What Impact Will Landlords Leaving The Victorian Market have?

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    justworld on 01/09/2024 - 13:51

    Housing is the opposite of a ponzi scheme considering

    1) the asset exists physically and can easily be resold for more than the purchased price

    2) Migration laws are the only thing stopping a flood of even more purchasers - of whom there are an almost unlimited quantity.

    Also, guess you think housing in every big city in the world is equally a Ponzi scheme huh? Canada doesn't have negative gearing, but have you seen the prices in Vancouver?

    • 

      pegaxs on 02/09/2024 - 10:40

      It is a Ponzi scheme, because it is relying on unlimited investors to keep pumping money into it to stop is from collapsing.

      Eventually, there will come a time when there will be no more people buying into it, or it will dribble down to a few. At that point we will see mum and dad investors start to freak out because people are not buying or the buying is slowing down, so they will then jump ship and try and panic sell their "investment portfolio", at which time, others will be seeing this panic selling and do the same, flooding the market with properties that no one wants because no one is buying and everyone is just trying to get out with whatever they can get back…

      The whole "housing bubble" is currently propped up by suckering in new "investors". The best way to insure a constant supply of new "investors" is to import them to drive up demand. Without these "immigrants", there is a good chance that demand for housing would fall and start the great downfall of this Ponzi scheme. A Ponzi scheme relies on new money coming into the racket to keep it alive, without this new money, it all starts to fall apart.

      If it looks like a Ponzi scheme, walks like a Ponzi scheme and quacks like a Ponzi scheme… chances are…

      If they want to "fix" this "housing market" and making housing more affordable then they need to de-incentivise "investment properties" and limiting it to 1 or 2 and removing the tax payers footing the bills for these "investments". They need to limit immigration until the current population is more housing stable. They need to incentivise building more houses or incentivise "mum and dad investors" to downgrade from 18 house portfolios to maybe 1 or 2. They need to stop foreign investors from "house hoarding/wealth hiding". The only ones that should be allowed to own"residential" property should be actual people, not corporations. End this AirBNB type short rental bullshit.

      The list of things the government could do to start fixing this goes on. But at the moment, they are too addicted to the revenue that is generated from more and more expensive housing being sold and flipped like used cars. Stamp duty from house sales is one of the biggest revenue earners for each state, they are addicted to it, because why would they want lower house prices? 4% of $150,000 is (fropanity) all when compared to 4% of that same house at $860,000.

      So, while there is money to be made on the backs of housing and all the government has to do is drive more competition into the market via immigration, there is (fropanity) all they will do about it.

      So, yeah, sorry, but it is a Ponzi scheme.

      • 

        justworld on 02/09/2024 - 11:10

        -1

        Lol. The whole world can invest in housing, as it's an excellent store of wealth. The only thing stopping prices from getting even higher are foreign investor restrictions. If we let wealthy Americans and Chinese invest in our property the prices would be even higher.

        The fact that people want investment properties means that it's not a ponzi scheme, lmfao. If you have to arbitrarily place limits on demand, that means it's not a ponzi scheme. If you need to artificially limit migration, that's not a ponzi scheme. If you have to stoke supply by 'incentivising building' then it's not a ponzi scheme.

        At the end of the day, anyone who's got a bit of financial sense and marketable job skills will be able to easily afford a property, or five, or ten. The ones who are left over can rent.

        • 

          pegaxs on 02/09/2024 - 11:27

          +1

          @justworld: It literally is a Ponzi scheme. It's almost a dictionary definition of how a Ponzi scheme operates.

          The top investors get all the wealth and this is only supported if they can continue to sucker in newer investors with fresh cash. Once there is no, or low influx of new cash from new investors, it collapses.

          invest in housing, it's an excellent store of wealth

          So are most Ponzi schemes… until the collapse.

          The fact that people want investment properties means that it's not a ponzi scheme

          The fact that people are willing to buy in at any price just because they think it is a money printing machine means it absolutely is a Ponzi scheme.

          The only difference here compared to a regular Ponzi scheme is that this one is on a MASSIVE scale (millions of people instead of 100's or 1000's) and it is backed by the government, giving it an air of legitimacy.

          The ones who are left over can rent.

          And when they cant? Who do you rent your house too if the people you need to fill it cant afford it?

          My only hope is that I live long enough to see the downfall of society and to witness the poor eating the rich.

        • 

          p1 ama on 02/09/2024 - 11:32

          +2

          @justworld: You have no idea what you are talking about.

          It's a Ponzi scheme from the point of view that the valuation of residential properties are extremely far removed from the present value of future cash flows, and have insanely high P/E ratios compared to basically any other investment.

          It is not like investing in stocks where the companies you are investing in are making products that people want to buy. It's a market where valuation is driven almost completely by speculation rather than fundamental value.

          For evidence of what I'm saying, the average weekly rent in Melbourne is $560 (e.g. see https://www.dffh.vic.gov.au/publications/rental-report), which is ~$30,000 p.a., and the average house price in Melbourne is ~$920,000 (e.g. see https://liveinmelbourne.vic.gov.au/live/housing-and-property…). This implies a P/E ratio of 30.7, which is insanely high.

          The average P/E ratio for the ASX is around 22 (e.g. see https://worldperatio.com/area/australia/), and the P/E ratios for asset heavy industries (which real estate realistically is, as it's based on heavy construction) is more like 6-8 (e.g. what you would see with a company like BHP or Fortescue). Even the high growth NASDAQ (i.e. tech stocks) only have a PE ratio of around 41, and those companies are at least innovating in areas where they can make money in the future. What innovative technologies are real estate investors backing?

          In case you're thinking that I'm just skewing the analysis for real estate - you can see the P/E ratio for REITs, which are ~31 (e.g. see https://www.statista.com/statistics/1369921/pe-ratio-earning…), similar to the figure we have for residential property.

          Basically what all this means is that we are now in a vicious cycle where house prices are driven almost completely by speculation, cheap debt, and government policy which can only ever keep house prices growing for fear of large swathes of the population going bankrupt otherwise. The reality is that we've created a society where everyone feels entitled to take a punt on residential property and it's practically risk-free, because investors are protected by government policies looking out for owner occupiers.

          FWIW, I'm not anti-investor, I'm just for productive investment. Every dollar that gets stuck in residential housing or paying off large mortgages is another dollar that is not spent investing in productive assets, e.g. stocks in growth companies, individuals starting small businesses, individuals taking risks…etc. I don't begrudge landlords for doing whatever makes them money, however, let's not pretend like they are not a hugely protected class of investors (as compared to investors in any other asset).

          And, man, what's with the "Lol" and "lmfao"? Were you bullied by the cool kids in school? It's alright buddy, you don't have to try and act cool anymore. We won't judge ;)

          • 

            justworld on 02/09/2024 - 11:59

            -1

            @p1 ama: Lmfao, the reason house prices are high is not because of rents - it's because of the value of land. As the world's population grows, there will still only be so many Alpha world cities with nice suburbs and nice schools. And literally the whole world wants to send their kids to good schools here in Melbourne/Sydney (and also Vancouver and other liveable cities in first world countries).

            Anyway, you're moving the goalposts, because a Ponzi scheme is an investment that's backed by phantom demand - and you never responded to my points there. If you literally have to intervene to quell demand (by restricting foreign investment) and stoke supply (by subsidising public housing) then you know it's the exact opposite of a Ponzi scheme. Without government intervention we would simply have feudalism, which is the natural state of affairs, and which speaks to the attractiveness of property as an investment - for every property I have, you can't have one. Rent seeking makes the most sense of any economic objective.

            The 'fundamental value' of property is that land on earth is scarce. And land appreciates just because of that.

            And lol at 'large swathes of the population going bankrupt'. Over a third of Australians own their property outright. My spouse and I own three outright. I'd love for there to be a recession with a housing crash. We wouldn't care, and we'd buy our 4th, 5th and 6th properties way cheaper. So let's hope for a massive housing crash so the investors with good cashflow can buy in at a discount.

            As to 'productive investment', I don't see why investing in housing is any different from investing in a tech stock. It's economically productive. It might not be socially productive, but the way I see it is, life is so easy - if you can't afford multiple houses, you've (profanity) up terribly.

          • 

            JimB on 02/09/2024 - 12:14

            +1

            @p1 ama: It's not a ponzi scheme as there's a use for housing. Unless tulips, no one needs tulips but everyone needs housing.

            Expensive? Yes for sure.

            Bubble? Maybe, it may fall 50%.

            But for it to be a ponzi scheme, the value of the houses must be nil.

          • 

            cloudy on 02/09/2024 - 22:36

            +1

            @p1 ama:

            For evidence of what I'm saying, the average weekly rent in Melbourne is $560 (e.g. see https://www.dffh.vic.gov.au/publications/rental-report), which is ~$30,000 p.a., and the average house price in Melbourne is ~$920,000

            For someone who claims to be an economist IIRC you're not very good at your job if you pick and weekly rent and compare it with house prices. Either pick housing rents, which is on average higher, or mediun property prices which is what rents reflect (both rents from houses and multi dwelling).

            https://www.abc.net.au/news/2024-08-01/corelogic-house-price…

            Here you can find melb property prices are $781,000. That is a good $140,000 less than the figure you provided, and makes your P/E (not sure why you would want to use that anyway) 26.

            do you want to continue to argue it is insanely high?

            the P/E ratios for asset heavy industries (which real estate realistically is, as it's based on heavy construction) is more like 6-8

            I don't know what to say other than to say this is folly.

            I do agree however agree with the rest of what your saying.

        • 

          trapper on 02/09/2024 - 12:10

          @justworld:

          If you need to artificially limit migration

          All migration is 'artificial' though, it doesn't happen by default.

          It occurs because we make a deliberate choice to allow people to come here.

          • 

            justworld on 04/09/2024 - 14:02

            @trapper: Migration is the de facto state of affairs. Restricting it is the artificiality. We wisely allow migration so that foreign talent can come in and actually contribute to productivity. Without it, we'd be (profanity). If you want to see how hard Aussies work, go to any construction site and see how many people it takes to hold up a Stop/Go sign.

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  Ryk on 01/09/2024 - 09:08

  +2

  selling an existing dwelling, in itself, doesn't add to supply. Simply changes the registered owner.

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    hazzad on 01/09/2024 - 10:14

    I suspect the idea is moving it to a permenant rental stock or in the hands of an actual home owner, rather than investor. Its less about the owner and more about what the house is used for.

    • 

      gromit on 01/09/2024 - 19:58

      The problem is you want a healthy investment market to encourage the building of new supply. It has a huge negative impact on the supply side.

      • 

        TEER3X on 13/09/2024 - 18:30

        Except that's been the case and it hasn't worked at all

        • 

          gromit on 13/09/2024 - 20:16

          @TEER3X: The investment market has not been healthy for a long time now, various state and local governments have been hell bent on driving investors out. Usually because stuff like Airbnb which is where so many have fled to in order to avoid the horrible situation that is the rental market.

  • 

    Darude Sandstorm on 02/09/2024 - 17:56

    -2

    Yeah no, it actually isn't that simple.

    Supply is what's needed, I'll agree there, but for example if there are 10 houses available and I own 7 of them and one other person owns 3 we can simply not sell them and put the rents of all of them up or sell them at an overly inflated price for someone to do it.
    When people are owning 2+ IP's there is less home ownership forcing more renters to be locked in largely inflating the 'market rate' to peak pricing, where people can afford to live in them and not be homeless, but any chance of saving for a house is non-existent due to the controls in place.

    The idea is to force house hoarders to sell up so people can escape the rent trap they're currently locked into.
    Or as above, old mate with the spare 'holiday house' who uses it 4-6 weeks a year and leaves it unoccupied means 4 people are homeless.

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  shaybisc on 01/09/2024 - 09:53

  +2

  "Melbourne tenants are being trapped in the city’s rental crisis as a landlord exodus outpaces investors buying into the market"

  Please explain? Residential property investors buy existing stock, they don't add to it. If they don't buy it someone else will. Maybe even a first home buyer. Maybe even, shock horror, at a lower price.

  • 

    hazzad on 01/09/2024 - 22:43

    Alas thats just an assumption. Could just be another investor. We have no idea on what the change of hand stats are. And anyone thinking this will result in prices dropping by 10-20 % is dreaming. Maybe it will have an effect in overinflated suburbs. But some areas have barely moved in 4-5 years. My area in the Nth of Melb has barely increased in value over the last 5 years. As an example, two houses in our court sold for 812k and 804k in the last 3 months. Last weekend, a knock down and rebuilt job during covid went for 1.2+ mill, breaking the ceiling of prices in our area by a good 2-300k. Any belief that this will allow renters into the market are probably deluding themselves. A few might be able to get in, but there are still plenty of investors with cash that can absorb these tax's. Easiest option is to just increase rent to offset it. Pollies are fooling themselves if they dont think rental prices wont increase to just offset any dis-incentive they dish out. Also keep in mind that not every new home buyer was a renter. They may be a new immigrant or someone who has just moved to Vic from interstate. They may be actually adding the issue of lack of rental stock.

    • 

      Jolakot on 02/09/2024 - 01:41

      Changing hands to someone who can run it better is a good thing, unless they buy it and mothball it then everyone is better off for it

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  fullmetal on 01/09/2024 - 10:20

  Housing is an inelastic goods, when investor isn't throwing their money FHB or other home owner will cover the demand.It will have very little effect to the market.It will likely become a market where people buy and sell house to live in more often. Equally beneficial to the government through stamp duty rather than land tax. The plus side is investor will seek other investment that will actually be a productive asset boosting the country overall economy.

• tabitha731 on 01/09/2024 - 10:23 Comment score below threshold.
  • 

    pharkurnell on 01/09/2024 - 11:07

    if U can't afford to even rent in Melb.. then you're completely living outside of your means

    Not necessarily.. Theres many variables involved.. Depends if you want to eat as well.

    Suck it up.. buy your own property

    thats fine if you earn enough money to save a deposit + pay rent… that isnt going to happen overnight… and as you save, the amount needed for a deposit increases…. Its always been the way just a great deal harder these days than before.

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  H3R34TH4C0MM3NTS on 01/09/2024 - 19:07

  Sweet FA , best way to save for a deposit is to live with your parents, if you can't do that share house, if you can't do that live in a vehicle.

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  gromit on 01/09/2024 - 19:57

  It will have exactly the same effect it has all over the world when this happens. Rental market will become impossible for renters, prices go up and government will panic and blame everyone but themselves.

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  drillvoice on 01/09/2024 - 21:45

  If — and it's a big if — investors leave the market, it doesn't alter the existing stock of housing. More opportunity, perhaps, for first home buyers. Most governments say they want to increase home ownership rates. Maybe fewer rental properties, but also fewer renters competiting for them.

  Honestly landlords in every jurisdiction in Australia always make this argument whenever any rental reform comes up.

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  FlyingMiffy on 01/09/2024 - 22:12

  +1

  Havent been a landlord for a few years now and i dont miss it. We probably spent close to 20K on maintenace (replacement aircons and a roof leak were the big items) in the final years with the investment property. The last tenant damaged the floor boards and the carpets on the way out and obviously we got nothing from the bond. I think the risk is now way imbalanced against landlords that unless the capital gains is exceptional, it wont be worth it for many so some will definitely redirect to other forms of investments. All the talk on renters being better off with less landlords though is crazy. If you are renting 500 per week for a place, that same place is going to cost the same renter a lot more to service on a mortgage. Good luck with it!

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  duluxe2000 on 02/09/2024 - 00:12

  -5

  Victoria has a massive land. Instead of incentivizing (investor's) capital to build more houses, growing population and economy, it now pushes investors's away. Crazy ! Just a populist policy trying to win election without long term vision for the state.

  The current Vic gov f.. up once and they seem not to learn anything from it.

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  Dack Smith on 02/09/2024 - 00:23

  -5

  Landlords are greedy so if they leave it’s a good thing, then housing prices will come down and the government can intervene for the good of the public.

  We need to get rid of these fat landlords and cap rent at no more than $200 a week.

  We need this now

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  ssfps on 02/09/2024 - 05:17

  -2

  So many 8th grade economics students here seem to think investors somehow create the demand which drives up rental costs?
  Here's a fun thought experiment: imagine 80% of the population died to a bioweapon. What do you think would happen to the price of houses and rentals? Do you think people would want to invest in housing in such a situation?

  The only way investors actually cause the rental OR house sale price increases, is if they collude and control enough of the market to artificially limit supply below the demand. With vacancy rate stats, there's no way this is a major factor in current prices. The demand in Australia has never been higher btw.

  • 

    p1 ama on 02/09/2024 - 10:17

    +2

    So many 8th grade economics students here seem to think investors somehow create the demand which drives up rental costs?

    And I suppose you're a 9th grade economics student with only a slightly higher level of perception?

    Investors drive up the prices of housing stock as they compete with each other to buy assets, at increasing levels of leverage, this drives owner occupiers out of the market and forces them to rent, the more people needing to rent because they can't afford to buy drives up rent, and in turn, will continue driving up housing prices. This leads to a vicious cycle.

    Speaking as an economist now - the issue with trying to analyse housing markets using simple demand-supply analysis is that it doesn't take into account the fact that there are actually three markets at play - the rental market, the asset market, and the construction industry (as a proxy for the market for raw materials and labour). To understand the impact of certain demand or policy changes, you need an integrated model which can flow through the second order effects into the subsequent markets. For commercial real estate, the standard model is the DiPasquale-Wheaton 4Q model (e.g. see https://ocw.mit.edu/courses/11-433j-real-estate-economics-fa… if you're interested).

    You can adapt the model accordingly for residential real estate. The key difference is that the space and asset market becomes substitutable, as (unlike regularly the case in commercial real estate), individuals can live in a rental or in their own home. It's been a while since I've looked at these models, but I think this is probably not simple because you need to add a feedback loop mechanism for that substitution effect. Perhaps some people have done that already.

    (Source: I worked as a macroeconomist looking at housing markets for almost a decade previously, and always happy to chat about the underlying aspects of the property market)

    • 

      ThithLord on 02/09/2024 - 16:47

      Would like to know what your thoughts are on the affects of a rent freeze would have on a city, let alone the whole nation?

  • 

    Zondor on 02/09/2024 - 11:37

    "The only way investors actually cause the rental OR house sale price increases, is if they collude and control enough of the market to artificially limit supply below the demand."

    You mean like what is currently happening? You know this is why all developments are released in stages right?

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  DontNeedThis on 02/09/2024 - 09:14

  +8

  As someone who's been renting for years, this is the best news I've heard recently. Housing shouldn't be treated as investment. Stamp duty should be quadrupled for investment properties, only then buying is house will be achievable for most people.

  • 

    fitr on 02/09/2024 - 15:22

    -1

    The truth buying is house will not be achievable if you don't give up other things in your life.

    Was like that 20 years ago will be the same 20 years later.

    • 

      DontNeedThis on 02/09/2024 - 16:15

      +4

      Uh, no?

      It's this simple.

      • 

        ThithLord on 02/09/2024 - 16:48

        +1

        Yeah, just give up 4 x as much things!!1!

      • 

        greatlamp on 03/09/2024 - 13:23

        +1

        Pull up a chart of house prices in Japan and South Korea.

        Next, a chart of the birth rate in these countries.

        Why are young people so LAZY! Less avocados!

        • 

          DontNeedThis on 03/09/2024 - 13:41

          +1

          @greatlamp: Let me guess, you have at least two investment properties.

          • 

            greatlamp on 03/09/2024 - 13:50

            @DontNeedThis: I'll have a second soon. You don't have to be a university drop-out with no prospects to see the problems with wealth inequality.

            Sorry if I don't fit your stereotype

            • 

              DontNeedThis on 03/09/2024 - 13:56

              +1

              @greatlamp:

              Sorry if I don't fit your stereotype

              You do, perfectly.

              • 

                greatlamp on 03/09/2024 - 14:44

                @DontNeedThis: What are you understanding from my comment above?

                I have no idea what you are implying.

    • 

      Ghost47 on 02/09/2024 - 17:29

      You could buy a house on a single white collar salary back in the 70s and 80s if you made some sacrifices. These days you either have to earn heaps or buy with a partner and with the latter if that leads to separation down the line — don't forget the divorce rate is something like 50% — then that'll lead to more social issues in the future.

  • 

    CalmLemons on 03/09/2024 - 23:12

    Wait till you and your spouse are each earning $150k per year then wondering what to do with your money in a relatively safe investment vehicle.

    Stamp duty is the most inefficient government tax known to the Western world.

    • 

      DontNeedThis on 04/09/2024 - 08:59

      +1

      What other ways do you suggest to deter third or fourth property purchases?

      • 

        CalmLemons on 04/09/2024 - 21:09

        I don't have all the statistical information, but most people I know only own 1 or 2 at most, and they are quite wealthy. I don't know why you want to deal with the headaches of managing 3 or more properties, that's my opinion.

        You have the morons who do the I own 20 apartments and am worth $20 million but they leveraged the paper capital gains who should be targetted as they definitely decrease the housing supply.

        It is a free capitalist market, your only methods are to tax increased property holdings. But at the same time, be realistic about who actually provides rental properties. You cannot stick your head in the sand and be like the government and think you can just build loss making apartments and get people to live in squalor while removing labour from the private sector and causing labour inflation because you're building inefficient public projects at 30-40% higher costs than an equivalent private owned development.

        • 

          CurlCurl on 05/09/2024 - 14:05

          @CalmLemons:

          You have the morons who do the I own 20 apartments and am worth $20 million but they leveraged the paper capital gains who should be targetted as they definitely decrease the housing supply.

          Please explain.

          Do you think the people renting those 20 properties will magically be able to purchase them?

          • 

            CalmLemons on 05/09/2024 - 23:53

            @CurlCurl: That's the question for ALL the people who think good, landlords are selling up, so people can buy their properties.

            I'm not for raising land taxes to ridiculous levels/increasing costs to rent properties because fundamentally it doesn't resolve the housing crisis at all.

            However, tbh, those cheaper apartments are most likely in the price bracket of some of the people who are renting as most of them are sub $600k.

            I mentioned the 20 apartment scenario because the media used to play up people doing that about how successful you can be, but in reality you are in debt by $16 million with $20 million of equity.

    • 

      SlickMick on 04/09/2024 - 10:04

      Wasn't stamp duty supposed to go when GST was introduced?

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  smartazz104 on 02/09/2024 - 09:15

  +3

  Should stop calling them landlords.

  • 

    Ghost47 on 02/09/2024 - 17:30

    -3

    There are some good landlords out there but the majority would be slumlords just seeking their rent cheque.

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  TheFyrd on 02/09/2024 - 11:56

  +3

  Honestly, good riddance. They over-leveraged themselves and now they have to pay up or cash out. Their greed is not our fault or our concern. There are plenty of property investors making good money in this economy by buying, building and renovating sensibly. Several friends and family have built townhouses and duplexes. They've done exceptionally well for themselves and they did it without overburdening themselves with massive amounts of debt. That being said for every one of them high building costs were the main concern.

  As for increasing costs and reducing building, valid but the general high costs of building far outweigh any additional taxes. I don't think we get to blame Dan Andrew for this one sorry but would concede that it's sort of kicking someone when they're down.

  I'd like to see something done to encourage additional stock to be built and built quicker.
  * Long-term by mandating large developers release more land (they deliberately release a small # of lots to artificially create demand)
  * Mandating an X number of higher-density living zones in new developments.
  * Incentivise office to residential conversions.
  * Make it easier to build duplexes and subdivide.

  We need to slow down urban sprawl and encourage more dense, walkable suburbs.

  Also at the end of the day, there's going to be pain either way right? Either we have an environment in which young people can never afford homes and have to rent for the rest of their lives while laws favour investors or we put some breaks on this thing, slow it down and give young buyers a fighting chance. Yeah, it kind of sucks, as a recent homeowner who bought in a high market of course I want to make money on my property but you know what else I'd like more than making bank on my property appreciation? Lower interest rates, and lower building costs so I could a) afford to buy a house in a nicer suburb and b) build the home of my dreams. I'd much rather sell my home for 1 Million and buy & build my dream home for 2 million than sell my home for 1.5 and have to buy or build for 3. Selling in a high market means you have to buy in a high market and the only people winning in a high market are banks.

  • 

    greatlamp on 03/09/2024 - 13:11

    +4

    How about we stop selling land to developers and local councils do their actual job and plan the suburb. This isn't even considered an issue at the moment. More supply is just code for open up more land for soviet style apartment blocks. Huge developer profits. That's why the media keeps pushing it.

    There is a reason all the older inner city suburbs are walkable and leafy while new developments are soulless courts which don't even have adequate street parking.

    Can't have a street that goes all the way through, got to shove in an extra 4 blocks.

    Council managed main street? No better to have another REIT owned big box shopping complex with exorbitant rents. Much better for everyone.

    • 

      TheFyrd on 04/09/2024 - 09:44

      +1

      "How about we stop selling land to developers and local councils do their actual job and plan the suburb. " So fking true. Town planning has gone to shit.

      Faced with the endless expansion of urban sprawl and "Soviet-era apartment blocks," I'd lean toward apartments only for the fact that they maximise usable space, reduce the cost of living, and are more efficient for businesses and councils to facilitate. Higher density reduces infrastructure overhead, one of the big reasons American LGAs suffer so much, Americans love big blocks and have a sick affliction to driving.

      Also, it's not like we will fix this without private investment. It's important for a mix, build big apartment blocks near main streets and public transport, allow for and encourage more subdivisions and ultimately fund councils to improve local infrastructure.

      I don't think we can blame developers either, Australians love suburbia, and the big land developers are just fulfilling an almost sick need.

      • 

        SlickMick on 04/09/2024 - 10:12

        I just got back from a holiday in Japan. I went to Tokyo and was told that it was demolished by an earthquake, but it gave them an opportunity to start over and they now have the best subway system in the world. I went to Hiroshima where only 1 building survived the bomb. They got to plan the entire city from scratch.

        I'm not saying that I'm hoping to a start-over, but at least we could have a plan for where we're going. Even small regional cities seem to progressively get worse rather than better.

      • 

        greatlamp on 04/09/2024 - 10:33

        I agree, we can't blame developers for being profit seeking. It's council responsibility to ensure apartment blocks have sufficient parking and open space.

        They can take a greater interest in town planning by designing the blocks, developers can still build them. Apartments in most European cities are not so poorly designed as they are in Australia

        The current approach is to sell an entire block, choosing between several options all created by developers. It's no surprise we get apartments that are not suitable for anyone except single university students.

      • 

        CalmLemons on 04/09/2024 - 21:15

        A few things:

        Large families cannot live in apartments/concrete jungles.

        Apartments carry huge owners corporation fees.

        They are often unprofitable to build, and they are much more expensive to build than a single story in a flat site in suburbia.

        Yes, Melbourne is one of the largest cities in the world due to our urban sprawl and the government doesn't have the money to suppor the infrastructure, schools and amenities - so they are already focused on building up inner suburbs.

        Getting people to live in apartments limits the population growth, meaning less tax payers and eventually a demographic issue. Of course you have the prime statistic that as wealth increases, the number of children born decreases.

• 

  SpicyStew on 02/09/2024 - 12:02

  meanwhile, other industries are working to solve world problems….

  (they actually create things)

• 

  Herbse on 02/09/2024 - 14:24

  They can invest their money in other areas that help prop up Australian industry and manufacturing.

  Good for everyone

• 

  Assiduous on 02/09/2024 - 15:53

  +1

  Investors mostly buy existing homes pushing up prices. Good riddance!

• 

  conza on 02/09/2024 - 20:26

  +2

  Yeah this is fantastic. I don't want domestic property to be investments, I want people to invest in productive things, not, drive up the cost of a house. There is plenty of demand in domestic property, we have a fairly high population growth rate (yes from immigration nothing really new), so deflecting people investing is brilliant.

  If you own a family home and you don't change houses all the time, as in, you're planning on keeping your house for a long period of time, sure, it would be ideal that the value went up at just about or slightly more than inflation, but you shouldn't be making large returns on houses in short periods of time.

  Here's for the correction, and hopefully it stays corrected, permanently.

  • 

    DontNeedThis on 03/09/2024 - 09:01

    -1

    Investment properties should be taxed so much that it's not profitable in any way.

    • 

      Ghost47 on 03/09/2024 - 19:10

      -1

      If people want to invest in property they should be able to. I'd say taxes for any properties after the first investment property should increase exponentially. That way people can feel like they've moved up a class by owning an investment property but if they want to hoard more it becomes less profitable for them to do so.

      • 

        DontNeedThis on 03/09/2024 - 20:53

        It's crazy how is it is to buy multiple properties. You just need to save for the deposit, the tenants will take care of the mortgage.

        • 

          Ghost47 on 03/09/2024 - 20:56

          @DontNeedThis: Sometimes you don't even need to save another deposit, just access the equity that magically appeared because the market says it's worth $500k more.

      • 

        TheFyrd on 04/09/2024 - 09:48

        +1

        Rather than increase exponentially perhaps they are only able to claim expenses against their general income for the first property and every property after that can only be deducted against the same asset class. How it used to be, not removing negative gearing but limiting it to a single property. I'd like to think there are better ways to disincentivise buy-and-hold strategies and encourage to building of new multi-dwelling properties.

        • 

          SlickMick on 04/09/2024 - 10:18

          @TheFyrd: I would have no problems with this, though I believe it would mean higher rents as everyone would want to be positively geared.
          Negative gearing allows mum & dad investors to reduce thier income tax, accumulate wealth in an asset, and provide affordable housing to those not in a position to rent.

          • 

            TheFyrd on 04/09/2024 - 10:32

            @SlickMick: Well by limiting it to a single IP property it would cover most mom & dad investors or even open it up to 2, if one is in each name that would surely (without looking at the numbers) cover the vast majority of investors.

            Rent can only increase so much before it gets too expensive and you'd be stupid not to purchase that being said I'd like to see something like this combined with an increase in supply initiative to incentivise additional stock being built.

            • 

              SlickMick on 04/09/2024 - 10:46

              +1

              @TheFyrd: When I bought my first IP I was told 5% of purchase price was average rent. So weekly rent = 1/000 of value.
              I find only crummy houses that haven't appreciated are getting that kind of return, and rents haven't kept up with the vlaue of nicer places.

              I think rents have a lot of growth yet, and less rental properties on the market will make that happen.
              Someone paying $650pw might not be able to afford a $1m loan, but if the rent goes up to $1000pw they might be forced to downgrade to crummier rental.

              • 

                TheFyrd on 06/09/2024 - 10:58

                +1

                @SlickMick: I've always heard that too but I've rarely seen it in practice. Principal repayment is about ~3% of the property price alone.

                On the one hand, you're not wrong, increasing property holding costs will probably be passed on, on the other hand, the very exact methods of "reducing" costs have enabled far higher leverage that would otherwise not have been allowed. Remember investors used to be able to calculate the tax savings into their borrowing capacity. This has resulted in higher property prices, mortgages, costs and rents by virtue of steadily increasing property prices for the last 30 years.

                Enough is enough. Too much money is being tied up into unproductive assets. Whatever the solution is now, it's painful but that's what happens when you have 30+ years of untreated rot.

                If I can move off-topic for a bit, looking at my super and ETFs and then comparing the expected long-term returns to our counterparts in America I think to myself how can we be so far ahead in terms of retirement planning but yet behind on expected outcomes? 11.5% minimum is far more than the average American will ever contribute to their retirement account whether it be their Roth IRA or 401(k) and yet consistently they get more with less. Okay, I get that they are a massive advanced heavily diversified economy that are the world leaders but surely we are doing this to ourselves by parking so much money into unproductive assets. We all would be far better off moving our money from housing into companies, the caveat is a solid argument could be made that there just aren't enough companies to invest in on such a scale in Australia but I don't know if that's true or not. I think that Australia's obsession with housing, even though it's been one of the greatest generators of wealth I've ever seen. My family migrated to this country without a lot of money in the '60s and ended up millionaires by simply buying family homes and working basic jobs. In a growing economy, this isn't a problem because there is enough money and growth to go around but in a stagnant economy wealth begins to be accumulated at an alarming rate and wealth transfer happens out of the middle class.

                The long story of this is that really this is a self-inflicted wound. I don't like penalising people, it's hard enough to live and survive today as it is but something has to give. Where does loyalty belong, to investors or to the people and society in general?

                Also as a totally

• 

  Dack Smith on 03/09/2024 - 02:23

  -3

  Stop the rot

  Stop the greed

  Give the houses back to the people

  Richies hoarding property and amassing portfolios are robbing Australians of their dreams!

  When will it end?

  When will the fascist capitalist juggernauts be stopped in their tracks?

  Playing with people’s homes and livelihoods isn’t funny at all.

• 

  duchy on 03/09/2024 - 12:35

  +1

  The problem is: Who will invest in a new housing stock now?

  I am keeping my hard earned money out of Victoria and wouldn’t invest there.

  There are much better places to put(invest) my money.

• 

  greatlamp on 03/09/2024 - 12:51

  If slumlord landlords want to leave the VIC market it can only be a good thing for everyone living there. Good riddance.

  This entire media beatup is ridiculous.

  • 

    SlickMick on 04/09/2024 - 10:20

    I was glad there were rental properties available when I lived there.

    • 

      greatlamp on 04/09/2024 - 10:57

      +1

      You were lucky. Once landlords have to comply with such onerous requirements such as a working heater, gas plumbing that doesn't leak and working smoke alarms there won't be any rental properties left!

      • 

        Yola on 04/09/2024 - 11:07

        Sorry are you being sarcastic? These are pretty basic.

        • 

          greatlamp on 04/09/2024 - 11:07

          +1

          @Yola: Yes I am being sarcastic. Those are the requirements causing 'investors to flee' VIC according to mass media.

          • 

            SlickMick on 04/09/2024 - 12:09

            @greatlamp: lol I upvoted you without considering sarcasm. I live in Qld and never owned a heater.

            Personally I also don't use air con, but cool with fresh air when possible, or fans. But have to keep air con working for tenants. (Not complaining, just something seems wrong that I look after tenants better than my own family.)

            What I do get mad about is REAs outsourcing the testing of smoke dectectors. Bunnings sells disposable detectors with a 10 year battery and just needs the press of a test button once per year, but apparently tenants need interconnected hardwired professionally tested devices.

            So yeah I thought you were legit having a go at the requirements imposed on landlords :)

            • 

              Yola on 06/09/2024 - 07:51

              @SlickMick: The smoke detector in our IP is not wired but the Property Manager insists that we cannot change the battery ourselves like we do at our home. Also, the gas and electricity compliance check had to be for the IP but nobody I know has done them for their home.

              • 

                SlickMick on 08/09/2024 - 19:22

                @Yola: I'm not sure that it's law. REAs love to add anything they can and let you think you don't have a choice. You're lucky they didn't change it to hardwired and just send you the bill. Yeah I've never heard of those compliance checks either, but you can be sure whoever is doing the checks has a sweet relationship with the REA,

                • 

                  Yola on 09/09/2024 - 02:35

                  @SlickMick: I am not sure it's the law either they just say it's too risky. I also think that when these compliance checks came in in Vic there were a lot of deals made with PM's. I got some quotes myself, but it's fairly expensive and has to be done every 2 years.

• 

  Ozbargainlyf on 03/09/2024 - 18:24

  +1

  Genuine question but people who can’t afford an OO now in Vic still won’t be able to own an OO. Where are they proposing they rent?

  • 

    gromit on 03/09/2024 - 19:17

    +1

    They all magically think prices are going to plummet so much that they will all be able to buy and supply will magically fix itself despite no investment and building costs meaning anyone would be insane to build new supply with falling prices. These are the people you will find living under a bridge in a few years time.

    • 

      Ozbargainlyf on 03/09/2024 - 22:37

      +1

      Sure might drop 10% but they still don’t have the means to save up a deposit. Therefore still will be renting with less supply, won’t rent just go up? Might become more of a yield play rather than capital gains.

      • 

        gromit on 04/09/2024 - 08:20

        +2

        yes rent will just go up and with no capital growth the landlords remaining will need positive gearing.

• 

  idonotknowwhy on 03/09/2024 - 20:56

  It's probably more complicated than this, but in a free market, wouldn't the impact be that property in Victoria will become a bit less valuable? The investors would move their capital to other states (or choose other states when making their next purchase, since there are expenses involved with buying/selling property). With property in Victoria slightly less attractive to investors, we'd see a reduction in demand here, and an even less significant increase in other states (because there are more properties on the market outside of Victoria than within Victoria.

  After a while, property here would become a bit cheaper, and investors would factor in the new taxes or whatever (I didn't read the news / don't care) when calculating the purchase price and potential rental/airbnb yields. Then, if they can earn more by buying the slightly a slightly cheaper property here in VIC and paying the tax/fee compared with a more expensive place in another state, they'll buy in Victoria.

  That's my understanding of how free markets work anyway… So we'd probably see a small change in the IP:PPOR ratio here, and the state government would earn more revenue from the new tax.

• 

  sandman20104159 on 04/09/2024 - 08:28

  good for Victorians, bad for where they are moving to, probs up here to Queensland to frak us over.

  • 

    greatlamp on 04/09/2024 - 10:54

    Median house prices in Brisbane surpassed Melbourne recently, which completly makes sense since the people moving there aren't concerned about job opportunities, they just need nice weather and good healthcare to support their retirement.

    Working class people aren't moving to QLD, retired people are selling up in Melbourne and Sydney and bringing the million + they 'earned' from the sale of their home with them. The locals end up sleeping in their cars and we are told all the blame is immigration. (The immigrants are in Melbourne and Sydney not regional QLD)

• 

  haemolysis on 13/09/2024 - 18:24

  I voted overall positive impact, but I think should clarify that only Victorian’s will benefit and the changes stand to exacerbate the problems interstate. Worse still, vested interests of the investor lobby may ensure we do not follow Vic’s lead by emphasising the costs as some sort of ‘plummet’ and ‘financial emergency’, when it is in fact a rather modest decline, and extremely good news for everyone besides social leeches/landlords.

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