Yabby wrote:

"... with 2 posts a day, I try and concentrate on what matters most."

No, you don't.

You attempt to bury, under an avalanche of your repetitive, largely irrelevant twaddle, carefully argued posts by others who have shown that they care about others, the environment and future generations. In doing so, you repeatedly ignore facts and logic which don't conform to your own miserable outlook on life.

The only outstanding question for me is: Why do you do it?

Don't you have a life?

Or is your own stake in preserving the current atrocious status quo, so great that it is worth all this time and effort to confuse the simple truth contained in the article and many contributions to this discussion? Or is someone else paying you to do this?

Yabby wrote: "You want a nanny state, think that Castro's housing etc is wonderful. I prefer to make my own decisions. blah, blah, rant, rave ..."

Now, stick to the point. Let me try one more to time to get you to respond to two clear points I have made in previous posts:

1. Yabby, you have already asserted several times that no matter what we try to do in this country it will necessarily be ruined by choices made by others in other countries, and I have disputed that assertion. Simply repeating that assertion, yet again, adds nothing to this discussion. The real point is that, whether we live in Australia, Venezuela, Nigeria, China or wherever, we all have choices before us.

In Australia, we could choose to end our unsustainable dependence upon the escalating levels of export of our finite endowment of mineral resources which is warming the atmosphere and poisoning the rest of the planet, whilst disfiguring our own country (see, for example, the scarring of the NSW rural landscape at http://lee.greens.org.au/index.php/content/view/1354/65/ http://lee.greens.org.au/index.php/content/view/1353/65/ http://lee.greens.org.au/index.php/content/view/1352/65/ http://lee.greens.org.au/index.php/content/view/1351/65/ http://lee.greens.org.au/index.php/content/view/1350/65/ http://lee.greens.org.au/index.php/content/view/1349/65/ http://lee.greens.org.au/index.php/content/view/1348/65/)

And we could choose to end our unsustainable dependence upon real estate and population growth which you, for your part, are bent upon increasing to a break-neck rate.

No one is pretending that this will (...tobecontinued)

A rise in median house price from 260k to 327k in 5 years, combined with a 2% interest rate rise, is more than enough to put most houses in Glenroy out of the reach of many first home buyers. I'm not really sure why you would believe otherwise - certainly incomes haven't risen anything like that much.

Yes, I accept there are a large number of factors that have contributed towards rising house prices - but many of those factors would apply in any country or city in the world, and yet Australia's most populous cities have some of the worst housing affordability anywhere in the world, so we need to be looking for factors that are unique to Australia.

No-one has said anything is "wrong" with saving for their own age - just that it's not reasonable to have cashed-up investors competing with first home buyers for the same housing stock.

Yabby you can't credibly comment on the state of the Victorian economy in 1992. You are not an economist or repository of business knowledge, you weren't in Victoria and your previous post was wrong. In Victoria people sometimes still say "I've had a Kennett of a day" and the previously most Liberal state in Australia did not vote for Howard, ever. If the rest of Australia followed Victoria's voting patterns Howard would never have been Prime Minister, and that's part of Kennett's legacy. Kennett closed schools, cheaply sold off hospitals, public transport, public road construction, ultilities and stopped building public housing.

Median house price in Glenroy is $375,000 that is still 6 times average gross earnings.
An investor would want to get a rent of $375 per week and that level of rental would put the tenant on average income into rental stress. Its Glenroy for G*d's sake so the likely tenant is dependent on welfare and this rent is beyond them.

The people who took up the mortgages capped at 17% in 1992 stayed on those mortgage rates for years after the other mortgage rates had dropped to 8%. Meanwhile their houses had dropped in value. In hindsight the sophisticated financial decision would have been to sell up and rent but if you struggled to raise a $20,000 deposit realising a $20,000 loss is very hard to do.

Careful reading of Col Rouge's posts indicates that his womenfolk have real estate portfolios but not our Col so perhaps the subtlety of my arguement just floats past him.

Have you noticed people on incomes over $200,000 often don't want to receive tax cuts if it means that public hospitals, schools and other social infrastructure has to be cut to pay for it. The people who aspire to earn the high incomes want the tax cuts.

Billie, my figure for the median house price in Glenroy, came from the REIV
website. As to Kennett, Keating etc, yes I know they were both unpopular.
But I also think that both understood what happens when Govts and
States get too far into debt and foreign financiers start to dictate the terms.
.Just take a look what happened to Argentina, when they went
over the limits. That is when REAL pain sets in! No I’m not an Economist,
but I subscribe to the Economist, in order to understand the global scene.

Wiz, yup a 2% increase in interest rates has in fact increased repayments
by around 25% or so, which is part of the problem. Our banks obtain about
half their funding from overseas. Why can’t Australians save more? We
have no incentive to do so, as I pointed out. Rudd has mentioned making
savings for a home tax free, that would help, but why not just make the
inflation component of interest payments tax free, then people would
find it worthwhile to save. Our interest rates are in fact higher then in
many other developed countries, because we don’t save much, look at
them blow it in the shopping malls right now.

Smart couples will both work and save a good chunk of one wage, that
way they soon have a substantial sum together for a hefty deposit. Then
they can think of kids etc. Smart couples did that in my time too.

Oops Daggett, sounds like you got out of the wrong side of bed today.

I’m discussing housing affordability, you want to change to coal mines.
Why not open a new thread? I think that blaming it all on speculators
is simplistic, there are many reasons making one large reason as to
why the housing market has behaved as it has. I know lots of ordinary
people who are helping their kids buy houses, or who plan to leave
one house to each kid, so have bought one and are paying it off.
These aren’t rich speculators, but plumbers, other tradesmen, etc.
They are all workers.

Yabby

Re your observation:

“Given low prospects for capital gain in all but
yuppy suburbs, why take the risk of building a new house and renting it out?
Much easier to just dump that money into the super fund, as people did by the
Billions”
According to your little theory, established house prices would drop as investors charged to build new ones, to obtain the negative gearing benefits. But of course that would also mean that new homes, once established, would lose value, so where would be the capital gain?”

this is either a genuine misinterpretation, a bit of a wind-up (or both).

My “little theory” is more of an assessment & it isn’t solely concerned with the current detail of investors’ motives & options

To begin with the housing construction industry isn’t entirely reliant on investors building houses then renting them out,

While some constructions are commissioned by owner/occupiers or investors, most homes are built by developers who sell them on to anyone willing to buy – the majority being people that move in & live there.

Developers’ interests are a little different to the speculators that simply buy & sell, Developers add-value. They are more concerned with profit in the broader sense than capital gain per se.
The gain that they make on the land purchase is enhanced by the construction. Although the price of land rises & falls, the profitability of the value-added has ensured that the construction sector has remained viable through most market conditions.

Housing supply doesn’t rely solely on investors. When the home-ownership rate is especially low they are all the more welcome to go & superannuate to their heart’s content.

The point of my “theory” as you put it is to eliminate discriminatory policies that create disproportionate demand pressures (& add nothing to production)
As well as making an exemption where invetment enhances supply
- broadly speaking that is, as a general, long-term, principle.

“Low prospect of a capital-gain”
– rather than being a permanent condition is another indicator of the degree to which properties are currently overvalued.

- Mr Smith

Wizofaus,

Re, your request

“Obviously what I also want to see are figures showing the ratio of renters to owner-occupiers. If that ratio hasn't changed in the last 6 years either, then it would be unfair to put the house price rise down to a flood of investors”

Isolated figures regarding increased investment & the declining proportion of first-home buyers are abundant & they all imply that the relative proportion of owner-occupiers has declined however if you want the actual ratio of owner-occupied homes / tenancies then you are looking for the rate of home-ownership.

Consider this:

“Reflecting Sydney’s high prices, Sydneysiders had the lowest level of home ownership in the country at 58 per cent”

(‘Home owners struggle to pay mortgage’ Financial Review 18/6/07)

That figure came from the “Genworth Financial Mortgage Trends Report”.

http://genworth.com.au/mortgageTrendsReport.htm

Genworth Financial are a mortgage insurer and the findings of this annual survey seem to be widely quoted throughout the financial press & industry sites.

They found that home-ownership rates in other capital cities varied between 60-68% or so.
According the ABS, the long-term average (nationwide) since the early 1960’s has been fairly consistent at just over 70% (or was).

The (definitive) ABS figures tend to be census-based & few years old. There is always a big time lag between house-price & ownership figures as the prices are immediately available whereas the other requires data across the entire population.

Even accounting for the margin of error between different sources of data the Sydney figure is the most interesting (to say the least) because the boom in property prices started much earlier so the cumulative effect over time is more apparent & because the prices here are higher.

The 58% figure is also significant because it is well below the 70% mark and getting within range of 50% - below which homeowners would become a minority for the first time since statistics became available in 1947.

There are other indicators One of them is the relative increase in investor housing loans.

(more details - later).

- Mr Smit