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People who can't afford to buy get stuck with borrowing costs being passed on, anyway, and get trapped in rent spirals. I do agree that some of the criticism of

People who can't afford to buy get stuck with borrowing costs being passed on, anyway, and get trapped in rent spirals. I do agree that some of the criticism of Lowe is undeserved, though.

Gigachad 4y ago
Rent rises are more the result of extremely low rental vacancies in Australia
- TheSpiceIsLife 4y ago
  Don't stop there. Extremely low rental vacancies are a result of? State governments, local governments, and property development, basically colluding to not build cheap and affordable high density housing.
  - chii 4y ago
    > State governments, local governments, and property development, basically colluding to not build cheap and affordable high density housing. australian taxation is already one of the highest in the world. In order for the gov't to build affordable housing (high density or not), it would take even more tax revenue to pull off. I for one, will not want to pay more taxes. The free market works for food, so why not have it work for shelter? The key sticking point is zoning issues, and approvals. These decisions are made at the local (council) level, and the existing residents overwhelmingly dislike a high rise going up next to their house/backyard. The other issue is that a large portion of real estate buyers want land ownership - ala a house. The thought of living in an apartment is at best a stopgap for them. Therefore, the capital appreciation of an apartment is meager at best. This also causes chronic underinvestment in apartments (esp. quality ones), and exacerbates cheap, low quality shitboxes that people dont like much (and reinforces the idea that they don't want to live in an apartment in the long term).
    - theteapot 4y ago
      > australian taxation is already one of the highest in the world. Where did you pull that from?
      - chii 4y ago
        https://wisevoter.com/country-rankings/highest-taxed-countries/ https://wisevoter.com/country-rankings/highest-taxed-countri... Specifically i'm gonna call out income tax in australia : Income Tax Rate 45% Ranked in the World #17 > ... This means that Australians are paying a larger share of their wages in taxes compared with other countries.
        BigJono 4y ago
        That site literally gives the overall tax rate as 28.68%, 42nd in the world. The US is 53rd, and the UK is 29th. The single figure of 45% is the highest tax bracket, which only starts at $180,000/year. Australia has a higher minimum wage than most countries, so a large proportion of the population are in minimum wage jobs. People on minimum wage here make ~$40k/year and pay around 14% tax. Not that any of that really matters if you're talking about government spending, since the overall tax rate is what determines government income, not what any individual person is paying.
        theteapot 4y ago
        Nice try. 1. Income tax is just kind of tax. 2. 45% is the highest tax tier in a 5 tier system, paid on every dollar over $180K. 3. The same site you got "#17" from says Australia is ranked #42 the World for an overall "tax burden" statistic ...
- firecall 4y ago
  Yes, but not totally. If I own an investment property, then I'm going to want a return on that investment. I want the rent payments to cover the mortgage, and to see capital growth over time. When you don't get decent returns on your property investment, you'll just move your investment elsewhere. However with a lack of diverse investment opportunities, housing is a decent play that people understand. So even if returns are low, it's seen as worthwhile, especially over the long term. This is especially true when you get the much hated "Boomers" and older X-Gens buying properties for their children as it's seen as a better use of money than their kids renting. I've seen queues of people down the street for open-inspections of average properties, and "Boomers" literally signing offers on the kitchen table at the open of any decent apartment. If property investors art investing, then builders will stop building and we'll deepen the housing crisis. We've already seen a few major building firms go under in the past 18 months. It's not easy to create a building firm capable of sizeable construction project. It takes years to trade school investment to actually train and qualify people to be able to build houses, and we've under invested in trade schools. There is a general sentiment on Reddit and elsewhere that if you cant afford the mortgage rises then you shouldn't own an investment property. This just doesnt make any sense, and isn't a useful way to think about it. I get that people are angry with the situation, but it doesn't help change society and housing policy when the younger millennials don't understand all the policy issues or motivations of those that own Rental Properties. :-) I see regular calls to ban AirBnb as if thats an easy answer... :-/
  - StopHammoTime 4y ago
    It makes perfect sense in a market like Australia. If you are making 15% appreciation YoY, your mortgage raises are covered and then some by that increase. If you do not have the liquidity to cover those raises, then get out of the market for someone who does. What you are describing is passing all the risk of your investment onto another party to take advantage of the entire profit. We do, in fact, understand ALL of the policy implications here. It seems like you don’t. The housing market should exist to PRIMARILY provide housing. Any effects such as you being able to cover your margin by passing on your increase to a tenant is a secondary benefit and should be curtailed to meet the primary need of the economy. Investments should have risks to make economic sense. In Australia, property owners have mostly been buffered from those risks. Economically, the question needs to be asked as to what value investors provide to the market? The current property investor class is for all intents a purposes a vehicle designed to remove money from the pockets of poor people and put it in the pockets of upper middle class people. Most landlords take bonds to fund improvements to their houses after a fingerprint is found on the wall or the concept of “reasonable wear” is not accounted for, they pass on almost all of the costs, and when a person asks for help with a problem they get ignored indefinitely. You would make similar money in the stock market but you are taking advantage of broken system that enriches people already in the system. Mortgages give access to houses because they are necessary. People now take mortgages and use them as a margin loan to fund speculation and investments. The policy answer is to stop allowing investors to access all of the benefits that have not been designed for them. Fixing the John Howard era middle class welfare rorts would begin to fix the problems.

People who can't afford to buy get stuck with borrowing costs being passed on, anyway, and get trapped in rent spirals. I do agree that some of the criticism of Lowe is undeserved, though.

Gigachad 4y ago

Rent rises are more the result of extremely low rental vacancies in Australia

TheSpiceIsLife 4y ago
Don't stop there. Extremely low rental vacancies are a result of? State governments, local governments, and property development, basically colluding to not build cheap and affordable high density housing.
- chii 4y ago
  > State governments, local governments, and property development, basically colluding to not build cheap and affordable high density housing. australian taxation is already one of the highest in the world. In order for the gov't to build affordable housing (high density or not), it would take even more tax revenue to pull off. I for one, will not want to pay more taxes. The free market works for food, so why not have it work for shelter? The key sticking point is zoning issues, and approvals. These decisions are made at the local (council) level, and the existing residents overwhelmingly dislike a high rise going up next to their house/backyard. The other issue is that a large portion of real estate buyers want land ownership - ala a house. The thought of living in an apartment is at best a stopgap for them. Therefore, the capital appreciation of an apartment is meager at best. This also causes chronic underinvestment in apartments (esp. quality ones), and exacerbates cheap, low quality shitboxes that people dont like much (and reinforces the idea that they don't want to live in an apartment in the long term).
  - theteapot 4y ago
    > australian taxation is already one of the highest in the world. Where did you pull that from?
    - chii 4y ago
      https://wisevoter.com/country-rankings/highest-taxed-countries/ https://wisevoter.com/country-rankings/highest-taxed-countri... Specifically i'm gonna call out income tax in australia : Income Tax Rate 45% Ranked in the World #17 > ... This means that Australians are paying a larger share of their wages in taxes compared with other countries.
      - BigJono 4y ago
        That site literally gives the overall tax rate as 28.68%, 42nd in the world. The US is 53rd, and the UK is 29th. The single figure of 45% is the highest tax bracket, which only starts at $180,000/year. Australia has a higher minimum wage than most countries, so a large proportion of the population are in minimum wage jobs. People on minimum wage here make ~$40k/year and pay around 14% tax. Not that any of that really matters if you're talking about government spending, since the overall tax rate is what determines government income, not what any individual person is paying.
      - theteapot 4y ago
        Nice try. 1. Income tax is just kind of tax. 2. 45% is the highest tax tier in a 5 tier system, paid on every dollar over $180K. 3. The same site you got "#17" from says Australia is ranked #42 the World for an overall "tax burden" statistic ...
firecall 4y ago
Yes, but not totally. If I own an investment property, then I'm going to want a return on that investment. I want the rent payments to cover the mortgage, and to see capital growth over time. When you don't get decent returns on your property investment, you'll just move your investment elsewhere. However with a lack of diverse investment opportunities, housing is a decent play that people understand. So even if returns are low, it's seen as worthwhile, especially over the long term. This is especially true when you get the much hated "Boomers" and older X-Gens buying properties for their children as it's seen as a better use of money than their kids renting. I've seen queues of people down the street for open-inspections of average properties, and "Boomers" literally signing offers on the kitchen table at the open of any decent apartment. If property investors art investing, then builders will stop building and we'll deepen the housing crisis. We've already seen a few major building firms go under in the past 18 months. It's not easy to create a building firm capable of sizeable construction project. It takes years to trade school investment to actually train and qualify people to be able to build houses, and we've under invested in trade schools. There is a general sentiment on Reddit and elsewhere that if you cant afford the mortgage rises then you shouldn't own an investment property. This just doesnt make any sense, and isn't a useful way to think about it. I get that people are angry with the situation, but it doesn't help change society and housing policy when the younger millennials don't understand all the policy issues or motivations of those that own Rental Properties. :-) I see regular calls to ban AirBnb as if thats an easy answer... :-/
- StopHammoTime 4y ago
  It makes perfect sense in a market like Australia. If you are making 15% appreciation YoY, your mortgage raises are covered and then some by that increase. If you do not have the liquidity to cover those raises, then get out of the market for someone who does. What you are describing is passing all the risk of your investment onto another party to take advantage of the entire profit. We do, in fact, understand ALL of the policy implications here. It seems like you don’t. The housing market should exist to PRIMARILY provide housing. Any effects such as you being able to cover your margin by passing on your increase to a tenant is a secondary benefit and should be curtailed to meet the primary need of the economy. Investments should have risks to make economic sense. In Australia, property owners have mostly been buffered from those risks. Economically, the question needs to be asked as to what value investors provide to the market? The current property investor class is for all intents a purposes a vehicle designed to remove money from the pockets of poor people and put it in the pockets of upper middle class people. Most landlords take bonds to fund improvements to their houses after a fingerprint is found on the wall or the concept of “reasonable wear” is not accounted for, they pass on almost all of the costs, and when a person asks for help with a problem they get ignored indefinitely. You would make similar money in the stock market but you are taking advantage of broken system that enriches people already in the system. Mortgages give access to houses because they are necessary. People now take mortgages and use them as a margin loan to fund speculation and investments. The policy answer is to stop allowing investors to access all of the benefits that have not been designed for them. Fixing the John Howard era middle class welfare rorts would begin to fix the problems.