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

  • DemocracyManifest on 18/01/2021 - 21:30
    +2

    Investments are fine, the government shouldn't give people a single dime towards looking after them however, nor 'first home bonuses'. The government has neglected investment in and maintaining their social housing stock, that's where their focus should be. Also, imo people using their folks as 'guarantors' needs to cease as well, its pushing up house prices

  • funnysht on 18/01/2021 - 21:42
    +1

    To those voting- only one principal property. where do you expect the renters to live at if no one owns an investment property -__- 32% of people rent.

    • serpserpserp on 18/01/2021 - 21:53
      +1

      where do you expect the renters to live at if no one owns an investment property

      In government rent controlled buildings.

      • funnysht on 18/01/2021 - 21:55
        +3

        Sounds like communism

      • brendanm on 19/01/2021 - 07:42
        +1

        I thought you were joking until I read your comment below. Just what we need, more government.

    • DemocracyManifest on 19/01/2021 - 01:06

      They could buy their own homes in a fairer market

    • dsar on 19/01/2021 - 01:08

      I just want to confirm, you are implying that without property investors, there would be less housing?

  • serpserpserp on 18/01/2021 - 21:52

    OP: You should read Evicted by Matthew Desmond. It might be set in America but many of its themes apply to Australia. In the last 50 years there has been a massive industry built out of being a landlord and just becoming a property manager. In this country we have been funneled into it by the government. Now we live in a country that refuses to build mass public housing even though what has happened with the pandemic is the absolute lightning rod we needed to pour billions into it. Just a shame because we could have shown the world how it could be done.

  • ribze1 on 18/01/2021 - 21:57

    I don't like it when some people own a shtload of IPs, but i'm not fundamentally against it.
    That said, i think the Gov't support should cease above a certain point, say 1 IP assuming you have a PPOR too. Doesn't stop people doing it but reduces the incentives.

    Gov't support = negative gearing, CGT discounts and any other sort of support floating around like the homebuilder scheme.

    • conan2000 on 19/01/2021 - 22:21
      +1

      If they took away negative gearing I would expect people would just set up an ABN, purchase the property through that and then essentially negatively gear, the same way every other business does with depreciation/loan interest vs income. They would also likely find many more creative legitimate ways to reduce tax via being a business owner.

      • ribze1 on 19/01/2021 - 22:27

        Companies shouldn't be able to own residential properties - simple.

        • sangohan on 21/01/2021 - 02:14
          +1

          so who will be the landlord to lend out a place to live for those people who want to rent?

          • ribze1 on 22/01/2021 - 21:43

            @sangohan: Individuals (or couples), not a company structure.

  • Dogsrule on 18/01/2021 - 22:24
    +5

    Here’s my story:

    I saw an ad for an auction of a 2500m2 vacant lot located amongst a low/medium density residential area. Went to the auction, was the only person that showed up. Put in a very low bid, bid was accepted. Seller was NSW Housing - selling because there was no money for new public housing construction. Subdivided into 5 lots, built a 3 bed house on each, put tenants in at below market rate (keeps vacancy rates low). All tenants are lower income families, 10 adults and 12 kids in total.

    Nobody else showed up at the auction. There were no houses on the lot before I bought it, now there are 5, housing 22 people. I don’t negative gear, and I took on significant risk to fund the subdivision and construction. I come from a low income upbringing myself, and my family certainly would have enjoyed living in a nice new house with cheap rent instead of the expensive weatherboard shacks we inhabited. Am I a bad guy?

    You decide.

    • DemocracyManifest on 19/01/2021 - 01:01
      +1

      You aren’t the bad guy, but why can’t low income families easily pay their own houses off instead of paying rent to someone else? I’ve paid $100k now to my landlord who’s done practically nothing to improve the property, I’ve paid off 1/3 what he paid for the entire block before it shot up in value…Pretty bad NSW Housings budget is that severely gutted

      • brendanm on 19/01/2021 - 07:44
        +2

        I’ve paid $100k now to my landlord

        Who has told you that you can't buy?

        • DemocracyManifest on 19/01/2021 - 14:15
          +1

          Bank wouldn’t lend me the cash at this stage in my life…houses are too expensive for what they would approve

          • AussieDaddy on 20/01/2021 - 03:45

            @DemocracyManifest: I'll be 42 in August and am still a renter so do you think it's too late for me? Have saved the deposit and more but was never confident to get into the property market as I am single and my job is my only source of income (nowhere near $100k that some people talk about here). Also, I am renting cheap, so I was anxious dealing with all the headache and responsibility that comes with owning a house. But at the same time I get nervous when I think about late in life and still renting.

            • DemocracyManifest on 20/01/2021 - 11:04
              +1

              @AussieDaddy: The goal would be buying a place that works out practically the same as renting, but then you have to factor in maintenance, insurance, emergencies. All depends on where you are living too. Practically zero chance of housing prices coming down for years to come due to record low interest rates and govnernments throwing money at the sector. Good luck!

  • KMeister on 18/01/2021 - 23:57
    -1

    In a free-market economy where there are winners, there will be losers.

    • saltypete on 19/01/2021 - 10:21

      XX In a free-market economy XX In any aggregation of organisms where there are winners, there will be losers.
      Please don’t lay this truism of the free market economy. I’m sure there are plenty of people here that are able to give us first hand accounts of how other systems work out.

    • No ONE on 19/01/2021 - 17:42
      +4

      In free market, you don't subsidise the landlords (negative gearing, discounted capital gain tax), first home owner grant etc.

      • saltypete on 20/01/2021 - 09:09

        You are right. Many of these same ones are far less generous with rental assistance, dole etc. Free market countries use a range of economic levers to achieve desired results. Be careful what you ask them to prioritise. 🤔

  • jaypee06 on 19/01/2021 - 04:19
    +2

    "You make it harder for people to buy a home, and in doing so, can raise the rent you charge."

    Not really - you can only charge what the market can afford. If you raise it too much then the tenant will just find somewhere cheaper to live.

    I think I agree with the sentiment of your post. I share a similar upbringing and am at a similar stage of life in that I'm 'ready' to buy a first home. It would be interesting to see if they capped the number of investment properties, or tiered the associated tax incentives, if it would bring house prices down to a point that renters, who previously couldn't afford to enter the market, could now afford to.

    I sometimes wonder as well, if house prices were cheaper and wouldn't take up so much of my disposable income, how much more willing would I be to spend money, and in turn stimulate the economy. Instead of saving as much as I can and just buying $5 Domino's pizzas I might be more willing to go out for a nice dinner.

    I don't blame IP owners for doing it - we have a really self-entitled culture here in Australia. I can't say for sure that I wouldn't do it as well if given the chance. I think it's best to direct your anger at the rules in place that allow for this to happen - CGT 50% discount, allowing IP losses to offset against salary & wage income (ie negative gearing), First Home Owner/Builder grants, First Home Super Saver Scheme, First Home Loan Deposit Scheme. And if you look at all the solutions to address housing ownership, nothing addresses the price of housing and what's pushing up the price of housing, but rather how to get the younger generation to access more money.

    • jaypee06 on 19/01/2021 - 04:26
      -1

      Another thought I had - renting laws in Australia are pretty piss poor. What if we change the laws to work for the tenants more, and provide a bit of stability and security, and perhaps renting might not feel as degrading.

      • brendanm on 19/01/2021 - 07:45
        +3

        What if we change the laws to work for the tenants more

        The laws are generally quite skewed toward tenants.

      • gromit on 19/01/2021 - 09:14
        +2

        huh? Australian tenant laws are heavily skewed towards the renter already. If they move much further in the renters favour then you will see a sharp reduction in rental properties.

  • HelpMeiCantSee on 19/01/2021 - 08:36

    Sure, communism is great! Just ask anyone who lived with it.

    Landlords are evil, acab. Jump on any other uneducated bandwagons much?

    Edit: capital cities are expensive shitholes. Always have been. Move further afield and find happiness.

    • unfinishedsentenc on 19/01/2021 - 10:53
      +1

      BUT I WANT TO LIVE IN THE MOST EXPENSIVE SUBURBS WHILE WORKING MY MINIMUM WAGE JOB

    • Griffindinho on 20/01/2021 - 11:39

      You’re missing the point. it isn’t about living under a dictatorship communist leader. It’s about having a great balance for the better of society so the wealth & income inequality doesn’t blow up like what’s happening the US & UK

  • Excelsior on 19/01/2021 - 09:35
    +1

    Playing devil's advocate here, but wouldn't we all do the same if we could? If you're in a position to then why not - obviously a smarter decision to grow your wealth rather than doing nothing with it. In any case, tall poppy syndrome is pretty prevalent especially when it comes to property and investments.

  • HeWhoKnows on 19/01/2021 - 09:46
    +1

    The more investors buy property the more stock thgere is availabe for those that chose to or can only afford to rent.

    What does this mean?

    The old law of supply and demand says that higher rental stock drives rental prices DOWN
    Right now is a classic example of that.
    Its never been more affordable to rent in the most desireable suburbs inthe cities

    So quite the opposite of What OP thinks may be the case.

  • Yotta00 on 19/01/2021 - 09:49
    +1

    NIMBYs are the Karens that is ruining Australia.

    Take one flight over Sydney, see low density suburbs in the middle of Sydney.

    Why does it take one angry boomer to block development that would provide shelter for 100s of people? There was one story that they blocked development of high density housing because it's going on top their POS rundown "Community garden". Heres an idea NIMBY, move out.

    Build high, not out.

  • payless69 on 19/01/2021 - 09:54
    +1

    Go out and buy a joint! Interest rates are at a historic low. If you can get a house then you have just rates to pay. Grow your veggies and buy corrugated iron to stay put. All the socialists manage to do is to destroy the middle class. Nobody needs a middle class anymore when the new majority of save nothing spend everything generation gets in control like it is happening now in the US. Spend big! Cry poor!

  • pogichinoy on 19/01/2021 - 10:59
    +1

    Ownership is not a right, therefore it is not crappy.

  • OzHunterNSW on 19/01/2021 - 11:07
    -2

    Landlords don't feel they are benefiting society… they want the money, pure and simple.

    I know one LL owning over twenty houses and a number of business properties. This started from he being a poor child back over in Eastern Europe somewhere.

    He is simply a hoarder of property, still driving an old dilapidated van, which he is goes camping in, to save money.

    It's a mental disease, not some sort of heroic gesture saving humanity from itself. It is a self absorbed mental disease.

    • trapper on 19/01/2021 - 11:26
      +3

      Landlords don't feel they are benefiting society… they want the money, pure and simple.

      That's why capitalism is so successful.

      Your friend wants the money, pure and simple - but has inadvertently provided housing for twenty families.

      • Griffindinho on 20/01/2021 - 11:41
        -1

        That's why capitalism is so successful.

        Doubt

    • whooah1979 on 19/01/2021 - 12:08

      They have done well going from rags to riches. 👍

    • Kapinny on 20/01/2021 - 14:54
      +3

      Tall Poppy Syndrome

  • trapper on 19/01/2021 - 11:19

    Not really.

    If people stop buying investment houses then there will be less demand for housing. Prices may drop a little at first, but ultimately fewer new houses will be built. This will increase rental prices significantly.

    • Drakesy on 20/01/2021 - 18:06
      -1

      Not really
      If people stop buying investment houses there will be less demand for housing - correct

      This will result in reduced prices and the removal of the false "bubble" that has crippled the likes of Sydney and Melbourne. We're already seeing this with the immigration taps having been turned off.

      The market will reset to a lower amount and projects that can't go ahead at the lower prices won't. Build costs will remain the same.

      Land prices change, the land does not. At the end of the day you're spending inflated prices on land that someone has held onto on the hope of it going up. There has been zero benefit to the economy that way.

      • trapper on 20/01/2021 - 21:47
        +1

        and projects that can't go ahead at the lower prices won't. Build costs will remain the same.

        You're agreeing with me.

        Less projects going ahead = fewer new houses being built.

        • Drakesy on 21/01/2021 - 11:00

          Im just stressing that its the land value that will come back down to earth, it will cost the same to build. There will be a temporary drop in new homes (saw this in perth) as prcies drop but then the market will correct (albeit at more reasonable amounts). Then construction will continue on as normal, just like in perth

  • [Deactivated] on 19/01/2021 - 11:52
    +3

    There's a lot of people who say they worked very hard so it justifies it. I'm sorry but I'd say many people work hard and still can't afford a home. It's not as simple as just 'working hard' there are other factors at play and I'm sure 95% of those people were privlidged in some way that allowed them to get there. I've saved around 200k and my parents keep trying to get me to buy investment properties but I can't help but feel the same way you do OP after buying my own. I've been to auctions with my cousin who was genuinely looking for a home to live but how can he compete with others who will get $1500 a month just in rent alone while he has to support his family which was a large amount of people there? I consistenly overheard others what amount in rent they could get for it. People need housing and they will pay for it. Honestly, they should just be able to own the home outright for that $1500. Ultimately I'm all for investment but it shouldn't be through necessary resources. It should be in tech, science and ways that aim to advanced society, not tied to housing. 'Make your money work for you', more like force low to middle income families pay for your houses but that's supposed to be smart right… I don't give a damn what the goverment allows, each of us are responsible for our own actions and I agree, society is bigger than any individual and how we earn money is important. Every generation has the responsibility to make life better for the next generation in my opinion.

    • Ghost47 on 19/01/2021 - 13:25
      +3

      It’s sad some people who say they’ve worked hard seem to be completely oblivious to the fact that luck probably played a huge role. I applied for a job where over 6000 others applied, about 60 of us got a role, that’s a 1 in 100 chance of getting the job.

      I know that I had more luck than others. These people who go on about working hard act as if they’re the only people working hard, and that everyone else is lazy. Absolutely ignorant and stupid.

      By the way Australia doesn’t have the courage to invest in tech or science. We are a backwards country that relies on coal, and we also rely on importing bodies to fill houses. Some people realise this when they get older, sadly others don’t.

      • [Deactivated] on 19/01/2021 - 16:59
        +2

        Yeah it's true, so much of life is based on luck. All these people who say they 'worked hard' probably still work less than a lot of people in third world countries that earn peanuts. I don't know why they feel entitled to so much, since just being born here already puts you above like 80% of the worlds population. But in saying that, I don't feel negatively towards luck, it can't be helped and people shouldn't be made to feel bad about being lucky. It's when you're lucky but you don't acknowledge it and then try to take advantage of that by making other people's lives worse.

        I know that I had more luck than others.

        I don't think that was completely luck so give credit to yourself and just acknowledge you were probably the best candidate. But as you said, 6000 is crazy and probably a lot more than 60 were qualified for the role. Sometimes it's the little things that don't even matter (how you look, talk, interests etc.) that get you the job.

        These people who go on about working hard act as if they’re the only people working hard, and that everyone else is lazy. Absolutely ignorant and stupid.

        Exactly, they live in their bubble where they try to justify everything they have being 100% a result of themselves and everyone else doesn't have it because they didn't work hard enough…

        By the way Australia doesn’t have the courage to invest in tech or science. We are a backwards country that relies on coal

        It's sad, we've actually come up with some great inventions and our research done at universities today are still world standard. I just know we can do way more.

        • Ghost47 on 20/01/2021 - 15:06

          It's when you're lucky but you don't acknowledge it and then try to take advantage of that by making other people's lives worse.

          That’s exactly what I’m saying. People in this thread act like “work hard and you’ll be successful” which is just extremely stupid and basic. They just need to think a bit, for example think of the Olympics. There’s only one gold medal winner for each event, then silver and bronze. But what you don’t see is the hundreds or thousands of other people who vied for those spots. People seriously think that by that point, it was all dependent on skill alone? It’s just preposterous. A large part of it skill, no doubt but there is also a large amount of luck too, to be born where they were for example or to have parents who forced them to swim, how their bodies grew (think of Michael Phelps and how wide his shoulders are etc.)

          I don't think that was completely luck so give credit to yourself and just acknowledge you were probably the best candidate.

          Thanks, what I was trying to convey was that even though we all got the job, I have no doubt that any one of the other ~6000 applicants also deserved the job too. I don’t act like I’m the smartest person in the room or that I got the job purely due to my merits, unlike what people are saying in this thread.

          Exactly, they live in their bubble where they try to justify everything they have being 100% a result of themselves and everyone else doesn't have it because they didn't work hard enough…

          Yep, these people simply don’t have the wisdom to realize that there are external factors that contributed to their success besides their hard work. I’d hate to be someone who doesn’t realize how fortune played a role in my success.

          It's sad, we've actually come up with some great inventions and our research done at universities today are still world standard. I just know we can do way more.

          You’re right and I probably was too harsh because Australia has created some great things in the past. It’s kind of sad that our main exports to the world are things we dig out of the ground, meat and subpar education (universities have become more of a paper printing business than an educational institution IMO).

          I’m so glad someone in this thread also realises that luck plays a role in success, thank you for realizing that.

    • StickMan on 20/01/2021 - 17:06
      +2

      I own a place. I live in a regional city.

      My place in a capital is 3-5x the cost. I cannot afford this.

      I can either cry about it over my smashed avo while spending 50% income on rent, or I could live and buy regionally.

      • kbbargains on 20/01/2021 - 17:25

        I get sick of hearing this one. Along with the "get a higher paid job" put down.

        That's absolutely fine to do if you're in a generic job like teacher, nurse, police/fire man/woman, checkout person etc etc.

        Although even then you're limited. Imagine if all the teachers tried to move to regional areas. Can't imagine there'd be enough jobs then.

        However, it's not an option for the vast majority of society. Fact of the matter is our economy is 60% services (and by services I don't mean making coffee) and most of those services jobs exist in the big smoke only.

        • pogichinoy on 20/01/2021 - 18:32
          +1

          My teacher friends were offered full time positions in regional cities as opposed to casual positions in capital cities.

          How about planning ownership in the future by selecting a career that affords you the income to buy and invest?

          • [Deactivated] on 20/01/2021 - 18:43

            @pogichinoy:

            How about planning ownership in the future by selecting a career that affords you the income to buy and invest?

            You're talking on an individual basis. I'm talking about society as a whole and our future looking forward.

            • pogichinoy on 20/01/2021 - 22:32
              +1

              @[Deactivated]:

              You're talking on an individual basis. I'm talking about society as a whole and our future looking forward.

              It makes logical sense that land near the ideal areas of a capital city is expensive. Buy in the cheaper suburbs.

              The alternative is renting.

        • [Deactivated] on 20/01/2021 - 19:00
          +1

          "get a higher paid job" put down.

          OMG why did I not think of that?! Silly me. What a lot of people here fail to acknowledge is how shitty our education system is and how poor we are at assisting students with family issues. I've seen entire year 9 cohorts with 80% of them having primary school level literacy and numeracy but watch people on this thread somehow turn it into a blame game on their parents or something when they probably had a similar upbringing. Then this thread will tell these people they should rent for life and pay of their house because they won't get a higher paying job or move regionally.

      • [Deactivated] on 20/01/2021 - 18:30
        +1

        Problem solved boys, quit your job and go get one of the plenty regionally…oh wait.

    • pogichinoy on 20/01/2021 - 18:30
      +2

      It’s not just working hard but working smart.

      The majority of the luck is when people are born and the opportunities they had to buy.

      So your cousin deserves a house because they have a family? Do you think your cousin could have planned things a bit better to be in a better financial situation?

      A lot of owners sacrificed holidays, leisure time, hobbies etc to secure their investment.

      • [Deactivated] on 20/01/2021 - 18:38

        It’s not just working hard but working smart.

        He was an immigrant who achieved a 99.5 ATAR after starting school in year 10 with little to no English. He did extremely well in university and was one of a chosen few around the WORLD to work at some special centre in Queensland AND he was given an award from the chief scientist of Australia among all of them there. He was doing his PhD in something related to a brain disease only for the job he was offered to be pulled back due to lack of funding from the government. Maybe he'd be better off if he got into med like every 99 atar student tries to, that's his fault he chose to do a PhD in hopes of improving people lives right? And I get it, people will say he should have done this this or this but they're completely missing the point. In my opinion, society failed in this instance.

        So your cousin deserves a house because they have a family?

        No, my point was, here's a guy earning average wage and trying to support his family by finding a place to live yet he was having to compete with those who were looking at it as an investment so they could get some renters who can't afford their own home to pay it off for them. He's out of the academic field now because there weren't jobs for him. Everytime I hear about a bright academic leaving, I can't help but feel it's such a huge loss for society.

        A lot of owners sacrificed holidays, leisure time, hobbies etc to secure their investment.

        Or like one guy commented below, use one investment to borrow money for another investment and so on. Yes they may have sacrificed some things only to make other people who need a roof over their heads to pay them back for it later plus some…or more like a lot.

        • pogichinoy on 20/01/2021 - 23:28
          +2

          He was an immigrant who achieved a 99.5 ATAR after starting school in year 10 with little to no English. He did extremely well in university and was one of a chosen few around the WORLD to work at some special centre in Queensland AND he was given an award from the chief scientist of Australia among all of them there. He was doing his PhD in something related to a brain disease only for the job he was offered to be pulled back due to lack of funding from the government. Maybe he'd be better off if he got into med like every 99 atar student tries to, that's his fault he chose to do a PhD in hopes of improving people lives right? And I get it, people will say he should have done this this or this but they're completely missing the point. In my opinion, society failed in this instance.

          Well done to your cousin for achieving what he has thus far. Are there no other similar positions available for him? Or has he pursued other careers in his industry? Has he completed his PhD? Unfortunately what happened to him has happened to others as well. I missed out on a decent job because due to the economy/industry/market/etc company performance wasn't as good as expected and they lost their budget for the position. Oh woe is me. I moved on and found something else.

          Yes perhaps he would be better off in a different career, like medicine, something that was more in demand.

          Victim narrative again and now, entitlement. Tell your cousin to adapt. Nothing is guaranteed in this world. The world does not owe him, you, or me anything.

          No, my point was, here's a guy earning average wage and trying to support his family by finding a place to live yet he was having to compete with those who were looking at it as an investment so they could get some renters who can't afford their own home to pay it off for them. He's out of the academic field now because there weren't jobs for him. Everytime I hear about a bright academic leaving, I can't help but feel it's such a huge loss for society.

          You just described competition, what's wrong with that situation? It's the residential property market. What do you want? The govt to sanction owner occupiers only? What's the scope? Who decides the rules?

          Again, you are using a sob story about supporting one's family. What makes you think the investors are not also supporting their family?

          Bad luck to him for giving up on his academic career. Hopefully he returns to it. Again, are there absolutely no jobs in his academic niche or does such a job not pay enough like his average wage?

          Or like one guy commented below, use one investment to borrow money for another investment and so on. Yes they may have sacrificed some things only to make other people who need a roof over their heads to pay them back for it later plus some…or more like a lot.

          Property investment is also a risk. Doesn't mean their bet will pay off.

          You're making it sound like ownership is a right. It isn't. They can rent, and 9 times out of 10, it's cheaper than owning.

          • [Deactivated] on 21/01/2021 - 08:45

            @pogichinoy: He has moved on, I'm not speaking for him nor was he salty. You're missing the point. I'd expect the government to not create a market where housing is seen as an investment.

            You're blaming people for choosing their careers when plenty of people chose them we'll before housing blew up and not only that, you're limiting the jobs people can do and excluding a lot of science.

            Being a profitable investment is different to research and development in STEM. e.g. wifi

            But you forget that to get to this point requires a lot of research. I don't know how you don't see that there is a problem with the fact that we have tons of bright, intelligent students who may make a far bigger difference than if they were doctors or bank tellers but are basically told to do something else nor do you not see a problem with how many investors participate making it unnecessarily harder for others who just want a place to live against someone else who wants others to pay of their second or third home. You just fail to see the bigger picture.

            They can rent, and 9 times out of 10, it's cheaper than owning.

            Because of how house prices have gone up….because someone takes into account what others are willing to rent for it and maybe how much they'll get back from negative gearing and then they can pay a little bit more. I'd still rather most people during retirement, especially those that can't afford to rent, have home ownership than forced into poverty when they're older. Which you will say it's their fault for not choosing proper careers, working harder, working smarter etc. Seriously, go to a government school in a low SES area, look at the state of the kids and you will see that it's the government that has failed them. An example would be that schools don't care if students have ADHD, they don't teach for it and well, my cousin couldn't research it either because there was no funding.

            • pogichinoy on 21/01/2021 - 12:58
              +1

              @[Deactivated]:

              You're blaming people for choosing their careers when plenty of people chose them we'll before housing blew up and not only that, you're limiting the jobs people can do and excluding a lot of science.

              As they say, 'past history is not a guarantee for future results'. Unfortunately that is reality. You either choose a career out of passion, or you choose a career for financial sustainability.

              I wanted to be an artist painter but it was obvious to me back in high school that such a career won't pay the bills so I selected IT and it has treated me well.

              Take responsibility!

              But you forget that to get to this point requires a lot of research. I don't know how you don't see that there is a problem with the fact that we have tons of bright, intelligent students who may make a far bigger difference than if they were doctors or bank tellers but are basically told to do something else nor do you not see a problem with how many investors participate making it unnecessarily harder for others who just want a place to live against someone else who wants others to pay of their second or third home. You just fail to see the bigger picture.

              Yes a lot of things take effort. PhDs take effort. Honours and Masters degrees take effort. Regardless of this effort, its the value add of an individual that results in their salary. I have a few cousins in the science research field and they don't make much unlike others who are in tech, finance or sales. It is what it is though because research in their career does not guarantee results.

              Can you guarantee that your cousin will cure a disease or at least make progress? Of course not. Note the key word you used, 'may'. At least as a doctor they can instantly contribute.

              Again, you are trying to equate that ownership is a right. IT IS NOT. Renting public or private is available.

              Because of how house prices have gone up….because someone takes into account what others are willing to rent for it and maybe how much they'll get back from negative gearing and then they can pay a little bit more. I'd still rather most people during retirement, especially those that can't afford to rent, have home ownership than forced into poverty when they're older. Which you will say it's their fault for not choosing proper careers, working harder, working smarter etc. Seriously, go to a government school in a low SES area, look at the state of the kids and you will see that it's the government that has failed them. An example would be that schools don't care if students have ADHD, they don't teach for it and well, my cousin couldn't research it either because there was no funding.

              No, the rental market is completely detached from the buying market. The rental market doesn't care if a house costs $1M. If people are willing to pay only $200 a week, it will only rent for $200 a week.

              Yes, it is mostly an individual's fault if they don't properly prepare for retirement. Did they make the right choices in life? Did they get sick with an aggressive health problem? Did they have kids when they couldn't afford it? etc etc A lot of things life events affects your ability to retire with enough wealth.

              Please. Some of my friends have been from such lower socio economic areas and they've pulled themselves out of poverty by studying hard, working hard and working smart. Or do you think poor people will always be poor and have no hope in getting themselves out of poor situations?

              That's a big accusation. Take it to the media and/or govt with evidence.

              • [Deactivated] on 21/01/2021 - 19:22

                @pogichinoy: Can't argue with someone who doesn't even care what society could be or it's pitfalls. You have such a narrow view.

                • pogichinoy on 21/01/2021 - 19:30

                  @[Deactivated]: @bkhm

                  Take your L.

                  Your arguments are baseless and incorrect which isn't even backed up by any logic.

                  Do your cousin a favour and remind him that choices that he makes at an early life, like having children without even having savings for a child plus a home, can impact his situation in the future.

                  As much as I'd love to be Oprah and tell everyone 'You get a house, you get a house!', I'm not fooling myself as it's not just possible nor is it realistic.

                  I care about society, but I'm a pragmatist. Nothing is free in this world, and one has to make the right decisions in life to get to be average or higher.

                  Continue to blame society, govt, others without first looking at yourself.

                  • [Deactivated] on 21/01/2021 - 19:36

                    @pogichinoy: I own a house already and have more than enough for a deposit on a second one. But I acknowledge a lot of people don't have the privileges I had. I never once said housing should be free. Not to mention you literally have a comment below who agrees the system is broken and was able to buy too many houses too easily. I will blame the government as many people, even those with investment properties have.

                    If throughout history everyone thought like you, that you should just do what add values right now, we would not be where we are. We would not have the technology or medical advancements we have.

                    • pogichinoy on 21/01/2021 - 19:41

                      @[Deactivated]: Of course we all started from somewhere different. It's about equality of opportunity, not equality of outcome.

                      Wow, just because there is someone who owns IP agrees with you, suddenly you're magically correct? No. Continue the blame game rather than the responsibility game.

                      If that is so, then ask your cousin to take an unpaid/lesser paid role in his disease field, so he can contribute to medical advancements as you claim. Or is he in it for the money? For shame.

                      • [Deactivated] on 21/01/2021 - 20:09

                        @pogichinoy:

                        If that is so, then ask your cousin to take an unpaid/lesser paid role in his disease field, so he can contribute to medical advancements as you claim.

                        It doesn't matter, even if he doesn't solve it now, we're still in a better place than we were before. It's arguably just as important as it will prevent others from doing it in the future, adapt it or use the method. That's how science works, we don't only look at successes, articles that didn't achieve what they wanted are equally as important. Again, if you don't see the problem with someone like my cousin unable to secure a job in that field, then you miss the point entirely and there's not much to discuss. Not to mention so much of our discoveries happened by accident (penicillin that literally saved millions) but wouldn't have happened if we didn't have those people there and now you want them to go into IT or something.

                        One two three four

                        There were some that I could only access through my education library but these were the top free ones that appeared on google scholar. I don't think they're cherry picked (even I was surprised at how similar they were) but each one essentially said similar stuff (I skimmed through maybe 8). I don't have time right now to go through them thoroughly (in a week maybe I might have time). One of them (not sure if it's one that was linked) even mentioned that it benefits politicians hence they're less likely to change it. Doesn't help when the general public plays their game. I only briefly skimmed through them, so feel free to point something I may have missed (although try not to cherry pick and look at the bigger picture)

                        Thank god the government doesn't sell off the covid vaccines…

                        • pogichinoy on 25/01/2021 - 09:36

                          @[Deactivated]: That's fair if you can guarantee progress. But no, I have not mentioned that he and others need to get into IT. Mind you, you're the one that mentioned technological advancement is paramont, which falls under IT. I simply said you either choose a career that benefits society more but does not meet the finanical obligations to satisfy your life or choose a slightly more selfish career that makes you money.

                          As I mentioned, it seems that your cousin is selecting the latter route.

                          Geez you make it sound like your cousin is a saint. Exaggeration much?!

                          Negative gearing is a terrible policy but what you'll find is that it doesn't benefit the top 10% because the top 10% more often than not are not negatively geared. The common individuals who claim negative gearing are those who earn a taxable income below $87k. Not exactly your 10% right?

                          https://www.theguardian.com/business/grogonomics/2020/jul/21…

                          Whilst it does contribute to rising housing prices, in addition to stamp duty, the purpose of negative gearing is to disconnect the responsibility of the govt to provide private housing for Australians in the rental market.

    • quanticism on 21/01/2021 - 00:07

      It should be in tech, science and ways that aim to advanced society, not tied to housing.

      Now that would be ideal. Advancing technology and human society is the only meaningful legacy we collectively leave behind; even if it can potentially lead to our own downfall.

      • [Deactivated] on 21/01/2021 - 08:49

        even if it can potentially lead to our own downfall.

        That's a possibility, but by not doing so we are eventually doomed anyways.

        • quanticism on 21/01/2021 - 08:50

          Can't agree more.

  • dufflover on 19/01/2021 - 13:48
    +1

    The topic really should be:
    "Isn't It Kind of Crappy Towards Society to promote property as a high gain investment vehicle?"

    All this talk about working hard, or being entitled to buy property, or legal limits would be moot if it wasn't anything special in some self-fueled capital gains appreciation.

    • whooah1979 on 19/01/2021 - 13:57
      +1

      People that think that real estate is a high gain investment have low expectations for what high gains should be.

  • wimphrel on 19/01/2021 - 14:08
    +2

    As an owner of 2 investment properties (but living at home) - I think the tax incentives should be focused on building new houses & apartments (thus focused on increasing supply).
    We should get little or no tax incentive in buying an existing property, nor on 'doing one up'. I didn't mind getting rid of negative gearing because no investor in their right minds would want to lose money for the sake of it. Media talk it up a bit as it's the damndest way to get rich, but it's a riskier way to invest.
    Negative gearing is not why I invest: I save up a massive deposit to make sure I'm not negatively geared (and if so, I'm not for long).
    I'd like to reduce the CGT discount as well, or have it only apply if you re-use the money from the sale to buy NEW property only. You want people to 'let go' of their property, the CGT discount is something that encourages an investor to 'let go' of their asset at some point in time to hopefully invest in a new property, as opposed to hold it forever because I'm going to lose +40% of it to the government (BTW the tax I've deducted from interest repayments needs to be factored into the cost base when I sell).

    Capping the amount of investment properties one can might not work the way you want: If 30% of families need to rent, then with a theoretical cap of 1 investment property per family implies 30% of the families in Australia needs to be well-off enough to be able to afford their own home AND service the mortgage of an investment property, just to be able to provide the 30% of properties needed for the renters. Given a lot of 1st home owners still want to live in our capital cities, the price is going to remain relatively high anyway in the long term (short term you might improve 'supply' a little bit).

    As others have pointed out - home ownership isn't a necessity. It's normal to rent for life in some EU countries. We're influenced by US/Asian media where it's apparently embarrassing to not own a home. And our house prices have skyrocketed due to the bitcoin-ponzi-effect (I find the blockchain technology little relation it's speculated value :D) of "I'm going to be left out if I don't buy" & also being the most talked about topic at work, media & social media.

    Another negative: If the individual taxpayer family is capped on the number of investment properties they can have - then the diversification of 'who owns all the property' becomes less and some massive corporation (probably foreign owned) gets a monopoly on the housing market, because the limits you're focused on don't apply to 'businesses'. Are companies not rich? These portfolios aren't talked about much in the scaremongering/tear-jerking ACA journalism that people seem to react emotionally upon (Maybe because they don't want to piss off some massive investor)

    • whooah1979 on 19/01/2021 - 14:13

      You have two while many have none. Shame on you.

      Not really. 👍 job.

      • wimphrel on 19/01/2021 - 14:33
        +2

        I have two while many have large diversified portfolio in shares, derivatives, or run a successful small business worth a few million dollars.
        I think we should congratulate all forms of success, not just those who chose the most 'mainstream' way of investing in AU :D
        (That's the only likely way to get house prices back down without government intervention)

  • Philthy on 19/01/2021 - 14:18
    +3

    most of the people that complain are the ones that don't have the discipline to save a deposit and in turn ,pay the monthly mortgage.
    " ~2g a month.. why.. id rather go to ballllllliiiiii and NEED the latest iphone".

    Could you imagine if property purchasing was like how some countries are.eg china.

    Where you need to pay 1) the whole amount upfront .. yes the total price of the mortgage (esp for new developments).. 2) its harder to get loans 3) theres a waiting list .which in turn means sometimes you pay even more

  • Terbo on 19/01/2021 - 14:25

    I didnt see anyone comment that state/fed govt's have moved away from providing 'public housing' due to start up and ongoing costs. IP is therefore encouraged through neg gearing and friendly lending, otherwise the govt would have to get back into the landlord market. The main reason people continue to do it is relatively simple understanding and access, historical capital growth and tax deductions while losing money. Overseas it doesnt happen as much because govt incentives dont support it (deductions, loans, taxes, renter rights, etc) and capital growth isnt generally there or as predictable. As for housing affordability, interest rates are all time low, so should be cheaper than rent if you can get a deposit together. Yes, prices are ridiculous for first timers in Syd/Melb but try buying in London, Paris, New York, Tokyo, San Fran, etc. Maybe a lesser location means a lesser job but also a lesser debt to get a roof over your head. For a big country some of us seem very reluctant to move to improve.

    • nephilim on 19/01/2021 - 14:31

      SA gov would offer long term tenants to buy the house, most said no.
      WHich is why you have areas like Davoren park and Smithfield plains with huge areas 90% new houses and 10% old ones. The 90% of new ones they literally had to give them a house somewhere else as every tenant for the last 30 years refused to buy it.

      • Terbo on 19/01/2021 - 14:34
        +1

        I know Whyalla was worse, had FT wage people living in HT homes for 30 years, just paid rent, never bought, could have bought them for 20 - 30K but most didnt take offer.

  • LFO on 19/01/2021 - 16:51
    +3

    What is really really wrong with our society is that buying dwellings, homes or units, can be (or rather IT IS!) a way to achieve wealth.

    Wealth creation should be promoted thru investment in science, technology; productive items not static.

    Denmark used to have a brilliant "housing commission" like schema: young and single will lease a small unit that has to be left clean and painted, immaculate as received; same for a couple, same for a very large family. With high quality housing resolved wealth could be created by other means more beneficial to society.
    AFIK is NO longer the case.
    Either it failed to achieve its dreams or Danish government corruption saw an opportunity … to force an industry, a third party industry based in dwellings!!!

    • [Deactivated] on 19/01/2021 - 21:39
      +1

      Yep, in one year we managed to make a vaccine for a virus when we really put our minds to it (although we got lucky in a lot of aspects) but I can't help but think where we could be and what we could accomplish if people stopped just caring about themselves and looked at the bigger picture. If instead of all that money going to individuals, we invested in education to try and foster all our brightest minds and in science and tech, we could solve a lot of problems. I even see if reading through this thread, the first thought that everyone has is about themselves. Then there are people who recognise that it's a broken system but participate anyways…I think that's the worst part. It's like investing in fossil fuels knowing full well the impact they have but at the same time calling it out. One of the absolute worst parts about growing up was realising how selfish everyone was, how amazing science is but also how no one gives a shit, all they care about are investment properties and getting as much money as they can

    • pogichinoy on 20/01/2021 - 19:00

      Science, technology, etc aren’t all profitable.

      There’s cheaper housing in the cheaper suburbs but those with beer money want to live somewhere nicer than that.

      • [Deactivated] on 20/01/2021 - 21:26

        There’s cheaper housing in the cheaper suburbs but those with beer money want to live somewhere nicer than that.

        Or maybe there aren't jobs there for them? But that's their fault right

        Science, technology, etc aren’t all profitable

        Yes but so much of what we have today is because of science and technology. We wouldn't have computers if people from hundreds of years ago didn't study number theory when there was no immediate benefit for them. Why should we stop? If we don't pursue science and technology, our species is going to be doomed

        • pogichinoy on 20/01/2021 - 22:25

          Or maybe there aren't jobs there for them? But that's their fault right

          Be logical. You cannot expect govts to create jobs out of thin air. The demand by consumers needs to be there. Did someone force them to choose this career? Stop this victim mentality.

          Alternatively, they can commute like others. e.g. Many people from the Northern beaches or Wollongong commute to Sydney daily.

          Yes but so much of what we have today is because of science and technology. We wouldn't have computers if people from hundreds of years ago didn't study number theory when there was no immediate benefit for them. Why should we stop? If we don't pursue science and technology, our species is going to be doomed

          Being prevalent does not guarantee it will be profitable nor is it an argument. Being a profitable investment is different to research and development in STEM. e.g. wifi

  • Essigee on 19/01/2021 - 19:35
    +1

    Yeah, I think the system is broken, however I’m saying this from someone who owns 4 investment properties. I got in with a low deposit and a very cheap (think around $140k) property and over 8 years have built up from there. I would say the first investment was 80% chance and luck - that it’s now 2.5x in value.

    It’s quite sick when you think about it. I use the equity from my first houses as a deposit for the next house, though I don’t cross collateralise. This way the equity portion is essentially tax free for the moment, and all the stamp duty and lawyer fees are “paid” using the equity. Apart from the first house, I’ve never out laid any cash. The properties are all positively geared.

    So yes, the system is broken. It’s skewed towards the rich getting richer. But I’m a part of the system. I think more incentives need to be given to first home owners, although it’s been shown all this does is to push up house prices.

    I invest because I can. I like the thrill of house hunting, putting on offers and getting the property… and then making money off the property! I do it so one day in the future, when the tenants have literally paid off the houses, I will have fully paid off houses that I can use for either my income or retirement.

    • [Deactivated] on 19/01/2021 - 21:33

      I do it so one day in the future, when the tenants have literally paid off the houses

      I guess this is the problem many people see with it. At least you didn't use some statement like 'making your money work for you' because you've acknowledged it's basically someone else paying it off with some probably never owning a home due to people taking advantage of a screwed system aimed for the rich. I don't think many people would care if it was something like a private jet but when we're dealing with necessities, it becomes different.

    • dufflover on 19/01/2021 - 23:39

      then making money off the property! I do it so one day in the future, when the tenants have literally paid off the houses, I will have fully paid off houses that I can use for either my income or retirement.

      This isn't at you in particular but each time the property talk comes up among friends I wonder how much debt they are in for it. In particular one friend was getting envious about another having just bought their 3rd. We don't exactly know how much income they have in a household, but the sheer cost of the 3 houses means they are in a lot of debt, or they earn a hell of a lot more than their job titles suggest (or some external thing like parents money).

      My point in the end was trying to tell my mate he reckons they got rich able to buy 3 because of property, when it's not quite like that cos they have never sold to realise any value. "Not as simple as OMG they're rich they have 3 properties."

      OT but this is why I would hate a land tax too. Council rates are already tied to property values. At least with stamp duty if I don't want to play the property game I don't pay. Land tax means I'll probably pay more cos of some paper value by some stranger when I have no intention of selling. Much like calling some old modest couple millionaires simply cos of some paper land value of their old tiny house.

  • Mark1159 on 19/01/2021 - 20:20

    Negatively geared a high end Melbourne period terrace twenty years ago.
    Friends had multiple properties/flats etc in Perth, Adelaide, Qld and anywhere else.
    One set of variables and one tenant (brother in law).

    Better off with lone crown jewel than handful of pebbles

    • LFO on 19/01/2021 - 21:12

      Better off with lone crown jewel than handful of pebbles

      So true!

      Problem is the masses buying with a mortgage can only get pebbles. Cracked, unwanted and deformed sad-gray colored pebbles.

      • Ghost47 on 20/01/2021 - 22:34

        That's another problem in this country, dodgy developers everywhere building subpar apartments. You can't even buy a nice new apartment without it being shoddily built because of phoenix developers. If I bought an apartment in the Opal Towers I'd be suicidal.

    • nightqueen on 20/01/2021 - 08:40

      Isn't it better to have diversification. Not have all the eggs in one basket?

      • StickMan on 20/01/2021 - 17:11

        Yes. But property has upkeep, and some more than others. Increasing the number of properties jacks up the total upkeep cost, so your gains need to be larger to offset this.

  • buckster on 19/01/2021 - 21:10

    Yes, it is a bit crappy.

    At the end of the day housing is not the most lucrative investment, and each investment property is a property that an owner occupier can't purchase.

    Some argue for a free market, but if that was the case we shouldn't have distorting policies like negative gearing.

    • Some Guy on 20/01/2021 - 11:49

      Yep and we shouldn't have capital gains tax, first home owners grant, home builder grants, asset tests for aged care entry or welfare, mortgage holidays, eviction moratoriums and any other policies that distort the market.

  • SlickMick on 19/01/2021 - 21:36

    no.

    In the 90s we had to make some sacrifices to get a little townhouse, but somehow we managed.
    Now my daughter and her husband have a loan to build a 4 bedroom double lock up garage brick home in a decent area, with thier entry level retail jobs.
    Yet I don't see them making the sacrifices we made. So it seems to me that it's easier now than it was in the 90s.

    I remember 40 years ago my parents complaining about how they'd missed the opportunity of a life time by not buying a property when they were cheap.
    I have no doubt that if this society lasts another 40 years, people will be saying "if only I'd bought in 2021 when houses were cheap".

    Imagine what you could afford if you were willing to move to another town, to get a smaller, older place, further from town, and give up the coffees and netflix.

    All our tenants seem pretty grateful to have a house over thier head. I don't know why the government subsidises private hospitals and private schools but not private accommodation providers.

    • [Deactivated] on 19/01/2021 - 21:51
      -3

      Imagine what you could afford if you were willing to move to another town, to get a smaller, older place, further from town, and give up the coffees and netflix.

      Yes, let's all start giving up things and possibly even living close to our families until we are stripped to the bare necessities of plain rice so we can pay the owners of the houses for a roof over our heads or even worse, afford the rent they will ask that will eventually become a shoebox because everytime you say to yourself I should get a smaller place. I'm sure this will be great for our economy. God forbid we indulge ourselves in netflix when we're not working for the ludicrous price of $10 a month which could also be used to pay our landlords when we have such great free to air channels. Actually, let's scrap TV all together. Think of how much you'll save in electricity costs which again, can be paid to our landlords.

      All our tenants seem pretty grateful to have a house over thier head.

      Yeah, no thanks to the 300% increase in house prices but double digit increases in wages

      • cheapaschips on 19/01/2021 - 22:33
        +2

        Did you have a better idea? Apart from guvment shudd giv me a cheep houuse,

        Because newsflash, a lot of home owners did sacrifice Netflix and other luxuries to get where they are.

        A lot of complaining in this thread(not surprised) without many actual solutions.

        • [Deactivated] on 20/01/2021 - 08:09
          -3

          I don't think netflix is a 'luxury', it's probably one of the cheapest forms of entertainment out there…

          We need to stop viewing housing as investments and just what it is, a place to live. People can play the same game with shares, jets, bmws all you want but it should not be done with what is necessary to live.

          Apart from guvment shudd giv me a cheep houuse,

          This is a better idea than stripping everything from your life to the point where you can't even afford netflix to pay whom? The owner or the landlord of the house. There's other threads where people have discussed this to death, this isn't one of them. I can't believe technology has advanced so far, food is mass produced like never before but yet all this extra production is supposed to go into buying a house. From a societal standpoint, it's the stupidest thing I've ever heard. Seriously, if people are to sacrifice even their coffees, eating out etc what would become of the economy? Even more people would be out of a job. We could have so much spare income for other things but nah, I'm supposed to put every last penny into housing. Then watch as people are pushed into poverty because you don't think there's a better idea.

          Yet I don't see them making the sacrifices we made.

          If you had to make sacrifices to buy a house, you must've been pretty poor with money, my parents were farmers and they bought a house with relative ease.

          • cheapaschips on 20/01/2021 - 08:46

            @[Deactivated]: Haha yes every year let the government just give everyone a free house who is an Australian citizen or turned 18.

            I love it. If only you all spent the time and effort you do complaining into working for something.

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