Three monkeys all right. Local, state and Feds, all passing the buck and refusing to take responsibility. Yet another example of our over-government resulting in poor outcomes. And is it true that we pay first home buyers grants to international investors in our housing market?

Estelles asks:

… # And is it true that we pay first home buyers grants to international investors in our housing market?#

Here is an excerpt from an article (re; link supplied) applicable to NSW:

http://www.dailytelegraph.com.au/news/nsw/foreign-buyers-are-cashing-in-on-nsws-new-home-grant-scheme/story-fni0cx12-1226817242757

#Under the first homeowner scheme, a buyer - and in the case of a couple, at least one of the two - had to be an Australian citizen and they had to live in the home for at least six months to qualify.

But, under the New Home Owner Scheme introduced in the 2012 state budget, buyers can own multiple homes in their country of origin and still apply for the grant for the purchase of Australian properties.

They don't have to live in it. All they have to do is apply through the foreign investment review board to buy.

In fact, if an overseas buyer were to buy 20 off-the-plan apartments, they could apply for 20 $5000 grants, Treasurer Mike Baird's office confirmed yesterday. The grant is paid as a discount on stamp duty for properties worth up to $650,000 and vacant land worth up to $450,000.#

…Why do we, as citizens of this claimed “Great Country”, suffer such indignities without protest?

I suggest that anyone posting a comment on this item, and the author, read George Monbiots article, Homesick, published early this month.

The tax law in the UK and in Australia is weighted very heavily in favour of the speculator and investor and against the younger potential home owner.

Monbiot's article mentions the son of a UK government minister who spent about $6 million buying 40 council flats when the Thatcher regime decided to privatize council housing. Those flats have increased in value by a factor of three and the investor is gleaning $1,500,000 pa in gross rent.

Monbiot blames faults in the tax system for the whole house bubble problem.

How many wage plugs in Australia know that anyone whose only income is franked dividends pays no tax.

I did the exercise yesterday for someone grossing $120,000 per annum in franked dividends. After deducting the franking total from the calculated tax, they receive a small refund! That continues up the income scale with no apparent limit, except for small, usually temporary, levies.

That franking fault in the system is attributable to Hawke and Keating

Apart from saying, that I agree wholeheartedly agree with DD and foyle. My only additional commentary is.
Negative gearing, [the emperor's new clothes of a housing poicy] has just got to go.
We are the only nation with, [absolutely positively,] dumb enough leaders, [the best I've ever seen,] to have one!
Consequently, we have the second highest house prices in the world!
Sydney is now the world's most expensive city, where a bedsit, costs more than the single pension!
Then we wonder, why we, in this rich and oh so lucky country, have over a hundred thousand homeless!
Whats next? Tent cities and soup kitchens?
Well we are the lucky county!
Shame, all you so called leaders, shame!
Rhrosty.

...The question must be asked; is there available to Australians, an alternative action (to reliance on Politicians), which will force a desirable political outcome to assist availability of affordable housing urgently?

...The time appears ripe to test the resolve of the “housing dispossessed”, (and the Government), for an orginised rent strike! This is a historically proven weapon sure to force attention to the huge problem high rents and housing unaffordability has created for the majority of Australians, as a direct result of Government policy!

Not only is it extremely difficult for first home buyers to purchase a home in Australia, those that are able to could well find themselves in the nightmare of negative equity if or when the housing market collapses.

Speculators and investors can simply write off their losses. First home buyers, however, will more than likely be in 'dead money' debt servitude for life. (No US-style 'leave the keys and walk off the property' laws here).

One possibility that first home buyers should look into is buying overseas. Countries like the Philippines and Malaysia have much cheaper housing and a growing market. Countries like Ireland and Spain have very cheap prices after their housing collapses.

If you own a house or apartment in one of these countries, the net income from rental can then be offset against renting in Australia.

Buying overseas does involve a bit of mucking around and a lot of research, but it's a much safer bet than first-time buying into a dangerously overinflated Oz market.

Neither side of politics wants to talk about housing affordability. Rather, they would rather ramp up immigration levels and also allow non-residents to buy up Australian property at unprecedented levels. Young Australians are literally being priced out of the market by foreigners.

when I see cafes charging $6 coffees, bars charging $6 beers and restuarants charging $40 main courses full of aspiring first time home buyers you realise that things are not as simplistic as you might think. Added to this the bogan buses filled daily to Phuket, Bali and other places and you realise why many can't afford to pay for the 4 bedroom mansion or trendy inner city apartment that they desire so much but aren't prepared to make to many sacrifices to obtain. Strange world that we live in. Doing away with negative gearing is bound to create a huge rental shortage in capital cities which is often ignored.

Choosing to live on a tight budget for a few years and make a few sacrifices does not seem to be in the picture for many spoilt from day one of birth.

There is a reason for this, Foyle.

>>How many wage plugs in Australia know that anyone whose only income is franked dividends pays no tax.<<

Here's the definition:

"Definition of 'Franked Dividend': An arrangement in Australia that eliminates the double taxation of dividends. Dividends are dispersed with tax imputations attached to them. The shareholder is able to reduce the tax paid on the dividend by an amount equal to the tax imputation credits. Basically, taxation of dividends has been partially paid by the company issuing the dividend... Essentially, the company pays a portion of the tax that you would owe if the dividend was unfranked."

As for your example - "someone grossing $120,000 per annum in franked dividends" - have a think about how much capital would need to be tied up in those investments, in order to get that level of franked dividend.

Try a few examples first, and take a look at the dividend history for the past five years. That's a mountain of cash tied up, right there.

@runner, Saturday, 14 June 2014 1:52:27 PM

Pithy and spot on.

runner

When is the last time you bought a house? 1970?

This whole mess could have been averted if banks were told to insist on a 20-25% deposit. Now our houses are 40% over valued.

The biggest correction of all time will happen soon, so prepare well as our banks have enormous derivative exposure and assets that are way over valued.