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> I'd suggest to keep working in the U.S. and invest in housing back in Australia. As it happens I do own a house in Australia that is rented out but when you'

by cletus 16y ago

> I'd suggest to keep working in the U.S. and invest in housing back in Australia. As it happens I do own a house in Australia that is rented out but when you're paid in one currency and your costs are in another you open yourself up to exchange rate risk. So I'm way of overweighting myself in AUD liabilities. It's not a currency I'd be betting against in the next 10 years. Likewise, the USD looks like it'll only get weaker in the short to medium term. Pretty much every government here has a budget in deficit and you may find local and possibly even state governments defaulting in years to come. The US governments (at every level) seem to have made the same mistake as many individuals: when times are good they simply increase spending to match or exceed revenue. When revenues drop they're in a bad position. The US has this huge Sword of Damacles hanging over its head in the form of Social Security. It's ultimately unsustainable in its present form. Everyone knows it. Nobody wants to do anything about it. At least in Australia we've been moving towards funding our own retirements for decades. We're not there yet but we're a damn sight better off. As for buying houses near the beach, not in any capital city I know about (except maybe Brisbane now). Certainly not Perth or Sydney. In Perth you'd have to go 50km+ north of the city to get anything remotely close to the beach for under $500k. And the idea that property near the beach "will never go down" is exactly the kind of thinking that led to the subprime meltdown. As for the Australian tax system, mine was't a criticism, merely an observation. Frankly I think any system that encourages people to create homes for others to rent as doing a public good. After all, when someone rents, somebody else by definition has to own that house. One other difference worth pointing out between the US and Australia is that in Australia interest rates are typically variable. They move mostly in lockstep with the official (Reserve Bank) cash rate. You do get fixed mortgages but they're rarely for more than 5 years. In the US, mortgages seem to be fixed for the 30 year life of the loan. This actually makes buying in the short to medium term attractive in the US as interest rates can only really go up. 4% fixed for 30 years is a hell of a deal.

jacques_chester 16y ago
> Frankly I think any system that encourages people to create homes for others to rent as doing a public good. All good and well, but land releases have not kept up with demand. A supply of cheap money from the US, the mining boom and negative gearing have lead to massive increases in housing prices in the past 10 years. It's not sustainable, IMO. We in Australia brag about sailing through the GFC, but if inflation breaks out, the Reserve Bank will hike up rates mercilessly and a lot of people won't be able to cover the interest on their $3-500k McMansions.
- cletus 16y ago
  > All good and well, but land releases have not kept up with demand This point I've heard too often and it's one I vehemently disagree with. Australians need to get over this quarter acre with a 250sqm house nonsense. What's more the government should stop subsidizing it to the degree that they are. It's not simply a question of land but all the infrastructure that goes along with it: water, power, roads, schools, etc. There is no God-given right to build out rather than up.
  - jacques_chester 16y ago
    I've heard your argument too. It's been the guiding thought behind slow land release -- that it will lead to higher density. That and the fact that it expands stamp duty receipts. But that overlooks the fact that overly complex zoning laws, NIMBYist resistance from residents and the odd spot of outright corruption has basically prevented density from increasing. Density has its costs too. It's cheaper to extend a sewerage and water network in a greenfield project than it is to dig up and replace it in a densely settled area. It's cheaper to maintain small streets than large streets.
    - cletus 16y ago
      FWIW http://www.wired.com/science/planetearth/magazine/16-06/ff_heresies_01cities http://www.wired.com/science/planetearth/magazine/16-06/ff_h... As far as stamp duty goes, IMHO that system needs to be abolished. Property taxes should be applied smoothly rather than transactionally. For one thing, stamp duty reduces the flexibility of the labour market. Consider: someone owns a house in Sydney worth $1 million. They're offered a job in Perth for, say, $150,000. Now to sell up and buy a new house in Perth they'd need to pay $50,000+ in stamp duty before you even get into agents commissions and whatnot. Why should someone take such a huge initial hit? Unless they didn't have a job where they are or the new job was substantially better, they're best off not moving.
      - jacques_chester 16y ago
        You're right that the carbon footprint is lower, but that doesn't change the fact that the collision of politics and economics has prevent urban density from increasing in Australia. We need both to release land and increase density or will are beggaring ourselves unnecessarily. As for stamp duty, the states rely on it too much to give it up.
snagage 16y ago
> Frankly I think any system that encourages people to create homes for others to rent as doing a public good. I don't see the tax breaks as a good thing as it skews market forces and inflate property prices. They also throw up a moral dilemma: Why should property investors get tax breaks (offset interest payments against personal tax) and not home owners. What you start to see some single young professionals in Australia doing is buying an investment property to lease out and then renting another property to live in themselves. This is to take advantage of the government-funded tax breaks. So the flow of money goes a little something like: government tax revenue -> property prices. I can't see this helping the public good at all.
- whatusername 16y ago
  Moral Dilemma? It seems a logical way of treating it. The additional income is treated as taxable income. The additional expense (aka Interest) is treated as a deductible expense.
  - snagage 16y ago
    1. It's deducted against personal income. 2. Nobody is allowed to do it on their own home
    - whatusername 16y ago
      So is a company car if you're a sole trader... But I can't write off my normal car. It's relatively consistent.

by cletus 16y ago

jacques_chester 16y ago

> Frankly I think any system that encourages people to create homes for others to rent as doing a public good. All good and well, but land releases have not kept up with demand. A supply of cheap money from the US, the mining boom and negative gearing have lead to massive increases in housing prices in the past 10 years. It's not sustainable, IMO. We in Australia brag about sailing through the GFC, but if inflation breaks out, the Reserve Bank will hike up rates mercilessly and a lot of people won't be able to cover the interest on their $3-500k McMansions.

cletus 16y ago
> All good and well, but land releases have not kept up with demand This point I've heard too often and it's one I vehemently disagree with. Australians need to get over this quarter acre with a 250sqm house nonsense. What's more the government should stop subsidizing it to the degree that they are. It's not simply a question of land but all the infrastructure that goes along with it: water, power, roads, schools, etc. There is no God-given right to build out rather than up.
- jacques_chester 16y ago
  I've heard your argument too. It's been the guiding thought behind slow land release -- that it will lead to higher density. That and the fact that it expands stamp duty receipts. But that overlooks the fact that overly complex zoning laws, NIMBYist resistance from residents and the odd spot of outright corruption has basically prevented density from increasing. Density has its costs too. It's cheaper to extend a sewerage and water network in a greenfield project than it is to dig up and replace it in a densely settled area. It's cheaper to maintain small streets than large streets.
  - cletus 16y ago
    FWIW http://www.wired.com/science/planetearth/magazine/16-06/ff_heresies_01cities http://www.wired.com/science/planetearth/magazine/16-06/ff_h... As far as stamp duty goes, IMHO that system needs to be abolished. Property taxes should be applied smoothly rather than transactionally. For one thing, stamp duty reduces the flexibility of the labour market. Consider: someone owns a house in Sydney worth $1 million. They're offered a job in Perth for, say, $150,000. Now to sell up and buy a new house in Perth they'd need to pay $50,000+ in stamp duty before you even get into agents commissions and whatnot. Why should someone take such a huge initial hit? Unless they didn't have a job where they are or the new job was substantially better, they're best off not moving.
    - jacques_chester 16y ago
      You're right that the carbon footprint is lower, but that doesn't change the fact that the collision of politics and economics has prevent urban density from increasing in Australia. We need both to release land and increase density or will are beggaring ourselves unnecessarily. As for stamp duty, the states rely on it too much to give it up.

snagage 16y ago

> Frankly I think any system that encourages people to create homes for others to rent as doing a public good. I don't see the tax breaks as a good thing as it skews market forces and inflate property prices. They also throw up a moral dilemma: Why should property investors get tax breaks (offset interest payments against personal tax) and not home owners. What you start to see some single young professionals in Australia doing is buying an investment property to lease out and then renting another property to live in themselves. This is to take advantage of the government-funded tax breaks. So the flow of money goes a little something like: government tax revenue -> property prices. I can't see this helping the public good at all.

whatusername 16y ago
Moral Dilemma? It seems a logical way of treating it. The additional income is treated as taxable income. The additional expense (aka Interest) is treated as a deductible expense.
- snagage 16y ago
  1. It's deducted against personal income. 2. Nobody is allowed to do it on their own home
  - whatusername 16y ago
    So is a company car if you're a sole trader... But I can't write off my normal car. It's relatively consistent.