Finally, someone telling it as it is....

[zilo]

Originally Posted by BENT_8

No, but it is common knowledge that the practice takes place.

...

Sorry mate, me thinks you're liberating BS

[jpblue1000]

Originally Posted by BENT_8

Let me get this right, the Chinese, amongst the smartest people on Earth realised that speculative housing investment was causing economic hardship to its people and took action to rectify it, yet Australians are so much smarter and allowed the spooked Chinese to speculate in our market free from personal risk or damaging their own market.

.

Im working with a Chinese investment broker at the moment, looking at feasibility of 'investment' in Australian projects. His suggestion is that due to Chinese investment and ownership laws, it is hard to have total control of their money and do with it what the rich Chinese want. If they invest outside the country they are able to free the money from the country and when needed they can do with it what they please. The investment project I'm working on is worth potentially 2-300 million AUD. I am lead to believe the 'investor' could happily sit on this sum potentially losing rents or opportunity to sell in the future freeing up their money from the Chinese government.
Sounds feasible to me? and could occur at any scale from single domestic purchases up to city centre developments.

JP

[BENT_8]

Originally Posted by zilo

Sorry mate, me thinks you're liberating BS

You can think whatever you like.

[ILLaViTaR]

vagga vagga...

[nuthin' fancy]

Originally Posted by jpblue1000

Im working with a Chinese investment broker at the moment, looking at feasibility of 'investment' in Australian projects. His suggestion is that due to Chinese investment and ownership laws, it is hard to have total control of their money and do with it what the rich Chinese want. If they invest outside the country they are able to free the money from the country and when needed they can do with it what they please. The investment project I'm working on is worth potentially 2-300 million AUD. I am lead to believe the 'investor' could happily sit on this sum potentially losing rents or opportunity to sell in the future freeing up their money from the Chinese government.
Sounds feasible to me? and could occur at any scale from single domestic purchases up to city centre developments.

JP

That is how I understand the Chinese approach too. It is much harder for them to hand assets to their kids in China.

Still, I would much rather see us selling to non-residents on terms equivalent to our ability to buy in their market or long term leases rather than freehold.

If 1% of their investors move to the Australian market it will be no good for our ability to afford to buy.

[Lotte]

Originally Posted by Stefan

You're on the right track BUT I think the biggest issue is that the banks are handing out the big loans to buy the properties at high prices.

If the banks pulled back slightly (ie made it a little harder to get a massive loan) there would be less money to buy property and vendors would need to come down in price to sell. It would certainly pull the reins in....you do need to be careful as you'd want this to be a gradual process without spooking the market. Our economy is somewhat reliant on real estate price stability.

I know years ago banks would ensure you could service the loan...not sure that these days it is as strict.

Abolish negative gearing would be like simply trying to gradually deflate a balloon by sticking a pin into it, the market would collapse along with every industry that is associated with it. It would be economic suicide and it will never happen.

Banks making it harder to borrow won't necessarily bring prices down. It just means the competition will be between investors and investors. Not investors and home buyers. Exacerbates the problem for first home buyers, thus doing the exact opposite of, I presume, the intention.

[nuthin' fancy]

Originally Posted by Lotte

Banks making it harder to borrow won't necessarily bring prices down. It just means the competition will be between investors and investors. Not investors and home buyers. Exacerbates the problem for first home buyers, thus doing the exact opposite of, I presume, the intention.

The ability of people to borrow is entirely based on the banks preparedness to advance funds. The Government imposed 'responsible lending legislation' on banks to curb the 'low doc' and 'no doc' loans. It worked a treat, basically now if you can't see the money you earn, you can't use it to borrow. It reduced the competitiveness of a group of borrowers.

Government could legislate against banks using negative gearing to boost borrowing capacity. Head back to using a lower % of joint income than single income when determining borrowing power.

Of course, those who don't borrow will find themselves competing against fewer people at a given price, this should cause an easing of prices.

[Lotte]

Originally Posted by nuthin' fancy

The ability of people to borrow is entirely based on the banks preparedness to advance funds. The Government imposed 'responsible lending legislation' on banks to curb the 'low doc' and 'no doc' loans. It worked a treat, basically now if you can't see the money you earn, you can't use it to borrow. It reduced the competitiveness of a group of borrowers.

Government could legislate against banks using negative gearing to boost borrowing capacity. Head back to using a lower % of joint income than single income when determining borrowing power.

Of course, those who don't borrow will find themselves competing against fewer people at a given price, this should cause an easing of prices.

Agreed completely, however this wasn't detailed, nor was it implied in the post I responded to.

[ford man xf]

The surprising truth about Chinese buyers: Five must-know facts

Here are five surprising truths about Chinese real estate buyers in Australia - the last one might catch you off guard.

There are four relatively uncontroversial things I believe to be true about Chinese buyers.

But you'll be surprised by the fifth.

1. I have no doubt that Chinese buyers are a much bigger presence in the market today than just a few years ago.

2. I know for a fact that Chinese buyers have spurred much new construction in Australia - thus adding to the stock of homes on the market and creating jobs and tax revenue.

Related: Asians 'not to blame' for property prices

3. I trust the data from various sources that reveals Chinese buyers to this year be the largest foreign buyer group in Australia.

4. I know that Australia can expect Chinese investment to increase in the coming five to 10 years. As China relaxes its capital controls, the flow of money to Australia and other countries, according to the Bank of England, could triple.




Now for the surprising fact.

Anyone who pays attention to the real experts, such as Glenn Stevens of the Reserve Bank of Australia, already knows this last truth.

Drum roll, please.

The fifth thing I know: Chinese buyers are not distorting the Australian real estate market.

With all the media hyperventilation suggesting the contrary, how could I possibly know this?

It's because Chinese are foreign investors, and total foreign investment is down significantly. The total of Chinese investment into Australian real estate is nowhere near large enough to make up for last year's decrease by other nationalities.

Related: Chinese investors eager to spend in Australia

That's right. The total amount that all non-Chinese foreign investors transferred into the bank accounts of Australian property vendors last year actually decreased.

It didn't decrease by a little. It decreased by $8.2 billion.

Those British, American and other foreign investors haven't disappeared altogether. Even so, there aren't nearly as many of them as there were just 12 months before.

Yes, Australia, as a fellow countryman, I know it can be hard to accept, but last year foreign buyers did a runner.




From $54 billion in 2012, non-Chinese foreign investment plummeted down to $46 billion.

The Chinese valiantly tried to make up the difference, but they fell several billion short. As someone once said, "A billion here, a billion there and pretty soon you're talking about real money."

Perhaps that's why the governor of the Reserve Bank of Australia has gone on the record with his belief that the Chinese aren't having any real impact on prices.

Related: Chinese investors to build $970 million luxury hotel on Gold Coast

That doesn't mean Chinese buyers aren't important. Quite the contrary: they are more important than ever. But the Chinese, as a subgroup of all foreign buyers, are far from distorting the market.

For foreign buyers to push prices up in Australia, presumably their total demand would have to go up. And –even when you include Chinese buyers– total demand from foreign investors plummeted last year.

Whatever price rises we're seeing, then, have to be due to other factors. The prime contenders seem to be wage growth, investor demand and low interest rates, but that's the subject of another story.

https://au.pfinance.yahoo.com/money-...ust-know-facts

[blueoval]

Interesting. Could it be that if the Chinese aren't pushing the prices up, that maybe mum & dad aussie home owner, are the ones who think their house is worth more than others are willing to pay and are still trying to capitalize on the boom of 5-10 yrs ago?

[ILLaViTaR]

sneaky article implies that because total numbers on foreign investment are down that the recent influx in chinese investors has not affected demand when it actually has incredibly. The problem they fail to acknowledge is it's a big nation and the demand (as has always been in property) is localized. It also seems to be hiding the elephant in the room that foreign investors from China are infact increasing..

Chinese pushed the Sydney market up 10% that is fact.

No one is saying you still can't get sub 200k quality brick homes in ballarat, horsham and elizabeth downs etc. They're saying the Chinese are inflating blue chip suburbs and making them unaffordable pushing Australian out which is completely true. That article is out of context and over generalized it probably got it's biased data from the local estate by Ayres Rock.

Then there's Cwmyoy in Wales which hasn't even hit the industrial revolution let alone industrialized demand.. funny article though.

[Lotte]

Things pushing the market up:
- Capital gains tax concessions
- Negative gearing contributed earlier on
- Higher investor percentages, doesn't matter if they're local or foreign, though the opening up foreign investor laws assisted with keeping the house prices from dropping during the gfc, investors have more money, and are more willing to spend it,
- alongside the first home owner and builder grants
- Banks willing to loan more to investors based on income from the property.

One thing that has nothing to do with, is wage growth. House prices in respect to wages have increased four fold in the past twenty odd years (cbf finding the article, but you can find the relevant data on the abs site and work it out for yourself if you've got a clue). That literally means house prices have increased four times more than the rate of wage growth. If it was wages, they'd be going up roughly in sync.
Another thing to note, governments have learnt through history that when there's a housing bust (up until the mid nineties, roughly one a decade), they'd usually cop a flogging in the polls, so they've been doing their best since Howard to make sure they don't have a bust cycle - which is actually necessary for healthy long term growth. Over a decade a house will appreciate regardless of the moderate recession usually experienced. Growth for the sake of growth is absolutely the worst thing economically, and that's what the housing industry is right now, because housing isn't considered a long term (10-15 years plus) investment, by a lot of investors.

[BENT_8]

Originally Posted by ILLaViTaR

sneaky article implies that because total numbers on foreign investment are down that the recent influx in chinese investors has not affected demand when it actually has incredibly. The problem they fail to acknowledge is it's a big nation and the demand (as has always been in property) is localized. It also seems to be hiding the elephant in the room that foreign investors from China are infact increasing..

Chinese pushed the Sydney market up 10% that is fact.

Agreed, foreign investment may have decreased as a whole but Chinese investment is UP.
What it fails to highlight is that without the increased activity in the market from China, our market would likely have seen some correction.
It also fails to show what is done with these Chinese owned investment properties once they are bought.
Are they occupied by the owner, rented or empty.
The answer to that has greater relevance to housing stocks and market demand than total foreign investment or the background of the investor.

[GASWAGON]

Just found this article on ABC news......Looks like we are not the only ones complaining about high house prices.

http://www.abc.net.au/news/2014-09-1...g-mark/5740808

[ford man xf]

Is Australian housing facing a repeat of 2003?

Australia's property market is approaching the bubble extremes seen a decade ago, an analyst told CNBC, after the Reserve Bank of Australia (RBA) warned that the market looks 'unbalanced'.

"There was an intense bubble in the property market a decade ago. There were property 'spruikers' out there encouraging people to buy five properties at a time - everyone was buying property magazines and all the top rated shows on TV were property related," Shane Oliver , head of investment strategy and chief economist at AMP Capital, told CNBC.

We haven't quite returned to the extremes we had back then but we're getting close and that's why the RBA is getting concerned, he said. "Danger signs are emerging."

A low interest rate environment and strong price competition among lenders have led to a surge in investment property, raising the risk of a repricing, the RBA said in its Financial Stability Review on Wednesday.


Read More RBA warns of risk of 'unbalanced' housing sector

National home prices rose an annualized 16.8 percent in the three months to August after a cooler period in the first half of the year. Meanwhile, prices in Sydney and Melbourne rose 16 and 11 percent, respectively, over the past 12 months according to RP data.

As a result, the RBA said is considering measures to cool property investment that could include macro-prudential controls or credit restrictions designed to reinforce sound lending practices.

Worrying parallels

Fears of overheating in Australia's property market have occurred on and off since the turn of the century, but the period between 2003 and 2004 was most worrying, Oliver said.

Australian house prices were overvalued by as much as 51.8 percent amid low interest rates, high incomes and strong demand from foreign investors, according to the Organization for Economic Co-operation and Development.

Read More RBA keeps rates steady, says China housing a concern

Parallels with that period are emerging, Oliver said, noting investors' share of mortgages is 40 percent, approaching the 50 percent seen in 2003. The popularity of 'The Block', a television show focused on property, is also worrying, he said.

A continued price rise and acceleration in investor lending could turn the risk of a repeat into a reality, he said.

Big city, little city

While there are worrying parallels in Australia's larger cities such conditions are not prevalent in the rest of the country, Paul Bloxham, chief economist for Australia and New Zealand at HSBC (London Stock Exchange: HSBA-GB) said.

"What we're seeing overall has so far looked like a pretty normal housing cycle. National prices are up 11 percent over the past year [to August], we've got very low interest rates, you should expect house prices to be rising," he said.

Read More 10 urban property hotspots to watch


"But if the recent trends do persist for much longer, it might start looking overheated," he said. "You are seeing signs of that trend in Sydney and Melbourne."

"Australian housing may be expensive but you could have made that argument for the last 15 years," said Steve Goldman, manager of Sydney-based Kapstream Capital.

"The reality is default rates from borrowers are extremely low and the only way that goes up [is if the] unemployment rate goes higher, and we don't see that," he said. "That means housing prices will be continue to be stable and we don't foresee a crisis at least in the near term."

https://au.finance.yahoo.com/news/au...223500342.html

[GASWAGON]

Another forum I use is saying there's a big market crash just around the corner. China's Iron ore demands from OZ are slowly deccelerating and mining jobs are are being lost all over the place. Mention of a GFC 2 also.....Could be enough to put many off OZ RE for a while???

[BA GT-HO]

^ You have been saying that for 3 years now though.

[BHDOGS]

Americas trade deficit decline and China's trade deficit rise is shifting the power balance at moment back into Americas favour so I'd say a decline is unlikely at the moment as China's demand for imported power is rising sharply in future tho could be a big drop off when they hit there own recession.

[ILLaViTaR]

Investors taking advantage of negative gearing tax breaks drive property prices higher

September 28, 2014 - 12:15AM
John Collett



Official data suggest investors taking advantage of the tax system are helping to drive property prices higher and locking out first-time buyers.

In its Financial Stability Review this week, the Reserve Bank of Australia showed a correlation between investor activity and stronger property prices.

Investor housing loan approvals account for almost 40 per cent of the total value of housing loan approvals, the highest it has been for 10 years.

The most recent data from the Australian Tax office shows 1.3 million taxpayers reported losses on investment property for the 2011-12 year, or about two-thirds of all those with an investment property.

The average loss for 2011-12 was just under $11,000. Negative gearing is where the income from rent from the property is less than the costs of the investment, which includes the interest of the investment loan and other expenses.

Loss-making investors are hoping to be able to eventually sell the property for a price that more than makes up for the losses incurred along the way.

Australia is one of the few countries among those with similar tax systems to allow negative-gearing losses on all income-producing assets, not just property, to be offset against investors' other income.

It is seen as particularly generous to investors, given the capital gains on which capital gains tax applies is discounted by 50 per cent as long as the investment is held for at least a year.

The Abbott government has said it wants a review of the tax system, though it is yet to outline the scope or timing of the review. Any review would almost certainly revisit the question of negative gearing.

This week, the Housing Industry Association released a report it commissioned that shows removing negative gearing would exacerbate housing supply problems and cause rents to rise. The Association said removing stamp duty would be a better way of improving housing affordability than removing negative gearing.

Stamp duty is the often-high fee paid to a state government for buying a property. The report said an estimated $7 billion was paid in stamp duty on residential property conveyances in 2011-12.

http://www.smh.com.au/money/borrowin...25-10lr7r.html

[BENT_8]

Two things, why would the HIA commission a report into negative gearing unless it was pre empting such consideration.
They must be feeling uneasy.

And who do they think they are kidding, removing stamp duty would just entice sellers to absorb the extra money potential buyers would have, driven by mongrel RE agents as they did with the FHOG boost.

[BA GT-HO]

No ones 'locking' anyone out. Yeah, you might be 'locked out' from buying you first home in your ideal suburb because of high prices, but I feel I am 'locked out' from buying a Lambo. If I want the Lambo I need to save my money, cut back on fast food, new iphones, killa sound systems for my home theater etc etc etc.

You CANNOT tell me it is 'impossible' for a first home owner to afford a house right now. Bollocks. Live where you can afford to. You can't have a first home like your parents current home. That takes time.

Anyone wishing for a 'crash' or a 'bubble bursting' can hurry up and wait. By the time you have waited all this time you may as well have saved up a deposit and entered the market. It's always the same names on here preaching that the sky will fall, but it has seriously been years now, you could have bought that house by now!

[mcnews]

So what cheapest house near a major city that would be liveable these days is what $300,000 minimum? Mortgage repayments on that even at these low interest rates are going to be over $500 a week and probably close to $600 a week. So realistically a young person right now, after tax, super and modest living expenses including food, power, rates, water etc. would need to be on at least $1100 a week to make ends meet and that's if they walked everywhere and didn't have a car to maintain, insure and pay rego on.... And that is if they can get a deposit.....

Negative gearing was a scam in the first place, and still is, and it has no place.

[Franco Cozzo]

Originally Posted by mcnews

So what cheapest house near a major city that would be liveable these days is what $300,000 minimum? Mortgage repayments on that even at these low interest rates are going to be over $500 a week and probably close to $600 a week. So realistically a young person right now, after tax, super and modest living expenses including food, power, rates, water etc. would need to be on at least $1100 a week to make ends meet and that's if they walked everywhere and didn't have a car to maintain, insure and pay rego on.... And that is if they can get a deposit.....

Negative gearing was a scam in the first place, and still is, and it has no place.

Out here the average house price is around $300K but we're around 70km out of Melbourne, which isnt bad, you can get into the northern suburbs of Melbourne for work such as Tullamarine/Airport West in about 45 minutes.

Problem is developers out here are getting greedy and are doing small 800m2 blocks in new developments, pricing them high and wondering why they are struggling to sell, which is becoming a hot topic out here as the average is around 1500m2 to - 5 acres in the existing estates around the town and people are strongly taking offence to it as its ruining the rural aspect of the town.

All of a sudden its become a big election issue out in the region as the residents of Gisborne are also up in arms about it, they're even worse with 400m2 properties occuring around the place.

[mcnews]

When I left Secret Harbour south of Perth before moving to Lake Eildon in country victoria there had just been some lots released at 320 square metres in Secret Harbour...

[BA GT-HO]

Originally Posted by mcnews

So what cheapest house near a major city that would be liveable these days is what $300,000 minimum? Mortgage repayments on that even at these low interest rates are going to be over $500 a week and probably close to $600 a week. So realistically a young person right now, after tax, super and modest living expenses including food, power, rates, water etc. would need to be on at least $1100 a week to make ends meet and that's if they walked everywhere and didn't have a car to maintain, insure and pay rego on.... And that is if they can get a deposit.....

Negative gearing was a scam in the first place, and still is, and it has no place.

Buy a unit then! Start small and work your way up. I bought a crappy unit to live in first up, neighbours from hell, lived with it, $400 a week mortgage, you just have to keep an eye on spending.

[danzvtil]

Originally Posted by BA GT-HO

No ones 'locking' anyone out. Yeah, you might be 'locked out' from buying you first home in your ideal suburb because of high prices, but I feel I am 'locked out' from buying a Lambo. If I want the Lambo I need to save my money, cut back on fast food, new iphones, killa sound systems for my home theater etc etc etc.

You CANNOT tell me it is 'impossible' for a first home owner to afford a house right now. Bollocks. Live where you can afford to. You can't have a first home like your parents current home. That takes time.

Anyone wishing for a 'crash' or a 'bubble bursting' can hurry up and wait. By the time you have waited all this time you may as well have saved up a deposit and entered the market. It's always the same names on here preaching that the sky will fall, but it has seriously been years now, you could have bought that house by now!

Your sound, reasoned, cogent opinion has no place on a public forum such as this

People have the idea that the world owes them a cheap house, my late neighbour built his house 50 years ago for 12k home and land. Looking at that amount with 2014 eyes is to think he got a bargain. He still scrimped and saved in order to pay it off, never had nice cars or anything. Back then this was deliverance country, miles from anywhere, now its 20 mins from the CBD. If you are new to the market today, you too may need to buy/build in "deliverance country" in order to afford it, in 50 years it may just appear that you got a bargain!

[Charliewool]

Originally Posted by mcnews

So what cheapest house near a major city that would be liveable these days is what $300,000 minimum? Mortgage repayments on that even at these low interest rates are going to be over $500 a week and probably close to $600 a week. So realistically a young person right now, after tax, super and modest living expenses including food, power, rates, water etc. would need to be on at least $1100 a week to make ends meet and that's if they walked everywhere and didn't have a car to maintain, insure and pay rego on.... And that is if they can get a deposit.....

Negative gearing was a scam in the first place, and still is, and it has no place.

More like $350 a week for the full 300k...
Which would be cheaper or on par with renting

[nstg8a]

We are building our first home, I think total cost is around 430k, our payments once completed are only about $100 a week more than renting, plus rates insurance etc.

It's too easy to over spec when building, and so many couples we spoke to during open homes, and wandering through display homes are doing it on the absolute minimum deposit. They will have bugger all room to absorb higher costs if and when interest rates start going up again.

We are roughly 20 minutes drive from Brisbanes cbd, so not far at all.

[mcnews]

I just used a mortgage calculator and it came in at $445 a week using an average rate of 6% over 25 years.

I pay $750 a week to get well over the odds on my mortage and get the capital down but I am doing pretty well. I really pity anyone not doing well these days with the cost of living.

[nstg8a]

Originally Posted by mcnews

I just used a mortgage calculator and it came in at $445 a week using an average rate of 6% over 25 years.

I pay $750 a week to get well over the odds on my mortage and get the capital down but I am doing pretty well. I really pity anyone not doing well these days with the cost of living.

That's exactly what I pay in rent now.