was the point.

          • sangohan on 20/01/2021 - 16:36
            +3

            @dsar:

            1. Carry the losses forward

            They are not losses carried forward if they are negative gearing. It's only capital losses that are carried (which only happens if they sold at a loss), and this loss cannot be used to reduce income for taxation purposes.

            The tax deductions from negative gearing are expenses related to the investment. This makes sense, as it's the same as any business would deduct their expenses from their revenue, and only get taxed on their ultimate net profit.

            I do wish that this can apply for personal costs as well, not just business cost. Why isn't my food, utilities and bills deductible from my taxes, the same way food, utilities and other bills of a business could?

  • Pimpiticians 4 Life on 18/01/2021 - 18:04

    Hey slaves bow down to your political gods.

    https://www.youtube.com/watch?v=714JOrCrI5M

  • diddy50 on 18/01/2021 - 18:54
    -1

    Home Ownership is the single biggest important investment we can provide to young people.

    Having access to superannuation to use this as a deposit or reduce the mortgage will set people up for life, make so many people home owners and not stuck as renters.

    Having your money locked away in Super is absurd when your money can do so much more for you right now.

    • tsunamisurfer on 18/01/2021 - 20:03
      +10

      Having access to superannuation to use this as a deposit or reduce the mortgage will set people up for life, make so many people home owners and not stuck as renters.

      Is it possible that this policy would simply increase the flow of money into buyers which will ultimately increase the property prices?

      In the end those people will simply be home owners WITHOUT a Super balance.

  • Herbse on 18/01/2021 - 19:38
    +1

    With outdated incentives like negative gearing to reduce high income taxes, which only adds to the value of investment properties. This kind of use of houses as a means for people with money getting more money will only grow.

    It used to be that house values would grow slowly, with most high value benefits happening after 30 years or so of owning it. Now people can flip a house in a couple of years for $100k profit. Most people with enough assets can and already do it if they're smart. So the values go higher and higher as more people fight to use the incentives and invest.

    Prices are so ridiculously high now, most single people are essentially locked out of the market unless they get help from family members or get married. And even then they need to get a loan so large that the risk of losing one of their jobs is nerve racking and drives people insane.

    Houses are not meant to be get rich investments. They're meant to be a home for people to live in as part of the Australian dream and slowly grow to be a retirement fund. This has not been the case for decades now and will leave many people with a poor retirement fund in the coming years.

    • Geordiejohn110 on 18/01/2021 - 19:52
      -1

      Very rare you make a $100k in a couple of years without doing some major renovations, especially on most median priced houses, especially when you factor in stamp duty/holding costs/selling costs/capital gains) .

      The Australian market has done extremely well over the past 20 years. If interest rates remain at an all time low, they'll probably increase further.

      • DemocracyManifest on 19/01/2021 - 01:05

        Not true, piece of shit houses on the Central Coast NSW went from $300k~ to $600k in a few years, are above $700k now, nice bank for minimal repairs to rent it out and slap a granny flat on the back.

  • Tiredman on 18/01/2021 - 20:12
    +3

    I don't know. I work and save like a mad man so i should be able to get as many as i want. If the government wants to limit how many i can have, i don't really care. Investors will just find something else to invest.

    Some people can throw their money on fancy cars, fine dining and holidays and live paycheck to paycheck, i have no problem with that.

  • dufflover on 18/01/2021 - 20:32
    +2

    These days a lot of "investors" are just speculators who have been convinced to join a ponzi scheme. The whole premise is buy now, sell it at some greatly inflated price (as they all see reported in Sydney and stuff). They don't even really have a plan - just cross their fingers in 5, 10, 20 years there is some sucker, or ideally a cashed up Chinese investor or other investor thinking to hold and go big, to pay some ridiculous higher price.

    I know it's a pipe dream but the sooner property and the housing isn't perceived as some cash cow the better.

  • Mistredo on 18/01/2021 - 20:37
    +1

    I believe things that are necessary for people survival shouldn't be investment, and if they are investments they should be heavily regulated. I prefer what Vienna does. The city owns majority of buildings, and it gives them better control over rent and gentrification.

    I also believe if scissors between rich and poor continue growing, there will be a revolution at some point that will overthrow the ruling class. It happened in the past, it will happen again. It is very dangerous to allow the current trend to continue.

  • Drakesy on 18/01/2021 - 20:51
    +2

    It's the elephant in the room that would be an immediate election loser for anyone who tries to implement it, and yet our housing affordability is at at an all time low.

    We have a crisis on our hands but no one wants to own up and tackle it fearing they'd be kicked out of office for doing so and now Australia as a whole is going to be paying for this for years to come (the ones paying btw are the x y z generations). Thanks boomers :)

    For years we've had issues with lack of spending being a giant burden on the economy, now i'm not an economist but one way to jump start this would be to increase disposable income. This is what the RBA has been trying to do with the back to back rate reductions, only problem is Australia is hooked on real estate like crack because of the effect that investors, both foreign and domestic have made to drive up property prices. Also record high immigration to cover up dwindling pregnancy rates and artificially 'grow' the economy is probably the most short sighted solution ever.

    Basically with no increase in wage and with inflation most likely in the near future anyone not in a home will be priced out of the market again, and there's nothing they can do about it, it's not because they can't save, it's not because they're eating too much avo on toast, it's literally those with money gambling on the infinite gains of property. Endlessly protected by tax breaks thought up by lobbyists in the real estate industry.

    Restricting the number of investment properties per person would definitely help, along with the implementation of land tax to push people to downsize when they get older, this will help free up houses for those that actually need them. i.e families

    We're following Japan on the path to economic stagnation, the next 10 years are going to be rough.

    Rant/

    • WizMuncher on 18/01/2021 - 21:03
      +1

      Well said. It's not hard to fix the problem in a technical sense. Simply make some reforms to the tax system. Although judging by the reaction to this thread - politically it is infeasible.

    • dufflover on 18/01/2021 - 23:12

      You could practically throw this situation into the China bucket. If the top of the ponzi bucket was cut off (i.e. this whole notion there is likely some sucker willing to pay the price that capital gains come from) then the whole thing would burst and fix itself albeit painfully.

      No different to how so much of our country is addicted - yes addicted because it's apparently not stable without it - to cashed up typically overseas buyers. Whether it's education/Uni's, beef, coal, seafood and probably most of the Sydney property market.

      Stuff like Gov limitations on property people propose is not addressing the issue of why it's appealing in the first place. Too bad China didn't put a ban on Aus property. That would prob get the ball rolling pretty well.

    • MaxTravels on 20/01/2021 - 00:47

      Why does the number of properties count? Why not the value? I live in a regional areas where house prices average $300k. Owning 4 properties here is less than one in a desirable suburb of Sydney. I support a cap on the value of the properties, but the number of properties is not a fair yardstick. In my opinion (not an economist) if that was the case, smaller regional investors like myself would sell up locally (reducing further the value of regional areas) and drive us to buy the cities (further increasing city prices).

  • bobolo on 18/01/2021 - 21:13
    +16

    I have 20 properties that net me a passive income of well over $200,000 a year. I loathe negative gearing.

    I grew up in challenging circumstances, but worked hard, saved, invested, sacrificed, lived like a nun for 10 years to achieve it, whilst my mates were partying it up, holidays, buying nice clothes, cars and so forth - trying to impress each other. This was my choice to create a better future for myself and my family.

    Some of the houses I own are less than $500,000 in value, but the tenants renting them will never be able to afford to buy it. They are employed in good paying jobs, hard working, honest people who pay rent on time like clockwork - but just do not value even the slightest bit of financial security and spend every cent and beyond, like their lives depended on it.

    I'm not judging them at all, but I am saying this demographic make up the vast majority of Australians. I provide affordable housing for them, and they get to enjoy their lives as they see fit.

    Everyone can achieve financial security if they educate themselves a bit and are able to action some self discipline and delayed gratification. Collectively, I am certain I give much more than I take (in terms of providing housing, jobs for solicitors, property managers, tradies, insurance people and so on)

    • funnysht on 18/01/2021 - 21:22

      true..the post about tom ford sunglasses being down from $700 don't help

      • rgr on 18/01/2021 - 23:59

        lmao

    • Drakesy on 19/01/2021 - 00:32
      +2

      I get that you feel like you're doing them a favour, but you've been lucky with timing, I'm assuming you got in before the boom, then leveraged your increasing asset value to take out more loans on more houses.

      This is the problem we're getting at where there'll be multiple generations who simply weren't born at the right time. They can save all they want but will always be way behind the eight ball when it comes to getting a start in the property market while it takes off again.

      Oh and I get that it is probably fair enough that not everyone wants to own a home, but every investment property is one less place of residence.

      When you can earn more than working by literally hording houses then that is not a sustainable economy. Literally nothing is being created or provided.

      • dsar on 19/01/2021 - 00:58

        When you can earn more than working by literally hording houses

        Would just like to add this on to add weight to your (2nd) last sentence.

        When houses earn more than jobs: how we lost control of Australian house prices and how to get it back

      • p1 ama on 19/01/2021 - 16:25
        +1

        Oh and I get that it is probably fair enough that not everyone wants to own a home, but every investment property is one less place of residence.

        This sort of black and white thinking is stupid. You will always need "investment properties" because there are plenty of people who do not want to purchase a home and still need a place to live.

        • Drakesy on 19/01/2021 - 16:33

          https://www.sbs.com.au/news/the-feed/melbourne-s-60-000-vaca…

          You don't see the problem here?

          • p1 ama on 19/01/2021 - 18:36

            @Drakesy: Yes, so impose a tax on vacant properties?

            But don't be surprised if it has little to no impact on the market. 60,000 houses, say 4 people per house, is only 240,000 people, not even 0.5% the population of Melbourne.

            • Drakesy on 19/01/2021 - 18:56
              +1

              @p1 ama: Let's just check the maths

              Population of Melbourne: 4,936,000
              Population potentially housed in vacant properties: 240,000

              240,000 is 5% of 4,936,000

              I would debate that that is a significant amount. It's the difference between a shortage and a surplus of properties.

          • pogichinoy on 21/01/2021 - 16:26

            @Drakesy: Not all homes have to be occupied at any given time.

            Do we have to enforce this just because there are people who want to live there regardless of whether they can afford to?

      • pogichinoy on 21/01/2021 - 19:23

        Which boom? There's a 90s boom, the 00s boom, or the 10s boom? There are people in each generation who are able to achieve ownership on their own. If they can do it, why cannot others?

        It takes years for a leveraged property to become positively geared, if its not already, let alone paid off where it can actually be passive income.

        It's not one less place of residence, because more often than not, it will be occupied by a tenant.

    • jaypee06 on 19/01/2021 - 04:57
      +3

      Your comment comes off as patronising. Good on you for working hard, and making sacrifices for 10 years to get to where you are. But do you really think people nowadays aren't working as hard, or making the same sacrifices you made? Because I think that's where a lot of the frustration in these discussions comes from. There's a whole generation working hard and making sacrifices, much like you did, but still can't make any progress towards home ownership.

      Just out of curiosity, what do you think it is that you're 'taking' when you say you are certain you give much more than you take?

      • brendanm on 19/01/2021 - 07:41
        +2

        making the same sacrifices you made?

        They don't, that was literally the point.

      • gromit on 19/01/2021 - 09:01
        +2

        But do you really think people nowadays aren't working as hard, or making the same sacrifices you made?

        they don't, I see it all the time. Including in my own family. My younger sister epitomizes the problem. She (and her friends) constantly complain that it is impossible to save enough for a house deposit and it isn't fair. yet 3 days a week they go out to a cafe for breakfast together, at least twice a week they go out clubbing or drinking together or to restaurants etc etc. I have given up, initially I sat with her and worked out a few sacrifises she could make that would net her a house deposit in just a couple of years (e.g. 1 day a week breakfast with friends or 1 less night a week going out, 1 less overseas holiday), her response was "I shouldn't have to make sacrifices to buy a house, what's the point if I don't get to live now"). a few years ago she had a $100k windfall from medical malpractise (she well and truily deserved that and much more), but what did she do, latest iphone, holiday overseas, clothes and going out, I kept my mouth shut but it was heartbreaking to watch and know she would be back in exactly the same position of living paycheck to paycheck a year or so later.

        • Drakesy on 19/01/2021 - 12:50
          +2

          The irony here is that if you sacrifice your lifestyle and choose to save your money and place it in a bank you're not contributing to the economy over that time. This is exactly the issue the RBA has with the economy where people are choosing to save a deposit or their mortgage rather than spend, just look at the new car market.

          So in a way it's flawed, if everyone sacrificed their lifestyle like you did and diverted their disposable income then the economy would be royally farked as there'd be less expenditure, we'd have negative interest rates and house mortgages up the wazoo (although we're not far off). Ultimately house prices are the mitigating factor in maintaining disposable income.

          • sangohan on 21/01/2021 - 01:59

            @Drakesy: that's such a simplistic view - naive at best.

            The money being saved in deposits are not sitting idle - a bank lends it out (potentially to businesses). If a bank has a lot of money to lend (because everybody is saving deposits), interest rates drop, and this makes business investments more attractive, and so more gets lent out.

            Consumption does drive the economy, but so does investment. If consumption drops, i would expect investments to grow to make up for it.

            • Drakesy on 21/01/2021 - 10:56

              @sangohan: I'd argue that is the superranuation funds making investments, banks literally take your savings and lend it out as mortgages, which is why its in their best interest to lend out as much money as possible and allow house prices to go up as it guarantees them an income stream.

              This was why they had to bring in responsible lending laws as it was causing huge increases in house prices while loading up families with money they could never pay back.

              And again, mortgages don't drive an economy (unless your buying brand new.)

              • sangohan on 21/01/2021 - 13:13

                @Drakesy:

                mortgages don't drive an economy

                it does. You're only thinking of one layer of lending - but the money being spent on lending comes back to the bank, which gets lent again, and again. At some point, the money gets lent out to something other than just a mortgage.

                And if the house price increases - any sale means the person sold has a large windfall. So what do they do with the money? They either consume it, or re-invest it somewhere else. These are the investments i'm talking about in my post.

                It's the same principle as investing in shares will generate productivity - not from your individual purchase of shares, but from the entire process starting from the issuance.

        • Ghost47 on 19/01/2021 - 13:17
          +2

          Wait, you’re blabbing on about your sister and people you’ve met as if her/their behaviour is representative of the wider Australian population?

          Your comment is a huge insult to people who are working hard and are making sacrifices (such as sticking to a budget which basically puts them on the dole, not buying “wants”, not travelling, only buying items that are on discount etc) in the hope to one day buy a place to live. These people are probably making way more sacrifices than you ever did because of how house prices have trended.

          • gromit on 19/01/2021 - 13:26
            +2

            @Ghost47: oh the irony, attacking me for making assumptions while making assumptions about the sacrifices I made. FYI, for 10 years I lived in an uninsulated craphole in Canberra that I rented and rented out the spare room, never taking a holiday, taking lunch to work and living on a tight budget. by the time I bought my first house I had 130 days of annual leave saved up as well which was a double bonus for my sacrifises.

            Also I am not saying everyone is like my sister, but their is definitely a very large group of entitled people that believe it is unfair they need to do anything to be able to afford their first home, it should just happen and their right to live paycheck to paycheck should not have anything to do with them being able to afford a home.

            • Ghost47 on 19/01/2021 - 13:33

              @gromit: I guess you missed the point completely, that due to how housing prices have trended people will need to make even more sacrifices than you. That is until you show up at the auction and outbid them after all the sacrifices they’ve made, right?

              The fact you think others are not doing what you’re doing shows how ignorant you are. You didn’t even comment about how your small sample size might not be representative of the wider population either. To judge the entire population based on anecdotal evidence is very stupid.

              I just saw your edit, how big is this “very large group of entitled people”? I’m guessing you must work at the ABS or something? Or work with this sort of data on a day to day basis to make such claims? Please post the data so we can see hard numbers and not unreliable anecdotal stories.

              • gromit on 19/01/2021 - 13:55

                @Ghost47: funnily enough yes I have worked with the ABS LOL as well as several other agencies that do data crunching. Though I have not personally worked on the data I do work with people that do.

                • Ghost47 on 19/01/2021 - 13:57

                  @gromit: LOL well I’ll wait for you to post the data up since you have connections in the industry. Will be very interesting to see if your anecdotal claims match up, thanks in advance.

                  Oh and please don’t edit the data to bolster your claim, but I’m sure I didn’t have to clarify that.

                • Ghost47 on 22/01/2021 - 14:11
                  -1

                  @gromit: Got that data yet?

                  • gromit on 22/01/2021 - 14:29

                    @Ghost47: Lol. Never claimed to have access, even if I did I would not bother to post to prove a point to a kid on the internet .

                    • Ghost47 on 22/01/2021 - 15:56

                      @gromit: Ok lol, I was just asking. Nice personal insult though.

                      We'll just come to conclusion you don't have any facts or figures as to how large this group of entitled Australians are.

                      • gromit on 22/01/2021 - 17:08
                        -1

                        @Ghost47: Grow up. If u want the data Then buy it yourself. Millennial data survey is available at small cost, not going to buy it for u. And what insult?

                        • Ghost47 on 22/01/2021 - 17:56

                          @gromit: Look, you were the one who said this:

                          their is definitely a very large group of entitled people that believe it is unfair they need to do anything to be able to afford their first home

                          I simply asked you to back up that claim and requested actual numbers of these sorts of people. You clearly could not.

                          Don't tell me to grow up when you make outlandish claims without backing it with any facts. Instead of answering a simple "no" (which would have been fine) you threw a hissy fit instead. Well done.

      • bobolo on 19/01/2021 - 15:45
        +2

        @Drakesy @jaypee06

        I don't feel like I'm doing anybody a favor at all. But as a somewhat successful landlord, I should not feel vilified for making the sacrifices I chose to make to better my own circumstances. In the process of buying and owning these properties, I am providing affordable housing to those that don't want to sacrifice, along with jobs for those who are managing my properties. I pay my taxes (more than most people I know) and in return, I get to live a financially comfortable life that I created.

        Like I said, some of the properties I own are $500,000 or less. More than affordable for anyone on an average income or less. But is it up to me for them to choose to make their sacrifices and save up just a few years for a deposit to buy one?

        10 years ago when I first started buying, people who never had the intention to save and buy property were making the same claims - Its too expensive now, I wasn't born at the right time, I'm behind the 8 ball, too many investors hoarding etc. And it was the same 20, 30, 40, 50 years ago.

        A lot of my properties haven't seen much capital growth either. The ones that have I actually sold off so I could use the gains to pay off a few of the others I own (which is why I am now in a position with less debt and more income). If you think buying and owning 20 properties over a 10 year period is based on "luck", you have no idea what you're talking about.

        I know plenty of people, young and old, starting out today who are getting into the market, saving, making sacrifices and taking it one step at a time as I did. Its not 0 properties or 20. You can work towards a place of residence, or a small portfolio of 2 - 5 properties. But irrespective of what your goal is, its going to take hard work and resilience. And like any success in a capitalist society, the harder you work the more you are rewarded - and unsurprisingly, the "luckier" you get

        For me, I took sacrificing to an extreme. I never ate out, I worked a few jobs at a time/on weekends, I lived in very undesirable surroundings and saved like a madman. I'm not suggesting people need to go to that extreme, as most people do not want to buy 20 houses. But for those who want to simply buy their own place to live in, its more than achievable today if they are just a little bit smarter with their financial choices.

        If your goal is to own property, whether its to live in or to rent out, stop blaming the "system" and spend that time/energy on how you can improve yourself instead

        • jaypee06 on 20/01/2021 - 00:30
          +1

          Maybe you tagged me by mistake but I never vilified you for making sacrifices and amassing your IP portfolio. In fact I did the opposite; I commended you for that.

          I pointed out that you have a patronising view of everyone that doesn't own property.

          Which 10 year period did you amass your IP portfolio, and do you believe we'll see the same growth in the next 10 years as in those 10 years?

    • saltypete on 19/01/2021 - 10:12
      +1

      bobolo, I think the replies here illustrate your point pretty well. 🤔

  • funnysht on 18/01/2021 - 21:21
    +2

    if i was a renter i would hope there are more investment properties to rent..

  • boozler on 18/01/2021 - 21:22
    +2

    At the end of the day it’s all about creating wealth for you and your family so buying multiple properties is just one of many “investment” approach. Don’t hate those who can buy multiple properties you and next person, would do it as well if you could.

    • Drakesy on 19/01/2021 - 00:34
      +2

      Its when the rest of australia is subsidising their investment decisions if they go south. Effectively socialising the losses (some 76% of investment properties were negatively geared in 2018)

      Hence the false market bubble

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