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If you already own a home that appreciated to $800k+ then trading in to buy at $1M doesn't seem as bad. Prices seem silly to me here too (Australia) but a lot
by hnick 5y ago
If you already own a home that appreciated to $800k+ then trading in to buy at $1M doesn't seem as bad.
Prices seem silly to me here too (Australia) but a lot of it seems to be a combination of the perception that house prices just always go up, so you have to "get on the ladder" as they say and trade your way along. Each step doesn't seem to be a huge investment in itself. If you don't hop on, then you get left behind.
- sgt 5y agoBut that means moving all the time. Yes you will trade yourself to the best house in the end and perhaps to a much better neighborhood, but moving can be a bit traumatizing...
- hnick 5y agoOne option is to move as you change jobs. But tax law here also makes loss-making investment properties attractive to people, and borrowing against equity is another thing. Interest-only loans (as interest is a deductible investment expense), plus other expenses (all the better if it's in a nice holiday destination so flights and hotels to "inspect the property" are deductible), resulting in a minor loss on rent, which is offset against your primary salary and other investments. Negative gearing like this allows people to basically zero out a house on the balance sheet and move on to buying another. Let it appreciate for a few years and you're ahead. Be a major voting base and politicians won't dare ruin your gravy train.