Is it the end of negative gearing

[Dazz]

I've bought a property before and I will buy property again.

"a" property ??

So, in the real world, you're not exactly in the best position to comment at all. In fact, you've stepped onto the first rung of the property ladder and then jumped off.

I'd suggest you're in absolutely no position to be advising or putting pressure on the Govt over housing policy, or any other policy given your limited real world experience.

I can put aside my personal situation, motivations and goals and independently assess what I think the government should do for the greater good

I can now see why you would quickly want to put aside your personal situation. From a property perspective there is nothing of any consequence for you to draw upon. You'd do very well as a Govt adviser.

You're in no position to independently assess anything at all.

You're right up there with these poor as church mice University Professors with 5 degrees about housing policy but don't actually own any, or those wonderfully literate 23 yo. journalists who wax lyrical about the property market to all and sundry but have never actually owned anything - ever.

 

[hobo-jo]

Pathetic post Dazz. Haven't you got something better to be doing with your time than exchanging views with an ex-single property owner?

I could sell my current asset portfolio (not property related), leverage up and buy a handful of properties negatively geared if I really wanted... would that put me in a better position to independently assess the state of the market? No it would not.

We are on this forum sharing personal opinions, not advising or putting pressure on the Government (which very few if any regulars on this forum would be in a position to do so by themselves).

 

[Dazz]

Haven't you got something better to be doing with your time than exchanging views with an ex-single property owner?

Yes I have. Tata.

 

[jaycee]

"a" property ??

So, in the real world, you're not exactly in the best position to comment at all. In fact, you've stepped onto the first rung of the property ladder and then jumped off.

I'd suggest you're in absolutely no position to be advising or putting pressure on the Govt over housing policy, or any other policy given your limited real world experience.




I can now see why you would quickly want to put aside your personal situation. From a property perspective there is nothing of any consequence for you to draw upon. You'd do very well as a Govt adviser.

You're in no position to independently assess anything at all.

You're right up there with these poor as church mice University Professors with 5 degrees about housing policy but don't actually own any, or those wonderfully literate 23 yo. journalists who wax lyrical about the property market to all and sundry but have never actually owned anything - ever.

Didn't you just a few days ago berate someone for msuggeting you were not the bet to comment on something when they didn't like your comment and therefore suggested you were wrong to comment ?



I suppose there is no irony at all cause of some other reason I can't understand despite nearing 6000 posts as you said earlier as well...

 

[Tehanu]

NG will most likely end once house prices have crashed. The economy will be in such bad condition that governments will be desperate for tax revenue. Property will be one source as the Irish and American experience shows. One reason why NG will be singled out is that NG only affects investors, not PPORs. In housing bubble crashes there tends to be enormous political pressure to protect home owners but investors are seen as fair game, especially since they join bankers and regulators as the main people to blame.

Really NG (and other property investment subsidies) is very bad policy because it is so pro-cyclical. It boosts house prices even more during a bubble for very little societal gain (since NG usually goes to existing housing) but the pressure will be on to kill it during the bust, deepening the downturn.

In other words like a lot of ill-thought out government policy.

In the meantime though, I can't see NG going anywhere.

 

[Dan_p]

NG will most likely end once house prices have crashed.

When do you think this will happen?

 

[Ideo]

Maybe someone who is struggling to afford to buy a house is in a better position to understand than someone who just caught the wave at the right time.

 

[Tehanu]

When do you think this will happen?

The crash has already started in my opinion. However the removal of NG is still a whiles away. Prices haven't fallen enough and the government isn't desperate enough for tax revenue yet.

 

[Dazz]

Maybe someone who is struggling to afford to buy a house is in a better position to understand than someone who just caught the wave at the right time.

....hmmm, little bit more to it than that. You've just insulted almost every person on the forum by trivialising all who have worked their butt off, saved like crazy, sacrificed important things, performed detailed due diligence, negotiated hard, taken risks, continued to take risks, been at the mercy of Lenders and Govts, put up with lopsided laws...and whinging Tenants, managed PMs, tight cashflows etc etc etc.

Yes, a little more than just "caught the wave at the right time".

Lefty socialists always try and demean those trying to get ahead in the world, especially in favour of those not willing to put in the hard yards, but your simplistic "just" statement is beyond the pale on an investor's forum.

Your leftist ideologue generates opinions that are clearly unsupportable. We shall have to disagree on almost every point.

 

[jaycee]

....hmmm, little bit more to it than that. You've just insulted almost every person on the forum by trivialising all who have worked their butt off, saved like crazy, sacrificed important things, performed detailed due diligence, negotiated hard, taken risks, continued to take risks, been at the mercy of Lenders and Govts, put up with lopsided laws...and whinging Tenants, managed PMs, tight cashflows etc etc etc.

Yes, a little more than just "caught the wave at the right time".

Lefty socialists always try and demean those trying to get ahead in the world, especially in favour of those not willing to put in the hard yards, but your simplistic "just" statement is beyond the pale on an investor's forum.

Your leftist ideologue generates opinions that are clearly unsupportable. We shall have to disagree on almost every point.

I haven't done much more than catch the wave at the right time... there'd surely be heaps just like me, I've ever been than unique in anything I've done in my life.....

 

[Dazz]

jaycee, everyone here knows you are a very special case indeed.

 

[jaycee]

sure why not... back on topic though...

 

[Ideo]

....hmmm, little bit more to it than that. You've just insulted almost every person on the forum by trivialising all who have worked their butt off, saved like crazy, sacrificed important things, performed detailed due diligence, negotiated hard, taken risks, continued to take risks, been at the mercy of Lenders and Govts, put up with lopsided laws...and whinging Tenants, managed PMs, tight cashflows etc etc etc.

Yes, a little more than just "caught the wave at the right time".

Lefty socialists always try and demean those trying to get ahead in the world, especially in favour of those not willing to put in the hard yards, but your simplistic "just" statement is beyond the pale on an investor's forum.

Your leftist ideologue generates opinions that are clearly unsupportable. We shall have to disagree on almost every point.

Been there done that. Missed out on things and been at the right place at the right time.

I also see people only a couple of years younger me having a harder time getting into the market that I did.

 

[lizzie]

Been there done that. Missed out on things and been at the right place at the right time.

I also see people only a couple of years younger me having a harder time getting into the market that I did.

Well - perhaps you also need to look at the people a couple of years older than you who had a damn hard time getting into the market too ... it's all cyclical and, atm, we are in a stagnent period which is a great opportunity for those who had struggled over the last few years, to catch up and buy.

Assuming they have the balls to do so - not like my stepdaughter as mentioned previously - or my niece who is still living at home aged 27. To poor to move out, but just bought herself a brand new Honda Jazz.

 

[Ideo]

Well - perhaps you also need to look at the people a couple of years older than you who had a damn hard time getting into the market too ... it's all cyclical and, atm, we are in a stagnent period which is a great opportunity for those who had struggled over the last few years, to catch up and buy.

Assuming they have the balls to do so - not like my stepdaughter as mentioned previously - or my niece who is still living at home aged 27. To poor to move out, but just bought herself a brand new Honda Jazz.

Oh completely agree. At the moment some areas, especially areas of sydney, are overpriced. Others are good value.

For what its worth I'm 28 with four properties. But I also rent.

 

[Graemsay]

I don't doubt that people have made sacrifices to get on the property ladder. But there has been a massive step change in prices over the last ten or fifteen years.

Taking examples from London. One of my older brother's friends bought a one bedroom flat in Fulham (traditionally where people who couldn't afford Chelsea lived) on a single, recent graduate's wage in 1996 or 1997. Similarly, a friend who was working as a PA purchased a two bedroom flat in Southfields (decent area, not rough, but not extremely desirable) on her own at about the same time.

My older brother bought in Brighton at about the same, I think for slightly less. He could afford to cover the cost of a house by renting out rooms to students.

In contrast, my younger sister moved to London last year, and is doing a sales job. She's a few years older than the previous examples, but she's probably on a similar, or even better, income once adjusted for inflation.

At present she lives in a shared house in what looks like what was built as social housing for a local authority, pays a significant percentage of her income as rent, and has no expectation of ever owning. The apartments that were purchased for four or five times annual salary are probably eight to ten times now.

And this isn't even a generational thing. There's ten years between my older brother and younger sister.

Incidentally, my older brother renovated and sold his house in 2006 and used the money to fund a move to the US, where he married his girlfriend and complete a university course. His friend sold up in Fulham, having extended into the loft space, and used the proceeds to purchase an apartment outright in Brighton. And my friend still owns her flat in Southfields, which is now a cashflow positive rental, with a serious amount of equity in it.

The thing is that this was all down to market timing and blind luck. House prices are at, or close to, record highs in various markets, including Australia and London, and I'd be confident to bet that those entering now are going to have a far harder and rougher time than those who first bought ten or fifteen years ago.

As for negative gearing, it's costing the government an increasing amount each year. I wouldn't be surprised if it's scaled back or restricted in some way before too long simply because politicians don't like growing liabilities.

 

[Dan_p]

The crash has already started in my opinion. However the removal of NG is still a whiles away. Prices haven't fallen enough and the government isn't desperate enough for tax revenue yet.

Wont investor activity in the market increase governement taxes?

 

[Tehanu]

Wont investor activity in the market increase governement taxes?

(1) At the point this sort of thing occurs housing market activity is basically dead anyway.

(2) At this point governments will have much more urgent short-term priorities such as bond vigilantes (and in Ireland's case the Troika) who demand austerity. Hell, Australia is already going along the austerity route and it hasn't even got to this point yet.

(3) Investors, along with bankers and developers get much of the hate post-bubble. NG in particular has been heavily criticised by prominent economists such as Saul Eslake and Ken Henry. It has even started being a political issue. The popular story post-crash will finger NG as one of the key culprits. Hence it will likely be one of the targets. Supporting NG post crash will be as popular as being seen lunching with bankers.

As the head of the Irish Central Bank said recently about assistance for property investors:

http://www.irishtimes.com/newspaper/finance/2012/0319/1224313529722.html

The banks would appear to have lost the first round in this battle following the decision to include secured debts – ie residential mortgages – in the new insolvency regime. The next fight looks like being over buy-to-let mortgages. The new insolvency regime is ambiguous with respect to buy-to-lets and the governor would appear to be trying to draw a line in the sand.

He may well succeed as there is clearly an opportunity to divide and conquer public opinion. Whilst the majority of people – including those with performing mortgages or no mortgage at all – would see some self-interest in residential mortgage forgiveness they may well baulk at letting buy-to-let investors off the hook.

Honohan himself pointed out last week that: “public policy could hardly countenance any debt relief arrangements that in practice discriminated in favour of middle and high income people when so many households – debtors and non-debtors – have had to fall back on social protection payments.”

I believe all of the American government schemes are purely aimed at homeowners and leave investors out in the cold too.

 

[MIW]

....hmmm, little bit more to it than that. You've just insulted almost every person on the forum by trivialising all who have worked their butt off, saved like crazy, sacrificed important things, performed detailed due diligence, negotiated hard, taken risks, continued to take risks, been at the mercy of Lenders and Govts, put up with lopsided laws...and whinging Tenants, managed PMs, tight cashflows etc etc etc.

Yes, a little more than just "caught the wave at the right time".

Lefty socialists always try and demean those trying to get ahead in the world, especially in favour of those not willing to put in the hard yards, but your simplistic "just" statement is beyond the pale on an investor's forum.

Your leftist ideologue generates opinions that are clearly unsupportable. We shall have to disagree on almost every point.

Dazz, you are right. I personally felt a bit cheated about the " caught the wave at the right time" comment.
I totally believe anyone having a will to buy a place could do it if it was their priority no matter what the cost. The journey may take sacrifices (some of those you had mentioned) and may just take longer time.
Even though I read somewhere that most here are above 35 years of age and it seems we were lucky to caught that wave I disagree with this statement.
I once was young too and perhaps different decades provide different challenges that's all.
So a brief story about my first PPOR.
I met my hubby in the first year at UNI (being a migrant and living here for just about 6 years) and we married in the second year. He was awaiting his permanent visa so he wasn't allowed to work and study for the next 18 months.
I finished UNI and we went to live with my parents to save for a deposit. We lived in one room for the next two years and saved $55K net (both earning $60K gross per year).
Bought a house SW Sydney (considered by some in country NSW), close to parents, at top cycle for $185K when parents 2 years prior bought for $90K (so prices increased tremendesly then).
Interest rate was 16.5% so we were short $5K seeking $135K loan and banks would not lend.
Luckly, I was a good employee (worked 2 hours extra every day on salary so did not get paid for that) and the company helped and lend the money. So at the age of 23 we bought our PPOR.
In that time we never went on holidays, took sandwiches to work, ate at home, delayed starting a family (having children), had second hand furniture from St. Vincent de Paul, had a second hand car, travelled over 3 hours a day to get to/from work, had basically very plain life. Also, during that time we had the 'recession we had to have' so had no salary increase but were rather terrified of losing our current jobs.
Each week I would regulary go to the bank branch and prepay our loan (about 1 wage would go onto the mortgage). In 5 years we paid the loan off.
We practiced what is called delayed gratification!
Even our children today do not understand the sacrifices each generation had make so they could get ahead or to acquire their PPOR.
I find it interesting how each generation following assumes it was different times and easier. It wasn't easier but perhaps yes different times. It was just different sacrifices and different challenges like each generation did and will face ahead too! That's all IMO.

 

[Dazz]

Outstanding post MIW - some real life hard yards, like many on the forum have done.

Slightly more than just "catching a wave" indeed !!!