Mr Smith, prime real estate can be purely about location, even if a slum stands there.

I don’t claim to know much about Melbourne real estate, but people behave in
similar ways, in many parts of the world and I tend to learn from that. What we
have seen in other cities, is areas close to a CBD, some area is redeveloped,
e.g. in Melbourne the Docklands area. Next thing high earning yuppies move
into adjoining working class suburbs, buy up the real estate and rebuild most
of the suburb. People like you might lament that fact, but that’s the reality of it.

As to my point which you ridiculed, I did some homework :) As we have been
discussing Melbourne, I had a look around the REIV website.

According to them, the median house price for metropolitan Melbourne, up to
Sept 07, had jumped from 340k$ to 431k$ in 5 years. That’s around 5.2%
per year. Inner city values, where the population is heading, have jumped
a lot more, to 677k$ Yet outer “affordable” suburbs like say Broadmeadows,
have grown from 175k$ to 216k$ in 5 years, that’s about 4.6% a year according
to my calculations. Clearly in these areas, actual house building costs play a major
role, not real estate costs, as in the inner city areas. That was my point.
If you compare regional areas, you will get a similar result.

As to why developers board up houses, how much of that has to do with
State tenancy laws? I don’t know Victorian laws, maybe somebody else on here
does. But in my experience, whilst there are silly investors, there are also plenty
of smart ones. Why would anyone board up a house, unless they had very good
reasons? Tenants provide an excellent weekly cash flow. The question is, how
easy is it in Victoria to ask them to leave, when the time comes to redevelop the
land and how easy is it to get rid of so called tenants from hell?

Just when it looked we were running out of classic misconceptions
Country Gal says :

“ The removal of negative greaing would simply result in higher rental prices. If you want to think of negative-gearing subsidising anything, it is subsidising rent levels.”

Really, how ?

To begin with most landlords (and their agents) charge as much as they can realistically expect to receive, - and rent at “market value”. Ie. a price that is as high as the market will bear.

Some might charge less as a favour to friends or relatives, others, maybe a bit less (just a little bit) in order to secure a stable tenant & minimise vacancy periods.

If you’re thinking that negative-gearing increases the supply of rental properties that notion is only relevant where it contributes to investment in new construction.
Put simply you can’t increase the supply of housing without building new houses,
An increased level of investment in established homes merely redistributes ownership among the existing stock.
By increasing the proportion of tenancies relative to owner-occupied homes it decreases the level of home-ownership (which is now down to 58% in NSW).

When there is a sell-off of investment properties those houses are not demolished nor do they evaporate. Someone moves into them. Supply does not decrease in relative terms because among the population of tenants there is always an ample supply of prospective first–home buyers ready to fill the gap.

Thus, as the number of rental properties decreases (reducing supply) the number of tenants (especially high-income tenants) decreases - reducing demand.
The proportion of first-home owners increases & that is how the rate of home-ownership increases. Currently the reverse is the case.

Yabby,

An unedited quote:

'House prices have increased at three times the rate of wages in capital cities over the past decade according to a new report.
The research by Deutsche Bank analysts Emily Behncke and Sally Clarke says “While wages have increased 56 per cent on average, house prices in Australia’s major capital cities have increased 168 per cent since June 1997”

Article: “City house prices easily outstrip wages” page 59 (‘Property’ section) Aust. Financial Review 25/9/07

I chose that one because it covers the subject entirely in 2 short paragraphs. There is plenty more where that came from. The Fin. Review isn’t available for free on the net -- but The Age is. Try this one:

http://www.theage.com.au/news/national/house-prices-world-highest/2005/11/30/1133311106610.html

The Age article is from 2005 but its excellent. I have some good ABS references on my PC but its out of action for a while. I’m currently using my Mac.

Anyhow that covers that. I needn’t elaborate.

On a more conciliatory note:

Earlier on you said: “us baby boomers can’t take it with us When we fall off the proverbial perch, we’ll pass it on to you younger lot. You’ll just have to be patient, we are not quite ready to go yet”

A good point & a worthy sentiment. The only problem with this on a broader national level is that “reverse mortgages” are increasing at a rate of knots.
Some people (god bless ‘em) are using these to raise finance for their kids, a far greater proportion however are using it to fund retirement. There is nothing inherently wrong that per se, they are entitled & many of them no doubt justified. Its just that in previous eras even the relatively poor often received an inheritance – now the banks get it instead.

- Mr Smith

Daggett “It is time that this Big Lie,”

Under the “lassez-faire capitalism” model which you criticise, you are entitled to disagree, indeed, the process is designed around diversity, not only of resources and individuals but also their views.

The “all powerful Government” model, which you seem to support, can best be described by its historic proponents and implementers

example

“While the State exists there can be no freedom; when there is freedom there will be no State.”

Of course, on matters of “truth”

“A lie told often enough becomes the truth”

The same anti-capitalist also noted

“The Goal of Socialism is Communism”

The essence of his views come down to this

“It is true that liberty is precious - so precious that it must be rationed.”

However, the practice was

“It is true that liberty is precious - so precious that it must be denied.”

I said, initially, “Under the “lassez-faire capitalism” model which you criticise, you are entitled to disagree, indeed, the process is designed around diversity, not only of individuals but their views.”

Comrade Lenin’s view was less accommodating.

To suggest a “Big Lie” shows an ignorance to real “Lies”

The lie of “socialism” in promising everything and delivering nothing but slavery to the state.

Socialism and its goal (communism) are about the power of the state to crush the individual it is there to serve.

The capitalist model recognizes individuals and supports the right to aspire to their potential.

Any dissent by you would not be tolerated under the objective goals of a more powerful State. Ask the millions who died under Lenin, Stalin, Pol Pot or any of the other despotic "socialist" regimes, China included.

“Libertarian Capitalism” and the idea of individual private ownership and discretion over resources, prevailed in the Cold War because, ultimately, it is produces the better solution for all people.

As for not responding on other posts, sometimes I do and sometimes I find the questions so banal as to be totally mind numbing, I guess I found your comments on the other threads so mundane as to induce momentary coma.

Col Rouge what are you smoking? Stop it, its not good for you!

I concur with Billie's concern, but I would hasten to add that it should be a purely personal choice whether or not one chooses to abuse one's mind and one's body with hallucinogenic substances. As long as no harm is done to others, it should be treated as a medical problem and not one for the police, law courts and the prison system.