An idea that most here will hate, but I think is neccessary

[Ocean Architect]

I was having a chat with a relative a few months ago, asking about how things were in the 1960s-70s in regards to property development. Specifically, I wanted an anecdote on why it was possible for regular families back then to build and pay off an entire block of 6 units with less financial pain endured by your average first home buyer today.

Anyway, the policy in the NT back then was that the government would sell you land very cheaply, with the proviso that you must begin building within a certain time frame (24 months).

So fast forward to today, and the way it works is for large parcels of land to be sold by the government to specific land developers, who then on sell that land for a profit. In the NT presently, we are seeing a new subdivision next to a sewerage plant aroundabout 500m total land area for 290k. Which is horrific if you ask me. That represents 6 years of before tax earnings for the average worker, and that's before you build the house, or pay interest.

Now, you often hear politicians in the news speaking about a supposed "land shortage" in the NT. Funnily, though, last time I drove from Darwin to Adelaide it took me 36 hours at 100km/hr. Which was a hellish trip, btw. I only had 1 CD, and it was in Greek. Listened to it 19 times. Threw it into the bin as soon as I got home. So what the heck was I driving through, exactly? Land shortage? 36 hours at 100km/hr of "land shortage"? How the hell does that work? I wish my "money in the bank" shortage worked a bit like the "land shortage".

Anyway, my thought is that the first home owner market is absolutely unfair to the first home buyer, or anyone who just wants a house to live in - none of this "invest for the future" stuff - just somewhere to park the wife and kids until you get old, grey, and die.

So I think we should go back to where we started. I think that people should be sold, at cost price, a parcel of land, by the government, on which to build their PPOR within a certain time frame.

I believe this to be in the national interest, because it would mean that the productive citizens of Australia wouldn't be shackled to a home loan for 40 years, and would be free to pursue other, productive endeavors. Like actually refining and manufacturing things out of our mineral wealth, for example.

In the short term it would send shock waves a mile high through the speculative property market and half of the board would go broke, but then, I personally believe that a home is a human right, not a luxury, and that the housing market as it stands will deprive an entire generation (at least) of their economic independence for the sake of artificial scarcity, and the interests of people who like collecting rent.

Thoughts, ladies and gentlemen?

 

[cu@thetop]

For shame! How dare you suggest that people who would otherwise be tenanting forumites investment properties be able (and indeed encouraged) to get their own homes.

Such seditious talk will undermine house prices and bring them back to affordable levels.

You sir are a rougue and a scoundrel and your type are not welcome here.

 

[pennyk]

.

Anyway, my thought is that the first home owner market is absolutely unfair to the first home buyer, or anyone who just wants a house to live in - none of this "invest for the future" stuff - just somewhere to park the wife and kids until you get old, grey, and die.

I believe this to be in the national interest, because it would mean that the productive citizens of Australia wouldn't be shackled to a home loan for 40 years, and would be free to pursue other, productive endeavors. Like actually refining and manufacturing things out of our mineral wealth, for example.

Well, its an interesting idea, but not one that I would have expected from you..particularly given your views of the role of government in the thread about Abbotts nanny state (i couldnt work out how to quote it properly,, sorry)...... It almost sounds like you have taken a socialist pill!!

http://somersoft.com/forums/showthread.php?t=78046

The federal government has no business getting involved in peoples life like that. None. None at all. The federal government exists for 3 reasons:

1 national defense
2 system of laws
3 to establish and protect a currency

Its late at night, way past my bedtime and I'm teasing you.... hope you are not offended! ........ ok, now I've poked fun at you, we can go on to discuss the topic seriously........ I know you are not a socialist!

 

[Francesco]

I was having a chat with a relative a few months ago, asking about how things were in the 1960s-70s in regards to property development. Specifically, I wanted an anecdote on why it was possible for regular families back then to build and pay off an entire block of 6 units with less financial pain endured by your average first home buyer today.

Anyway, the policy in the NT back then was that the government would sell you land very cheaply, with the proviso that you must begin building within a certain time frame (24 months).

So fast forward to today, and the way it works is for large parcels of land to be sold by the government to specific land developers, who then on sell that land for a profit. In the NT presently, we are seeing a new subdivision next to a sewerage plant aroundabout 500m total land area for 290k. Which is horrific if you ask me. That represents 6 years of before tax earnings for the average worker, and that's before you build the house, or pay interest.

Now, you often hear politicians in the news speaking about a supposed "land shortage" in the NT. Funnily, though, last time I drove from Darwin to Adelaide it took me 36 hours at 100km/hr. Which was a hellish trip, btw. I only had 1 CD, and it was in Greek. Listened to it 19 times. Threw it into the bin as soon as I got home. So what the heck was I driving through, exactly? Land shortage? 36 hours at 100km/hr of "land shortage"? How the hell does that work? I wish my "money in the bank" shortage worked a bit like the "land shortage".

Anyway, my thought is that the first home owner market is absolutely unfair to the first home buyer, or anyone who just wants a house to live in - none of this "invest for the future" stuff - just somewhere to park the wife and kids until you get old, grey, and die.

So I think we should go back to where we started. I think that people should be sold, at cost price, a parcel of land, by the government, on which to build their PPOR within a certain time frame.

I believe this to be in the national interest, because it would mean that the productive citizens of Australia wouldn't be shackled to a home loan for 40 years, and would be free to pursue other, productive endeavors. Like actually refining and manufacturing things out of our mineral wealth, for example.

In the short term it would send shock waves a mile high through the speculative property market and half of the board would go broke, but then, I personally believe that a home is a human right, not a luxury, and that the housing market as it stands will deprive an entire generation (at least) of their economic independence for the sake of artificial scarcity, and the interests of people who like collecting rent.

Thoughts, ladies and gentlemen?

LOL. Back then in those good old days there were not too many government freebies too - age pension, unemployment benefits, family benefits, carer benefits, rental allowance, etc.

Remove that and the tax and tariffs for government will be much lower as well and rates, stamp duty and land taxes are big cash cows. We can live free and wild at our own risk without blaming government for not spreading a safety net to catch us when we fall.

 

[yadreamin]

Oh buggar off OA those new age views of yours are not welcome here.
Why should the young of today have it easier than us of "last week"
Crickey what is this forum comming too?;

ps ...just watching a show on inside China.
We really have nothing to winge about.

cheers
yadreamin

 

[Ocean Architect]

I'll give you a hand with how to quote it - next time, don't use the color icon, just cut and paste, highlight what you pasted, and press the "quote" button in between the picture icon and the hash (#) icon in the field above.

Well, its an interesting idea, but not one that I would have expected from you..particularly given your views of the role of government in the thread about Abbotts nanny state (i couldnt work out how to quote it properly,, sorry)...... It almost sounds like you have taken a socialist pill!!

The federal government has no business getting involved in peoples life like that. None. None at all. The federal government exists for 3 reasons:

1 national defense
2 system of laws
3 to establish and protect a currency

Its late at night, way past my bedtime and I'm teasing you.... hope you are not offended! ........ ok, now I've poked fun at you, we can go on to discuss the topic seriously........ I know you are not a socialist!

So, to clarify, what I said in the Abbot thread is what I think of Federal Government duties. The Federal government has a duty to look after our national security, currency, and system of laws.

The state governments, however, may execute the function of land provision at cost price to home buyers. So that's where the disconnect is.

I see nothing wrong with the idea, and can sense that most people would fear what it would mean for their investment portfolio. The thing is, though, that all of us can sense what is happening to the property market as it stands - we know that it is not feasible for house prices to remain as high as they are. People are buckling under the strain. Businesses are going under. When businesses go under, they let go of employees. When employees are let go, they don't pay rent. When they don't pay rent, rental properties are no longer feasible, and prices go down.

The root idea here is that production, not speculation, must be fostered by all government, not just state or local. We must free workers of their debt obligations in order to allow them to produce things of real meaning, value, and quality.

Why would you want a guy to give 80% of his pay to pay off a house, when he could pay 20% of his pay for the house and the other 60% to a business that produces something? Doesn't matter what that something is, because the idea is that interest payments are as dead as rent money is. The only thing of real value that someone can produce is something real - a house, a car, a tv, some iron, or food.

I perceive that we are in a parasitic death spiral. We are taking so much money away from workers in the form of rent that they do not have enough left over to drive the gears of the economy. The reason for that is interest to the banks - the renters pay rent, the owners pay interest, the banks say thankyou, and the economy stalls, with all of us in troubled water.

I would rather be average in a good world than rich in this diseased one. We are heading for massive trouble.

 

[Sunfish]

Thoughts, ladies and gentlemen?

I think you are referring to misallocation of resources. And Yes! I agree.

But remember the homes you speak about would have been simple weatherboard structures. Not McMansions. No denying the absurd cost of land though. It wasn't always so.

 

[kathryn d]

I don't think it is ever easy for any generation to own a home.

When I was little, my parents and us 4 kids lived in very small mobile home 10' x 48'
in a caravan park. Then we rented the bottom half of a larger house.
My parents were 36 & 43 yrs old before they bought their first house.

Owning a house is not a right.

So no...I don't like your idea OA.
The ones that take advantage of it, I think would just sell it as fast as they could.

 

[Ocean Architect]

LOL. Back then in those good old days there were not too many government freebies too - age pension, unemployment benefits, family benefits, carer benefits, rental allowance, etc.

I hate to break it to you, but those "benefits" are not free. They are paid upon the premise of future taxes to future generations.

You get to have a pension based on tax from someone younger than you. But the way things are going, the young are barely able to take care of themselves, because they are taxed to death already and pay amazing prices for housing. There is an end poiint to all this - when the young and old together go broke. And then no one gets a pension.

Remove that and the tax and tariffs for government will be much lower as well and rates, stamp duty and land taxes are big cash cows. We can live free and wild at our own risk without blaming government for not spreading a safety net to catch us when we fall.

The safety net of the baby boomers has become a hangmans noose about the necks of the young. This policy is plainly stupid, and wrong.

As a young person myself I prefer the ability to maybe take care for myself based on my wits and work to the policy of certain poverty in my old age for a safety net that disappears because we can't keep this up.

 

[Ocean Architect]

I think you are referring to misallocation of resources. And Yes! I agree.

But remember the homes you speak about would have been simple weatherboard structures. Not McMansions. No denying the absurd cost of land though. It wasn't always so.

True and true. That doesn't take into account technological improvements and vastly less labor required to produce a house, though.

With the advent of computers, power tools, production techniques, construction techniques etc, it should be as easy today to produce a mcmansion as it was to put together a weatherboard place 40 years ago.

I have a bachelors in pharmacy and can make more money working as a painter than I could as a pharmacist. This is bubblenomics.

 

[Sunfish]

True and true. That doesn't take into account technological improvements and vastly less labor required to produce a house, though.

That's true too. I was thinking about that when I made the post. Being a lazy typist, didn't expand on it.

But there is nearly as much rot in my 12 yr old pine house today [built in the modern way] as there was in the 60 yr old hardwood one I left last year. It is certainly bigger and more comfortable.

 

[Ocean Architect]

That's true too. I was thinking about that when I made the post. Being a lazy typist, didn't expand on it.

But there is nearly as much rot in my 12 yr old pine house today [built in the modern way] as there was in the 60 yr old hardwood one I left last year. It is certainly bigger and more comfortable.

How about the aluminium composite panel made out of sheets of aluminium and recycled plastic that I can buy out of china for $20 a square meter that is weatherproof, waterproof, chemicalproof, fireproof, doesn't need painting or rendering and withstands cyclonic conditions?

 

[Ocean Architect]

The stuff I was talking about doesn't quite look like hardwood though. It looks a bit more like this:

 

[lizzie]

I'd be interest to know the breakdown of that $290k for a block of land.

In certain parts of NSW, almost 1/3rd the cost of the block of land is already government taxes (at 3 levels) ... add onto that new infrastructure costs (underground electricity, water, sewer, internet/phone cabling) which nowadays has to be met by the developer ... then add in the sealed roads, curbs and guttering (no gravel and grass verge here matey) ... developers actually don't make a lot of money per block.

Yes - those "safety nets" mentioned aren't free, but the money has to come from somewhere. So, if you're giving the money out for cheap land, then you have to take it from somewhere else like infrastructure, pensions, defence etc.

And - if someone does get a cheap block, what makes you think that they will go on to contribute more to life? Have to remember that we are a very small, forward thinking, minority here ... the general populous would be flat out buying a bigger boat, a bigger car, a bigger holiday, with the money they've saved.

Got in theory ... but I don't think you'd like the eventual outcome.

 

[redwing]

I think at somepoint on your 36 hr trip, listening to zorba the greek one to many times, you left the NT land shortage and entered the SA land shortage


Those long trips on open roads apparently do strange things and the mind begins to wander (or is that wonder?)

How about providing lots of land for cheap housing in coober pedy? Want another room, just get the kids to dig one. It's a long way to OA's pharmacy, the smith st mall or casuarina square though?

OR you just build up, rather than out

Anyway, the policy in the NT back then was that the government would sell you land very cheaply, with the proviso that you must begin building within a certain time frame (24 months).

In those days what was the road to Adelaide like?

How far out did Darwin extend, I'm sure there weren't suburbs such as Lyons, or Bellamack, Johnston, Zuccoli or Mitchell?

So fast forward to today, and the way it works is for large parcels of land to be sold by the government to specific land developers, who then on sell that land for a profit

Government sells the land to developers with requirements for sealed roads, specific zoning and development requirements, open space facilities etc, The Government now takes the developers funds, plus the new home owners taxes etc as they buy into the development and they now concentrate on providing public services as the area grows?

You also get nice sealed roads, underground power, and a myriad of other services in preference to two tyre tracks through the bush to your block, a sepctic tank or a hole in the ground to conduct your business needs as well as power and running water?

No money, no honey as they say

PS: The only thing that gets cheaper as the years go on is me.

PPS Ten dollars is way too much for a dog

 

[redwing]

Imagine you had a product lets call it LAND (Little Aussies Need Direction) you can sell it all now, but its a bloody big place and there's not enough customers for all of it, or you could sell a portion each year at ever increasing prices to an ever increasing customer base

You then introduce a system of rates to ensure you can go back each year to the previous customer base and extract additional and ever increasing funds

Happy Daze indeed momma

 

[Fifth]

100% agree with your sentiment, just not sure if your plan is viable.

Could work as an alternative to FHBs regional new build grants but it wouldn't do an awful lot of good in capital cities. I can't see the government offering cheap land on the outskirts of Melbourne and Sydney, it would be political suicide.

 

[vbplease]

Now, you often hear politicians in the news speaking about a supposed "land shortage" in the NT. Funnily, though, last time I drove from Darwin to Adelaide it took me 36 hours at 100km/hr. Which was a hellish trip, btw. I only had 1 CD, and it was in Greek. Listened to it 19 times. Threw it into the bin as soon as I got home. So what the heck was I driving through, exactly? Land shortage? 36 hours at 100km/hr of "land shortage"? How the hell does that work? I wish my "money in the bank" shortage worked a bit like the "land shortage".

Lots of red dirt in the middle of nowhere isn't a solution for the "land shortage" the pollies are talking about. Urban sprawl cost $$ for the tax payer for services i.e. water, electricity, health, education etc. is also a bad idea for transport.. means you have to listen to more bad greek music to get anywhere

I know the majority of gen y/z wouldn't wouldn't consider living more than spitting distance from the cbd.

I can only speak for Brisbane, but I'm seeing 2bed units in my area (4.5km) from the CBD selling for $275k. That's pretty affordable imo. Ok, not everyone wants to live in a unit all their life but it's a good stepping stone into the property ladder.

 

[Macca]

The biggest change in land release methods IMO is that nowadays all the infrastructure is paid for up front by the buyer of the land.

EG: As Lizzie said re local subdivisions in Hunter region, if the land is selling for $150k then about $60k is in various utility/govt costs. That extra $60k needs to be found by the person buying the land up front.

In days gone by in this area, land would be subdivided on paper but basically left uncleared, no roads, no utilities. It was only after people had purchased the land and applied to build on it that councils would then start putting roads in etc.

These unfunded infrastructure costs were usually financed by utility bonds, EG: In NSW you could invest in Water Board bonds which would pay about 1% above the federal interest rate but backed by the Utility and the State Govt. These bonds could be 10 or 20 years time frames and could be sold on the market if required.

The land owner would then pay a connection fee to the water board when the water /sewer became available at their property. There are areas on the fringes of most cities/towns that are not sewered even now, in some cases 50-80 years after being subdidvided. When they agitate enough they get a sewerage system built but then find that they have to contribute to the costs and a lot complain but someone has to pay for it.

If we go back to letting the developer just do the land and roads then issue bonds to pay for the infrastructure I am sure Super Funds would be happy to buy them. There could be an extra levy in the rates to repay the bonds over 20 years which means instead of borrowing extra money up front residents pay it over a 20 year period while they occupy the home.

It would make it much easier to get into your first home wouldn't it

 

[slammindan]

I also agree with the sentiment, who wouldn't want a Utopian world of inconsequential mortgage commitments and the ability pursue more productive/creative endeavors. Count me in.

But has there ever been a case where giving a particular group a 'free lunch', which is what you are proposing, ending up with the intended results?