Pericles,

When I related that we "bought a house recently for $660,000. The independent valuation of the house is $450,000" I was demonstrating that the land value was well below the house replacement cost(construction not including demolition). My wording was clumsy. I should have said land and house for $660.000. Sorry for that. Another poster had commented that land was the highest cost component, which it often isn't.

Regarding your comments on the figuring by the Centre for International Economics, government itself includes all conceivable inputs when criticising policies, but government rarely if ever provides any specifics of its calculation. So what the Centre did was fair enough, and at the end of the day someone has to pay regardless of how an economist might treat the tax on the books.

As for infrastructure, we pay taxes for improving the Wivenhoe Dam -the original Stage 2 has never been constructed- and for other dams that took years (and $millions) in the planning but never eventuated (eg Traverston). Those taxes increased the cost of land development and land-house packages. The 'once off', 'special purposes' taxes remain forever. Just another way of increasing taxes.

It is demand that drives house prices, with serious peaks and troughs being linked to (ham-fisted) changes in government policy. Home prices in SE Queensland for example have been driven for many years by over-enthusiastic federal immigration policies and poor government planning (State and federal). Although there is not a great deal that State Premiers could do where the federal government was continually setting new records in migrant numbers and the new arrivals ended up in the major cities.

Investment is really a double-edged sword. On one side it drives up the profits & on the other side it drives up unaffordability. This is failing the community dismally. People always whinge & bitch about the poor & the rich but they're just watching as the poorer are exploited to last degree because the poor themselves are constantly on the lookout to emulate the rich.
Until some sort of investment regulation is put in place nothing will change. To become rich should involve expertise, knowledge & above all fairness. The notion of "writing it off" is in my opinion a stupid & corrupt one. Let wage earners write off their spending mistakes or dud purchases & they too will be better off.
In my opinion no-one needs more than one home & should not deny others the opportunity to buy one by driving up the prices of several properties without adding any value to them.
How many times has a council made several blocks available & one developer bought the lot. That might be a good technical move for the developer but so far as a community is concerned it is immoral.

" The notion of "writing it off" is in my opinion a stupid & corrupt one." Huh? So interest paid to hold an asset should not be deducted from income gained from the asset or the capital gain it accrues before determing income or capital gains tax?

Who would invest on that basis? Ah yes, the state would (have to) invest. Perhaps a stint in a failed socialist state (all socialist states are failed) would help you see the light, Indy.

Who would invest on that basis?
Luciferase,
Well, definitely not those who are wrecking everything now ! To care about others means to not deny them reward for their effort & vice versa. We should not but do, handsomely reward little effort. The whole system is ar$e about in favour of those who aren't capable of doing things themselves. The businesses use others' money i.e. write-offs & the senior public servants pay themselves with our money for absolutely nothing in return.
Look at housing for example. A house gets bought for 400 Grand, it is lived in for a few years & then sold again for 600 Grand. What has been done to that house that is worth 200 grand apart from new curtain rails ?
People are so engrossed in trying to make a profit that they can't see they're wrecking everything for everyone. Ever heard of change ? As in looking at something that doesn't work & changing it such as our Tax system & business practices ? Highly naive I know because it requires integrity.

"A house gets bought for 400 Grand, it is lived in for a few years & then sold again for 600 Grand. What has been done to that house that is worth 200 grand apart from new curtain rails ?"

You'll have to ask the person who buys it for 600K, Indy. What do you think might possess him/her to pay that? Inflation? Supply and demand? Improved amenity?

In a competitive capitalist economy, if you now want the same nice house for 400K you may have to buy it in a less desirable location, Indy.

Luciferase,
If our inflation rate is indeed that high then surely it can't get any clear that the system is broken. But it isn't that high is. It's the greed rate that's going through the roof & it is sanctioned by incompetent authority. I look at bank interest rates for example where interest is more than the loan. I suppose you could argue our inflation rate based on that but shouldn't we then take the banks to task ? That Bangladeshi Gentleman, yes gentleman, who even received a Nobel Prize for his noble service of providing bank loans to the poorer to enable them to make a start in small business. This man offered low interest rates instead of "writing off" at the taxpayers' expense. Not only is our system unfair it is outright corrupt. Hundreds of millions of taxpayers money is spent on advertising the corrupt system but id an individual owes the ATO ten bucks they'll haunt them at great expense to no end. What a lovely system ! Super fund Managers are going to wall by design evm after having "written off" millions in so-called expenses & the investors lose all. Great system yeah !
Star looking at it yourself, the list of loopholes is nothing short of endless. Start managing or get out if you can't make it without maggotting off everyone else. You hear Government & business !