6 ms·

I mean the article agrees with you? It primarily talks about the unfairness of the current system, the NIMBY problem reducing housing stock and the issue of re

• elric 6y ago
  > a minimum 5% deposit + 3-5% stamp duty Oh wow. I had to read the rest of your comment twice to understand that you were saying these seem high to you. They seemed really low to me. To put it into perspective, you need a 10-20% deposit in Belgium (depending on various factors) and there's a 6% tax for an old house (10% up until very recently) or 21% for a new house. It's basically impossible to buy a house if you're young or single or come from a poor family. I feel your pain.
  • pc86 6y ago
    Is that tax added into the mortgage as a lump sum (meaning you pay interest on it for the life of the loan) or is it added to the payment each month?
    • dbetteridge 6y ago
      Not sure how Belgiums works, but Australias stamp duty is a lump sum you pay alongside your deposit when buying the property. Correction: I double checked and it looks like it can be added to your mortgage, which isn't as bad up front.
      • pc86 6y ago
        That's rough, although paying it once and being done with it is certainly preferable (long term, if you have the funds) to wrapping it into the mortgage and paying 3-4x over the life of the loan.
        • rileymat2 6y ago
          Functionally it is wrapped into the loan because without that, you would have had more down payment.
      • gassit 6y ago
        That is not quite correct. Stamp duty is payable at the time of settlement but it is normally added as a lump sum to the mortgage.
        • dbetteridge 6y ago
          I've added an addendum! I must have misremembered that bit of info. Thanks!
    • elric 6y ago
      Lump sum in Belgium. You might be able to get away with tacking it on to the mortgage, but only if you have additional collateral (another home, rich parents, whatever). Or maybe if it's a really cheap house.
  • dbetteridge 6y ago
    Yeah sorry poor wording on my part, as a percentage it is low but as a percentage of income it is pretty high. A 20% deposit is minimum to not have to pay a 'Mortgage insurance' which gets added to your mortgage to cover the bank if you default. Belgium sounds like an even more painful situation, sucks for those of us who would just like to have a stable place to live and be allowed to add some personal character to (not allowed in most rentals ive lived in)
    • elric 6y ago
      Oh yeah, I forgot about the insurance, which is officially "not required", but no bank will give you a mortgage without one. Depending on how you decide to pay for it (installments vs lump sum), that can end up being another significant expense.
  • tuukkah 6y ago
    In comparison, in Finland the stamp duty is 0% when you buy your first home while you are under 40.
    • jorvi 6y ago
      > while you are under 40 This seems such a weird condition to add. Someone who doesn't earn much but saves up over 22 years for a house has to pay stamp duty on his first house, but someone privileged who can buy a house when 30 years old doesn't?
      • luch 6y ago
        I agree, it's better to differentiate based on revenues rather than just age. In my country, if you're poor and if it's the first house you buy, you can ask a 0% tax loan from the government and use it to pay your stamp duty with it.
      • tuukkah 6y ago
        I fully agree. I guess the intention may have been to make people hurry up buying or building while young. One of the major political parties here (Centre Party, the agrarian-liberal party) wants people to live outside of the cities. Finnish cities are so small that it's easy to commute from a place with plenty of cheap land and thus it's possible for most people to buy or build a house there if they want to.
        • piva00 6y ago
          Isn't this the same basic principle that drove American suburbia? Expand the outskirts with building houses on bigger plots of land and empty the city centers. It just seemed to have killed city centers in the US. Granted that Finland has a very different culture (disclaimer: I live in Sweden) and we aren't in the 50s anymore to invest heavily on a car-centric society but incentivising people to move away from city centres can have unpredictable consequences 20-50 years down the line.
    • himlion 6y ago
      The Netherlands has just implemented something like this as well, but so far nothing has changed for the better for starters.
  • rwmj 6y ago
    What's the reason for the strange difference between the tax on old and new houses?
    • mrslave 6y ago
      Developers lobbying politicians. And because jobs! Is win-win[-everybody-else-loses].
      • KptMarchewa 6y ago
        Shouldn't the new houses have lower tax then? Why would developers lobby for lower taxes on old houses?
        • mrslave 6y ago
          > Shouldn't the new houses have lower tax then? Why would developers lobby for lower taxes on old houses? Sorry if my first comment was a bit coy and unclear. Both ancestor comments are about Australia & Belgium. Google tells me that in Australia new properties are incentivized over old: >Grant: First home buyers can access a $10,000 grant when purchasing or constructing a new home, regardless of how much the property is worth. Stamp duty concessions: The territory government provides an up to $18,601 Territory Home Owner Discount (THOD) on stamp duty costs for first-time buyers. My Aussie friends tell me this changes frequently, that it also differs by state, but some sort of incentive to prefer new properties have been policy for a long time. GP says that Belgium penalizes existing houses: >a 6% tax for an old house (10% up until very recently) So there aren't lower taxes on older properties in either country. You get a discount on the taxes only when you purchase a new property, which is an incentive in alignment with the interests of property developers.
    • CaptArmchair 6y ago
      Belgium has complex housing and zoning problems caused by 50 years of inconsistent policies and regulations. One (of many) big issue(s) is that the past has seen unchecked claiming of land for new projects leading to an acute shortage of land, while lots of existing houses and buildings are entirely outdated. We are talking about houses which are 60 or 70 years old typically located in densely pouplated urban agglomerations and haven't seen little to no remodeling whatsoever during that time. These are hardly isolated, difficult to heat, are entirely outdated in terms of utilities and plumbing and so on. The idea behind the difference is to incentivize people to buy and renovate older, existing houses and curbing the further occupation / use of free & open space with new construction and urban sprawl. It should be noted: Belgium is also a country with an incredibly complex fiscal system. There are taxes as well as tax breaks on every aspect of life. Belgium is a complex federal nation with many levels of government. To put that in perspective: it's a country with 6 different governments. All of which turn politics and policy making, unironically, into 5D chess. The fiscal system tends to be the arena where everything comes together, generally as a compromise which is often more founded on pragmatism then necessity. Historically, home ownership has been, and still is, massively incentivized in Belgium. But just like everywhere else, soaring housing prices and an ageing population are causing issues for younger generations who can't buy property without financial help from their parents. And so, young people find themselves in a bind. They can't just buy any property, market dynamics and public policies push them towards buying outdated property only to face long, drawn out and expensive renovation projects just to bring everything up to date with modern, strict construction codes.
• pc86 6y ago
  Buying a house for 10% down all in would be a dream in the majority of the US. Yes, FHA or FDA allow 3.5% or even 0% down in some circumstances but you're going to end up in an undesirable area (FDA) and be paying hundreds a month for mortgage insurance (both FHA and FDA). Which, while it sounds like something everyone should have, is you paying for the bank's insurance in case you default on the mortgage. To avoid this insurance you need 20% down after all fees so with realtors' commissions and all the pre-purchase expenses you're much closer to 30% down all in.
  • bluGill 6y ago
    Realtors commissions? There are none, the seller pays those in almost all case. It is possible to hire a buyers agent who works for a fee from you, but that isn't common (and I'm not sure how it works) so I'll ignore it. There are closing costs, but they are not a percentage in general.
    • ipaddr 6y ago
      If the seller pays the buyer is the actual one who pays.
      • bluGill 6y ago
        In this case that isn't true because the seller is paying out of the full value of the house. When realtors decide give a discount (ie when working for a friend, or other marketing), the seller gets more money and the buyer doesn't see any difference. There are other ways of looking at it where you are correct.
    • akomtu 6y ago
      Without a buyer agent, the buyer can get a 3% discount on the sale price.
  • ihattendorf 6y ago
    We recently purchased in a large US metro area all-in for ~6% out of pocket. It didn't make sense for us to pay > 5% down on a conventional loan with interest rates below 3%. Depending on who you go with PMI rates can be as low as 0.25% of the loan value/year (~$20/month per 100k) if you have good credit.
• daemin 6y ago
  Also given that the median house prices are just below a million in Melbourne, and "slightly" above a million in Sydney, it makes saving up 20% for a deposit quite an endeavour. Then you need to account for all the other fees and stamp duty as well adding a few more percentage points of savings required. The big problem in Australia is that nobody really in the government wants to do things to make houses more affordable. Anything that would immediately lower house prices would be a disaster for the political party and somewhat for the country. In fact the government has been doing all it can to keep house prices rising further and further. First by adding a first-home-owners' grant, which just increased the prices of cheaper property, and most recently by allowing people to take money out of their retirement savings to buy a property. All this does is just add more fuel to the real estate market so prices would increase. The only real way to lower prices would be for a genuine crash to happen, one where the government would be incapable of doing anything to prevent. The other would be to get rid of negative gearing, maybe just for existing property initially, so that people won't leverage up the eyeballs buying more and more investment properties.
  • dbetteridge 6y ago
    Yeah Melbourne and Sydney are just insane, First home owners grant is great on paper but essentially covers none of the expense of buying a first home and like you said encourages the prices to increase even further. I'm on a decent salary by Australian standards and am going to be waiting at least 2 more years before I can afford a 10% deposit (have been saving for several years already at a lower rate). Just have to hope all the decent land/houses are still around by then and that the house prices dont outpace my savings.
    • verelo 6y ago
      I love, as an Australian, waking up in the morning seeing the Australians all talking. During the day it’s all North Americans, but obviously this is a game of time zones. Anyway. I just wanted to say that, and also, this issue is seemingly everywhere. I’ve been in Toronto Canada for over a decade now and prices have gone crazy for almost that entire time. When i arrived a house in the city was 350-400k, that same house today might fetch 1.6m, or if renovated I’ve seen them sell for as much as $3.8m
• dslkfjg 6y ago
  Population is going down in the developed world. The housing supply is not. If you can't afford housing where you live, then it can only be because more people are demanding housing where you live, having left where they were previously living. The solution to the "problem of home ownership" is to stop making areas undesirable places to live. Portland springs to mind but there's San Fran. NYC, L.A. but it's not just the Big Blue cities in the US and elsewhere, it's nations run by totalitarians everywhere. The solution is to export prosperity around the world. Then we can all enjoy the benefits of the developed world's population crash which translates into cheaper housing, amongst other things, both good and bad. Since The Economist is looking everywhere for the West's biggest mistake, today's their lucky day, I happen to have it right here. The West should have demanded of China and every other non-democratic regime in the world, as a condition of receiving manufacturing and industries and the privilege of importing their products duty-free, that they liberalize their political systems in ways which are hard to reverse. This had the power to transform regions from Mexico and Central America to China. We could have created a schedule of increasingly substantive requirements composed of democratic institutions, free speech and political assembly, (truly) free markets and anti-corruption metrics which had to be met in order to benefit from trade with the West. But we didn't. We didn't because a small group of industry beneficiaries made small and large fortunes by outsourcing the West's industrialization. They leveraged the lack of environmental and labor standards endured by the world's poor, living under corrupt and totalitarian regimes, to lower the cost of goods sold then sell back into the first world at first world prices. That's what the elite have been doing since Clinton gave China MFN status and even before. Now no one in the West can afford the most basic thing every mammal requires- a place of their own. A home. A burrow. A nest. A place to which they can retreat, which they can control and experience sheer animal comfort and safety. Now even that has to go to satiate the boundless greed of our elites. The only thing left for them to come after is reproduction. We should probably also start thinking about turning our mates over to them, since they can provide for them better than we can.
  • kwere 6y ago
    dont fool yourself, big capital always preferred "pragmatic" regimes over accountable democracies.
• lormayna 6y ago
  You are lucky, in Italy the average net salary is around 1400€/months and a 2 bedroom flat costs between 150k and 200k euro outside big cities. So you need at least 12 years of full working to repay your house.
• FredPret 6y ago
  This could partly due to an aging population. People hold on to assets longer, getting more appreciation before they sell to the younger generations. It’ll balance out when our lifespans max out somewhere (perhaps never?), and productivity is improving with technology as well, likely helping the situation somewhat. This is not the only factor however.