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asian_stallion

Australian Housing bubbles. Any thoughts? Lived through the US Housing crisis and it was really bad

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ocka
19 minutes ago, yobbo said:

You can't use a loss on shares to get a tax deduction on your normal income,

Actually,  I was told by a financial adviser about ten years back that you can do exactly that.  That is, he said you can claim the interest on your portfolio loan as a deduction against your total income, exactly the same as a property investor.

I never did this, so I can't say if the law has since been changed, but I certainly haven't heard of a change being made.

11 minutes ago, yobbo said:

But if you lose money on the shares, you cannot deduct that against your normal income. It is not same same property.

If you make a capital loss on selling property,  I'm pretty sure you can't deduct that from income either.   To the best of my knowledge, shares and real estate are treated exactly the same.

 

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Mr Wombat
3 minutes ago, ocka said:

Actually,  I was told by a financial adviser about ten years back that you can do exactly that.  That is, he said you can claim the interest on your portfolio loan as a deduction against your total income, exactly the same as a property investor.

I never did this, so I can't say if the law has since been changed, but I certainly haven't heard of a change being made.

If you make a capital loss on selling property,  I'm pretty sure you can't deduct that from income either.   To the best of my knowledge, shares and real estate are treated exactly the same.

 

You can carry the loss's forward.

I think a better idea is to stop foreign investment in australian residential property. The thais have heaps of stupid rules but the one I think is a real winner is to not allow foreigners to own property outright. 

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ocka
55 minutes ago, yobbo said:

I would also get rid of negative gearing on property. And get rid of the CGT discount.

I did have removal of the CGT discount as my point number 6.

I didn't suggest the negative gearing change, because it doesn't seem fair to treat the taxation of a property investment differently from all other investments.  However, it would certainly make a contribution to reducing house prices if you did.  In the short term, though, it would also increase rents, which might be undesirable.

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ocka
1 minute ago, Mr Wombat said:

You can carry the loss's forward.

Yes, you can, but only to offset future capital gains.  They are permanently quarantined from deduction against income.

One thing I don't know is if real estate losses can be used to offset stock market gains, or vice versa.

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talung66
11 hours ago, ocka said:

"Something decent in outer Sydney" ought to cost no more than $250k.

You should be able to find a car park for that in the inner city.just.

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taylor1975
8 hours ago, Mr Wombat said:

You may have your wish soon at the next election.

Negative gearing is only offsetting your costs against profit from the investment - same as any other business in australia. I dont see how they can do it.

If I invest in a bakery I make a profit on turnover and then offset my costs against that. If gross profit exceeds costs i pay tax on that. If I make a loss I can offset it against other income. Whats the difference with property investment

Its been implemented in UK, very recently. The system seperates rental income from costs, rather than just subtracting one from the other to get net income.

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olic
On ‎14‎/‎02‎/‎2019 at 19:03, yobbo said:

Wow. Negative gearing is not the same between shares and property. Yes you get to deduct the interest you are paying on the loan used to buy shares. But if you lose money on the shares, you cannot deduct that against your normal income. It is not same same property.

Getting rid of negative gearing on property all together would be one of the best things they could do to help bring house prices back to normal levels.

Yobbo,  I don't know what you mean about "lose money on the shares". You can't deduct any money if you lose money on house either.

Remember negative gearing is just a term and many people are positively geared (me included) and have to pay tax on their rental property. Claiming deductions for shares and property against income is the same. There are just more expenses with property.

I think the biggest scam with rental properties deductions were:

the travel to visit them (which they have now done away with)

Depreciation and capital works. They have made changes to this but I still get a healthy deduction for this.

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jimkiwi

I've been watching the declining house property prices in sydney and melbourne with some concern as to how that trend may be followed in the New Zealand market.

Prices in Auckland have increased at a greater rate than in Australia these past 5 years and the affordability gap (average wage v average house price) has widened to a point where ownership is out of reach of many more people. Restrictions have also been placed  on overseas buyers which has contributed to a softening market.

Yet the prices have not declined significantly, but I fear it's only a matter of time before we see falls similar to sydney and melbourne. The only factor that may prop up prices here is a shortfall of homes in Auckland, however theres further capacity coming through following Government incentives to build more stock.

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Not_Shameful

The fact that my Sydney house has only gone up 400% in value over the 24 years since I bought it means that I made a poor investment. At least 800% would be more like it if I'd bought in the inner west or eastern suburbs. 

We have close enough to the most overpriced real estate on the planet. Ongoing high levels of immigration and a national obsession with bricks-and-mortar investments will keep it that way, with a few minor corrections along the way. 

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Dr No
3 hours ago, Not_Shameful said:

The fact that my Sydney house has only gone up 400% in value over the 24 years since I bought it means that I made a poor investment. At least 800% would be more like it if I'd bought in the inner west or eastern suburbs. 

We have close enough to the most overpriced real estate on the planet. Ongoing high levels of immigration and a national obsession with bricks-and-mortar investments will keep it that way, with a few minor corrections along the way. 

So you’d really hate on those of us who bought inner city / west in 1997 and sold in 2017? :)

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Not_Shameful
5 hours ago, Dr No said:

So you’d really hate on those of us who bought inner city / west in 1997 and sold in 2017? :)

Hate? Not at all. 

Would be sitting on an extra $1M if I'd bought well in the inner west for about the same price though. Crazy prices. 

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soi6falang
On 14/02/2019 at 13:22, ocka said:

If I was the dictator of Australia I would implement the following.

  1. Immediately ban all non-citizens from owning residential property.
  2. Notify all non-citizens who own residential property that it must be sold to an Australian citizen within 5 years or the property will be confiscated.
  3. Immediately fund construction of public housing at $40 billion per year, to continue for the next ten years.
  4. Each time a new immigrant is admitted to Australia, add $100,000 to the public housing budget.  No exceptions.
  5. Each time a foreign guest worker is admitted to Australia on a 457 visa, add $100,000 to the public housing budget.
  6. Immediately abolish the capital gains tax discount on residential investment properties, and return to paying capital gains tax at full rate on the indexed gain.
  7. Forbid any mortgagee from foreclosing on any owner-occupied home,  provided that the owner continues to make payments of at least 30% of their net income.

If all of the above were implemented,  a basic family home would be back to the average price of 3 years average wage within 10 years,  and young working class people would be able to buy a home,  just like they could 30 years ago.

Thank god you dont make the rules otherwise I would still be working and waiting for the pension instead of collecting rents due to many off the plan purchases and strong capital growth. Gotta love capitalism 

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olic
On ‎04‎/‎05‎/‎2019 at 11:07, jimkiwi said:

I've been watching the declining house property prices in sydney and melbourne with some concern as to how that trend may be followed in the New Zealand market.

Prices in Auckland have increased at a greater rate than in Australia these past 5 years and the affordability gap (average wage v average house price) has widened to a point where ownership is out of reach of many more people. Restrictions have also been placed  on overseas buyers which has contributed to a softening market.

Yet the prices have not declined significantly, but I fear it's only a matter of time before we see falls similar to sydney and melbourne. The only factor that may prop up prices here is a shortfall of homes in Auckland, however theres further capacity coming through following Government incentives to build more stock.

Your fears will be realised eventually. It's fairly simple, when houses become unaffordable less people can buy. Supply and demand shifts. People quote all sorts of indicators to predict housing affordability but the fact is, many people will do lots of things to buy a house eg work a second job, get into huge debt, etc. But eventually it all becomes too much and they can no longer do this.

In Melbourne the average wage v average house got to over 10 times.

 

Another point that contributed was the tightening up of the banking sector and lending. I'm not sure if that is happening in NZ.

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dm92

In the US, monthly rent is about 1% of the houses value, is it the same there?


Sent from my iPhone using Tapatalk

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jimkiwi
5 hours ago, olic said:

Your fears will be realised eventually. It's fairly simple, when houses become unaffordable less people can buy. Supply and demand shifts. People quote all sorts of indicators to predict housing affordability but the fact is, many people will do lots of things to buy a house eg work a second job, get into huge debt, etc. But eventually it all becomes too much and they can no longer do this.

In Melbourne the average wage v average house got to over 10 times.

 

Another point that contributed was the tightening up of the banking sector and lending. I'm not sure if that is happening in NZ.

The official cash rate has been lowered to 1.5 % this week, it's never been cheaper to borrow and pundits are picking this may lead to upward pressure on house prices. I read that the so called 'bottom' of the housing cycle happened a few years back here, and that we're about to see a lift in average prices.

The supply and demand point you make is of course true, pricing property out of reach of the average person and demand falls,  lowering price. It hasn't happened yet but I think the demographic bubble of baby boomers reaching retirement and wanting to cash up will reveal a slump.

Any thoughts on the Pattaya condo market? I've thought about buying a bolthole condo to live in 6 months of the year (May to October) then renting it out over busy season. If you live in the southern hemisphere the seasons are in your favour for travelling during off peak times

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Gnorman
3 hours ago, jimkiwi said:

The official cash rate has been lowered to 1.5 % this week, it's never been cheaper to borrow and pundits are picking this may lead to upward pressure on house prices. I read that the so called 'bottom' of the housing cycle happened a few years back here, and that we're about to see a lift in average prices.

The supply and demand point you make is of course true, pricing property out of reach of the average person and demand falls,  lowering price. It hasn't happened yet but I think the demographic bubble of baby boomers reaching retirement and wanting to cash up will reveal a slump.

Any thoughts on the Pattaya condo market? I've thought about buying a bolthole condo to live in 6 months of the year (May to October) then renting it out over busy season. If you live in the southern hemisphere the seasons are in your favour for travelling during off peak times

The cash rate has been 1.5% for the last 30 months, there was no lowering it this week. 

 

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jimkiwi
3 minutes ago, Gnorman said:

The cash rate has been 1.5% for the last 30 months, there was no lowering it this week. 

 

The Reserve Bank of New Zealand reduced the official cash rate to 1.5 % 2 days ago. In response the NZD fell around half a cent to the USD. Pundits are now predicting that the house market will rise again off the back of lower interest rates.

Maybe you're referring to the Australian rate?

 

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Gnorman
6 minutes ago, jimkiwi said:

The Reserve Bank of New Zealand reduced the official cash rate to 1.5 % 2 days ago. In response the NZD fell around half a cent to the USD. Pundits are now predicting that the house market will rise again off the back of lower interest rates.

Maybe you're referring to the Australian rate?

 

Yes mate sorry, I didn't realise you were referring to New Zealand.

 

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Harry Brown
On 14/02/2019 at 15:51, yobbo said:

Exactly, against an investment. You can't use a loss on shares to get a tax deduction on your normal income, why should an investment in housing be any different.

A bakery is not an investment. It's a business.

If you know the rules then yes you can.

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Captain Dave
On 14/02/2019 at 08:26, Mr Wombat said:

You can carry the loss's forward.

I think a better idea is to stop foreign investment in australian residential property. The thais have heaps of stupid rules but the one I think is a real winner is to not allow foreigners to own property outright. 

Well actually Foreigners can own property outright in Thailand, the land is what they cannot own and this can be 

got around by having 'company' set ups, long term recurring leases etc.

Also Condo's don't even have that restriction - so I doubt it's much of a dis-incentive to buy Thai properties. 

 

Surely Australia is a big enough place to build more houses?

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Harry Brown
1 hour ago, Captain Dave said:

 

Surely Australia is a big enough place to build more houses?

 

Plenty of room but no water mate.  :)

images.jpg

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thegrogmonster
On 10/05/2019 at 03:26, dm92 said:

In the US, monthly rent is about 1% of the houses value, is it the same there?


Sent from my iPhone using Tapatalk

In Australia I believe this to be the rough formula (0.1%).

A house worth $400,000 should return a weekly rent of $400.

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Zeb
Posted (edited)
22 minutes ago, thegrogmonster said:

In Australia I believe this to be the rough formula (0.1%).

A house worth $400,000 should return a weekly rent of $400.

A rough guide for Sydney is currently a AUD $1 Million apartment in a reasonable area, rent minimum $600 per week - rents have come back a bit, but property prices still high.

Edited by Zeb

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dm92
In Australia I believe this to be the rough formula (0.1%).
A house worth $400,000 should return a weekly rent of $400.


I don’t see how the person that owns the house would make any money


Sent from my iPhone using Tapatalk

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dm92

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