HIA goes running to the Government asking for stimulus

[TomW]

The Government should tell them to take a running jump:

NEW home sales continue to slide sharply, prompting calls for the Government to boost the struggling industry with a stimulus package.

The housing market has been struck another blow, with new home sales falling 8 per cent in July, following an 8.7 per cent decline in June, according to the latest figures from the Housing Industry Association (HIA).

Detached house sales fell nine per cent during the month, while sales of multi-units increased by one per cent.

The result has renewed calls from the HIA for the Government to intervene with a stimulus, as building and construction companies continue to collapse with consumers opting to renovate rather than build.

Read more: http://www.news.com.au/money/proper...ia/story-e6frfmd0-1226124413240#ixzz1WQCctI6r

 

[Ausprop]

the role of the govt is to smooth the demand curve. If you look at future population predictions this could be argued as a matter of national interest and security. Every other industry gets assistance thru the troughs, why not builders? Of course the assistance could be in the form of removal of punitive taxes and charged as well. Instead of taxing the bejeesus out of the property and construction industry they could find a new scapegoat

 

[Indifference]

ROFL.... ahahahahaha.... have seen this "slowdown" coming for quite a while.

Don't get me wrong, I love property, I want to buy more property, I will one day partially be supported by property, BUT, IMO we have a long way to go yet before we see the real pain.

I laugh at these news headlines because 6-8 months ago I was being laughed at for even suggesting such a downturn was on the way..... this is however a good opportunity for the smart investor who is in a position to capitalize when the time is right.

IMO, the government subsidizing the industry is not the way to go.... all we need do is think about WHY this is happening and once we understand WHAT is really going on, perhaps a sudden reality check will clear a few things up.

 

[TomW]

the role of the govt is to smooth the demand curve. If you look at future population predictions this could be argued as a matter of national interest and security. Every other industry gets assistance thru the troughs, why not builders? Of course the assistance could be in the form of removal of punitive taxes and charged as well. Instead of taxing the bejeesus out of the property and construction industry they could find a new scapegoat

A new scapegoat? They've had their nose in the Government trough for ages. the BER program, the First Home Owner's Grant etc.

 

[Aaron Sice]

the HIA are a self-interest body like any other real estate group.

i dont see anyone here taking the mickey out of the steel worker's union, the retail trader's union etc - they're all doing exactly the same thing.

ham it up, guys.

 

[buzzlightyear]

the role of the govt is to smooth the demand curve....

The question is, does it or does it exacerbate economic cycles by intervening?

 

[Propertunity]

the HIA are a self-interest body like any other real estate group.
i dont see anyone here taking the mickey out of the steel worker's union, the retail trader's union etc - they're all doing exactly the same thing.
ham it up, guys.

Yes and the REI's will be doing the same. But isn't that what you expect of lobby groups?

 

[Aaron Sice]

Yes and the REI's will be doing the same. But isn't that what you expect of lobby groups?

My point exactly.

 

[TomW]

Yes but the HIA and other real estate lobbies have arguably had more success than other lobbies and their influence on the economy has been more pernicious.

 

[Propertunity]

These groups only lobby the government. It is up to the goverment of the day to take their "advice" or some other course of action.

If you want to go looking for pernicious effects on the economy, there would be many other places I'd be looking before housing stimulus.

When FHB buy houses, they usually also buy whitegoods, plants, child care, transport etc which has a flow-on effect to many other parts of the economy.

 

[Aaron Sice]

Yes but the HIA and other real estate lobbies have arguably had more success than other lobbies and their influence on the economy has been more pernicious.

just because they're loud and have decent political clout doesn't mean they get results.

the retail traders union is relatively quiet and have just secured -

1) a rejig of retailer's leases that make residential tenancy rights look landlord friendly
2) a forum for tax cut hearings here http://www.retail.org.au/index.php/news/Retail_industry_voice_to_be_heard_in_tax_discussions
3) lobbying govt for assistance like the HIA do here http://www.retail.org.au/index.php/...al_as_sector_faces_more_job_cuts_and_closures

explain to me the difference here - because i'm not seeing it.

with you, please.

 

[tom32]

You could hardly say developers have a good run when in the likes of Sydney they have to pay ungodly sums of money to state and local governments for each lot that is built.

They pay GST, which by rights should be included in the money that goes toward global infrastructure but this is just one more tax on the construction of new homes making it more difficult to develop new against existing homes.

Lots which traded for over a million in the late 90s now trade for less than half what they did because of government policies alone and now sit idle because to finish them off would cost more than what is achievable.

Purchasing the lot itself in some parts is less than 10% of the total out turn cost of a development. The rest is dev costs and government levies.

I cannot for the life of me think any industry which has to pay so much tax is being treated favourably by the government... It must be over 50% I reckon.

The finished products might be worth 100% more than they were due to other land use and infrastructure policies the government has put in place but this does not mean the government is developer and so by extension builder friendly.

I would say governments are property friendly but certainly not developer friendly. I think while it might seem counter intuitive at first developers have an entirely different set of objectives to the real estate lobby groups. They seem to win out in the end and any endeavor by government to release more land seems to be met with an equal increase in levies to ensure any windfall profits to developers are wiped.

 

[Ausprop]

yes and then someone goes to buy that tax encumbered product and guess what? here's a stamp duty bill sir! "so what is this stamp duty tax for?". "um, er, well it goes back to the war, dark days they were indeed and...."

seriously housing is far from a favoured industry. So far the developer bought a plot, paid stanp duty and got taxed the bedevil out of. not only was he not eligible for GGT reductions, he was also whamied with GST. then the end user bought it and got whammied with stamp duty. Around rolls June 30 and that fleet of white camrys is looking a bit old out at government house... slap! council rates, ESL, water rates, land tax....what else can we think? chuck a death tax in there cos they cant argue when they are dead, and somehow we have to pay out these hundred of millions to farmers and auto manufacturers and stuff me hardly normal wants a cheque now too!

 

[tom32]

and as an individual if I was to buy an allotment with the purpose of developing it I cannot negative gear the interest repayments because my pursuit of assessable income does not have enough clarity around it. Short of said block being already zoned residential and work commencing immediately. Anything short even say under investigation for urbanisation with plans being released within 12 months is not good enough...

It would seem the government will give you all the tax breaks in the world for owning one or two houses but if you actually are serious about supply of housing and want to make some you pay through the proverbial at every point and get no concessions whatsoever.

 

[Aaron_C]

and as an individual if I was to buy an allotment with the purpose of developing it I cannot negative gear the interest repayments because my pursuit of assessable income does not have enough clarity around it. Short of said block being already zoned residential and work commencing immediately. Anything short even say under investigation for urbanisation with plans being released within 12 months is not good enough...

It would seem the government will give you all the tax breaks in the world for owning one or two houses but if you actually are serious about supply of housing and want to make some you pay through the proverbial at every point and get no concessions whatsoever.

That's because developers are in the minority and therefore their votes are quite immaterial compared to 'mums and dads' who have their own home and that's it.

 

[Giddyup]

And then this is published straight after the HIA article:

Property supply is expected to outstrip demand for some time.

http://theage.domain.com.au/real-estate-news/market-not-warming-up-just-yet-20110829-1jh3x.html?posted=successful#makeComment

Thats a bit more realistic.

@Indifference - I couldnt agree with you more. At least a few people had their head out of the sand 6 - 8 months ago!

Everyone knows that industry lobby groups spin everything to promote their members. The difference with this article is that it is presented as news regarding property, with a headline of 'New home sales fall to 10-year low'. As opposed to other unions being reported as 'Union X makes claims for more money for their members'

 

[Ausprop]

wasn't melbourne booming thru the GFC tho? from memory it was defying all sense. it is probably still waiting for a good 30-40% cut off the ticket price ($1m-$2m range I am talking) to get it back to healthy levels? Once that bandaid is pulled off it actually feels better believe it or not. house near to me went on at $1.7m and they just took a biot over $1m - that's OUCH! however the developer that picked it up is going to a do a major reno and flip it... and so the cycle goes on.