rehtcub,

Where I live, there are over 1,000 vacant houses, and it is now quite common to see “For Rent” signs out in front of units and houses, as well as the innumerable “For Sale” signs.

Why is this when there is supposedly a housing shortage?

It is because there are over 40 coal mines nearby, and real estate developers starting building large numbers of houses on spec.

But the construction of new mines ended, and the production phase employs few, and 1000’s of people left (and many actually went back to NZ).

So all the negative gearing amounted to over 1,000 vacant houses.

It shows just how much the economy depends on the mining boom, and if that dips, the full effect of Australia’s overpopulation will become very noticeable.

If something happens to China's economy, expect to see a huge increase of homelessness in Brisbane, Sydney and Melbourne (and there is minimal employment in rural areas for them either)

I personally don’t care if all the new and vacant houses in this town rot into the ground.

Most of these new houses had no yard, they had no eaves, they were hot ovens in summer, and were basically un-livable anyway, and would have given the inhabitants zero quality of life.

Yes Incomuicardo sound a bit like Mackay. The same thing is happening here in Miles, Chincilla and Dalby, hundreds of new homes vacant, some never been lived in, yet they continue to build more.

These homes were mostly sold to interstate invstors, with rental appraisals of $850 to $1200 per week, so on the surface, half a million seemed like a good investment.

Today, if you say to the letting agent, you are vacating, they usually ask if you woukd stay if the rent was reduced. Most rent today for less than $600 per week, some as low as $400.

The thing is these are isolated cases and not a true reflection of the overall market. Besides, these vacancies were largely brought about by greedy landlords, sucked in by the hype of huge rents, so the miners simply moved their workers into camps instead.

While the CSG industry is in a lul at the moment, it's tipped to go full steam ahead in September/October, however I doubt the half million dollar houses will see much increase in value. In fact, similar houses just eight years ago sold for $125,000 and land has gone from $7500 in 04 to $220,000 now. Something had to give, and it did.

I heard the other day that the banks view the area with cation now.

flat tax of 20%, that still taxes the wage earner
rehctub,
Not just the wage earner, everyone-business included, no if's no but's full Stop!

A company that borrows money to extend an existing manufacturing plant
can offset the interest charges against the income from the busines.
Bazz,
That's what's got to stop & stop it has to if we don't want to go down the gurgler. When you say investment you're really referring to speculation because once the profits start ebbing the so-called investment gets discarded quick smart.

None of that suggests there are 'greedy landlords' does it? However it does prove that investment in rental housing can be high risk.

Developers and mums and dads housing investors don't gain from oversupply. It is nonsense to suggest that 'negative gearing' was at fault too. It is much more likely that they were victims of the vicissitudes of the global market for raw materials. Also, I wouldn't wish financial failure on anyone. No-one gains and certainly not tenants.

Hasbeen and others have identified some relevant causes of rising prices. There are others, one being the expectations of home buyers (and tenants!). I have been involved in small scale residential housing developments and many here would be surprised at the skill set and risk tolerance necessary to make anything out of it at all. Losses are easy and the excruciating, complicated, often arbitrary and unpredictable bureaucratic approval processes that confront the owner-builder and developer alike are sometimes implicated. As well, government policy changes and interference in the market never help, always creating uncertainty.

Talking about expectations, the public need to be aware that demands made of government always have costs. I am not opposed to regulation for instance, but it needs to be based on evidence of need and benefit and to never be the first resort of headline-hunting politicians, or the lazy gutless ones who always choose populism. Politicians seem to have a very short term view.

I could talk about the additional costs of previously luxury inclusions now seen as 'necessary' by home buyer and tenant alike, such as the proliferation of bathrooms and airconditioning, but those who would read and think are already aware and the remainder are just not interested.

onthebeach, quite to the contrary in fact.

Take the small town of Miles as an example.

Pre CSG, 2005, a regular house rented for $80 to $120 per week. Last year, that same house, with a new kitchen and new paint and floor coverings, rented for $500 to $800 per week, simply because land lords got greedy. And I guess you can't blame them.

Today, that house is back around the $350 mark and dropping.

I heard of an elderly couple who had rented this house for twenty years and, Pre CSG their rent was $80 per week.

Over a space of about four years, they had to leave, because their rent had reached $700 per week.

No matter which way you look at it, that's greed.

But I agree with your view on people's expectations, as I often say that while many people could afford 'A' house, they want 'THE' house, and there in lies the problem.

As for government regulation on rental properties, I saw this coming and just knew that placing more and more restrictions on landlords would see a spike in rents.

Now while I understand few people want to live in poor quality housing, the fact is, that's all some can afford. And the days of, il supply the materials, you do the work, and il knock a few bucks a week off the rent are gone.

Finally, I don't believe many investors sell property just because the tax break has been used up, as once a property becomes self funded, they generally go again, something that does put pressure on the market, so perhaps there could be a cap on NG, say the amount you can right off.

Perhaps property has to be treated like a charter boat, or a small farm, where a return to profit must be demonstrated to be eligible for the claim.

rehctub

The country is in a very precarious position if everything now depends on coal and gas prices.

The country now runs on debt and selling real estate, and I will have no sympathy for those who bought real estate hoping for capital gains, and then lose their money if countries such as China, Japan or the US hit the wall (and that is not unlikely at all).

But I would suggest what is happening in some rural towns will happen to the capital cities shortly.

Cities are a huge expense for the country, but there isn’t much in the cities except manufacturing and public servants (and I see no cultural value in places such as Brisbane, Sydney or Melbourne),

Manufacturing is reducing labour, and governments are reducing the number of public servants (because they can’t afford their wages or unfunded liability costs).

I have heard of people in Hobart complaining that the state government cannot reduce the number of public servants any more, because public servants are some of the very few people left in Tasmania who can afford to buy anything.