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My house isn’t an asset. It’s my home.

There’s been a lot of noise over the past few weeks about how changes to negative gearing could lower housing prices. According to Prime Minister Malcolm Turnbull:

“[Labor] is putting at risk Australia’s most important asset; they’re putting at risk the fundamental asset base of our economy.” (Malcolm Turnbull, 29 February 2016)

But in the words of Daryl Kerrigan from the movie The Castle – “it’s not a house, it’s a home”. My house isn’t an asset, it’s where my family lives, sleeps, eats, laughs and plays together.

The way Turnbull talks, you’d think we could decide tomorrow to sell the house and buy some shares or bonds instead. Perhaps he sees Australian families sitting around a stock portfolio for dinner or sleeping under some well placed monetary bonds at night.

Maybe that’s the key difference between the way the right see the world – as a series of dollars signs – and the left, who see it as a place where we live.

For Australians who live in their own home, their house’s value is only really relevant if they decide to sell. And even then, unless they decide to downsize or move to a cheaper city or town – then the money from selling their house goes straight into another house to live in, and there is minimal if any net gain – particularly when you factor in the costs and taxes associated with a property sale.

The only Australians who see a house as an investment asset are the 5% of Australians who own investment property and benefit from negative gearing. Oh – and bankers of course. They don’t seem to be able to lose.

For the rest of us, our house is a home, not an asset class.

Increasing housing prices could cost us all more than we realise

As Turnbull and the rest of the LNP celebrate increasing housing prices, they neglect to mention the very real cost those increasing prices have to the country as a whole in many different ways. Here’s some examples…

Firstly, because mortgages – and the corresponding interest charges – now take up a lot more of a family’s income than they did last century, families have less disposable income to spend on other things. Lower spending means fewer jobs which in turn means lower economic growth.

Secondly, the LNP conveniently fails to mention the impact higher housing prices will have on people’s retirement savings. The size of the average mortgage today is so high, that many people will need to wait until they retire to pay it off. Already today, nearly 45% of superannuation benefits taken as lump sums are used to pay off debt. As housing prices increase, more and more people will need to use their superannuation to pay off their homes. This will leave them with less money to pay for their own retirement, meaning more people will need to claim the government pension, completely undermining the whole purpose of the superannuation system – which was to reduce people’s reliance on a taxpayer funded pension. This will mean higher taxes for those in the workforce – even further reducing their ability to afford to buy their own homes.

Tell him he’s dreamin’

In the words of Daryl Kerrigan – Malcolm Turnbull is dreamin’ if he thinks that Australians are wealthier in real terms because the value of their home has increased. There is a housing affordability crisis in this country – and with increasing numbers of homeless Australians corresponding with a massive number of vacant houses – that’s where Turnbull and the LNP should be focusing their attention instead of protecting the wealth of investors like himself.

This article was first published on ProgressiveConversation.

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53 comments

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  1. jim

    Hi, Kate i think you better check your facts as I swear an LNP member said on TV that house prices wound go down not up, and I found out why our country is in such great shape it’s because ; The Coalition and its direct predecessors have governed at the federal level for a large majority of Australia’s history since federation: 30,548 days as compared to Labor’s 12,252 days.See what money and a right wing biased media can do. Please put the LNP last this year.

  2. Dennis_v

    Everyone that only owns one house will most likely agree, your home is more of a liability than an asset because of the money in taxes, insurance, and upkeep that is required hardly qualifies it as an asset. If you include mortgage interest and I have not worked this out for quite sometime when I was paying off my house you paid over half again in interest.

  3. Kaye Lee

    Malcolm is suggesting that every property investor will leave the market if they cannot negative gear their investment. Whatever happened to enjoying the rental income while your investment increases in value? Is tax rorting so ingrained that they cannot conceive of admitting to the income they get and paying tax accordingly, like wage earners do?

    Absolutely everything is viewed through the eyes of investors and geared to favour them. John Howard pontificates that the problem with the economy is that we are not making enough stuff – the supply side is sluggish. They just cannot seem to understand that it is demand that is sluggish because wages are stagnant and their free trade agreements have only exacerbated that problem.

  4. Fatalist

    “Tell him he’s dreamin’”

    Do you have his mobile number? Even if you email him directly, I doubt he would see the message, it would likely be deleted by some staffer as “spam” but if they did perhaps mention it in passing, I doubt he would care. Since when were politicians focused on doing anything other than looking after themselves.? He’s not dreaming, he knows exactly what he is doing.

    The hordes of zombified voters of this land, only read and listen to sources that agree with them, I seriously doubt any right-wing voters or politicians read Tha Australian Independent Media Network articles that are preaching to the choir, they are a few clicks away pushing their nostrils up Bolts cloaca..

    The Australian voter has demonstrated they are not the cleverest of species at the last election, with a good number of them quite happy to vote against their own best interests..

    We will get what we deserve.

  5. Kate M

    Dennis – indeed.

    Kaye – Malcolm has conveniently decided to ignore history, and ignore the fact that when they got rid of negative gearing in the 80s, there wasn’t a wholesale increase in rents, suggesting people didn’t sell across the board. Further, if abolishing negative gearing did lead to a drop in housing prices, then I suspect far too much of the property market is locked up in a Landlord/Renter arrangement which is stopping people from being able to buy and increasing the gap between the haves and the have-nots.

  6. Kaye Lee

    I would be interested to hear what others think of a proposal made by John Howard. He is suggesting there should be a lifetime cap on superannuation contributions which would allow you to either salary sacrifice over your career or put in a significant amount towards the end of your career. The amount would have to be worked out. He mentioned $600,000 – $1 million but I don’t know enough to say whether these figures are appropriate. I assume the capped amount would have to be indexed in some way.

    Early days in thinking about it but it may have some merit?

  7. z

    Property market has been pushed too high which most first-time buyers unaffordable , it is unwisely chose that persist in negative gearing tax benefits to push it further up without restriction. It is not sustainable and against economic rules, keep it unchanged only benefit some negative geared speculative real estate investors in short term, and is bound to fail in the long run for most Australian household, it is never a good thing.

  8. Steve Laing

    Well said. I don’t know why people don’t get this obvious fact. But there are other knock-on effects too. Rising property prices extend to business property prices, which in turn means businesses have to raise prices to cover those business property costs. Which decreases the value of discretionary spending.

    The business property adds no value to the product or service the business supplies. It is pure overhead. This government, who are supposedly great proponents of the free market, seem more than happy to distort it when it is in their favour. It really is astonishing that the MSM don’t have the aptitude to call them out on it.

  9. Ricardo29

    A lot of the comment ignores the fact that Labor’s proposal is for NG ing to be still available but only for new properties, and that those in existing arrangements will be unchanged. Hence we, the taxpayers, will continue to subsidise the investments of existing multiple home owners and future home owners of new investment properties. As for the changes to CGT, they still allow for a taxpayer subsidy on sale, only smaller. And it won’t prevent investors from continuing to buy houses, old or new, they just won’t be able to negatively gear on existing properties. House prices in Australia’s cities are generally ridiculous, even with the present corrections, Negative Gearing has contributed to this. Comments by Turnbull, Morrison and others show just how out of touch they are with those struggling, or denied, a home.

  10. Kate M

    Kaye – I do think a cap on super contributions does have merit. But I thought there already was one – only that it was an annual limit, rather than a lifetime limit. I think the key would also be making sure that it was indexed – you’d think that would be taken for granted, but it’s not. They put in a $450 per week minimum wage requirement 20 years ago so that people earning under that amount didn’t have to have super, but it has stayed at that amount.

  11. Kaye Lee

    There are yearly limits for tax free contributions. The funny thing about Howard’s proposal is that, in a vote buyer in 2007, he allowed people to put $1 million into super in one year as a one off. Do his comments now infer that this was profligate – giving to his rich mates in one year what he now thinks should be a lifetime limit?

  12. Wally

    “their house’s value is only really relevant if they decide to sell”

    The value of an asset versus the debt on that asset is also important, who wants to be paying off a debt that is greater than the asset/s it is secured against. Equity is also (foolishly in many cases) used to fund lifestyle choices so there are many less obvious ways that lower house prices affect home owners.

    “if abolishing negative gearing”

    Terminology really needs to be refined on what Labor is proposing, as I understand it they are stopping the loss from an investment property being offset against other income (still allowed for new homes). This does not change the gearing of the property, if the changes are implemented an existing property purchased after that date may still be negative geared but any losses will be offset against future profits or capital gains. In reality it is just the time the deduction or offset occurs that will change.

    To stop negative gearing they would have to legislate that the interest and costs of owning an investment property were not deductable and the widespread ramifications of this would destroy many businesses.

  13. Backyard Bob

    For Australians who live in their own home, their house’s value is only really relevant if they decide to sell.

    I’d like to throw in the way your rates are calculated as something many people might find relevant regarding their home’s value. For some people/families even modest rate increases are burdensome.

  14. Sally K

    What if unaffordable housing for the younger generations of Australians is not just an unfortunate side effect of tax privileges for property investors but part of an intentional plan for Australia’s future?

    In the next couple of decades joining the military may be the only possibility for the young to get taxpayer subsidised tertiary education, housing and employment. Defence spending will have to increase to satisfy the demand for jobs.

    My son used to play a computer game called X COM. In this an international elite in a coalition of nations organised to wage warfare against alien invasion (terrorism would do just as well). Australia was at the forefront as a prime breeding ground for the military personnel. Ironic if a computer game turns out to be prescient.

  15. Trish Corry

    Excellent piece Kate. I love the use of the castle. You hit the nail on the head there with home versus house.

    The Libs argue strongly for low paid workers to forgo penalty rates and get less money “for the good of the country and job creation” But they jump up and down, scream, yell, pull out all stops and use shame to try to convince voters it is detestable and an abomination for people who own more than one house to forgo a bit of their money “for the good of the country and home creation for those who can’t afford one”

  16. Backyard Bob

    Even if Labor’s modest – proposed – changes to NG were to deflate the housing market overall (it obviously won’t in fact) I would see that as a good thing. Housing affordability in this country is a farce and has been for decades.

  17. townsvilleblog

    Well written Kate. My wife and I have owned our house for 18 years, we have lived debt free for that time. I worked 2 and sometimes 3 jobs to build and buy the house in 1984, it cost me $66,000 and is now worth approx $280,000. If the NG policy lowers house prices I won’t be complaining, if it gives a generation of people a chance to save enough money for a deposit (I saved $20,000 in a year in 1983-4). What I have observed in the younger generation though is that they are impatient and won’t sacrifice to get the house, and if they do get one, they want it all, a/c ensuite swimming pool etc. My wife and I are still working on extensions such as a back deck and a rainwater tank. Shame on the LNP for wanting to strip penalty rates for weekend work, they were a large part of my savings as I worked 7 days a week 80 hours a week for 7 long years to own our house.

  18. kathysutherland2013

    But who gets ignored in all this? The renters!

    The house in which we (my husband andI) live, is an asset, but not our asset, as we rent. That was OUR decision – we felt we’d rather spend our money travelling than paying a mortgage. But our kids haven’t got that option – they can’t afford to buy. Daughters 2 and 3 are resigned to the fact that they won’t ever own a house. Daughter 1 and her husband have just committed to mortgage repayments that entail both of them working and kids in daycare/grandparent care.

    So not everyone can eveb get into the propert market.

  19. Wally

    townsvilleblog

    “I saved $20,000 in a year in 1983-4”

    It is impossible for most people nowadays to save 30% of the cost of a house within a year, this is a great example of how income has fallen well behind increases in house prices and the cost of living.

    The changes Labor proposes are not even a band aid, it may make it a little easier for those who can afford to buy a house but it will not make any difference to those who cannot.

    We need wage growth and some good old fashioned inflation so mortgage payments consume less income over time. When interest rates were 16% and inflation was 10-12% we were only paying 4% interest in real terms so the high sticker price for home loans was irrelevant.

  20. silkworm

    Last year, just before he got dumped as PM, Abbott said wtte that the high house prices in Sydney was a good thing, and he got howled down. Here we are, with MT saying pretty much the same thing as Abbott, and the pundits are being less harsh on MT as they were with Abbott. What’s going on?

  21. nurses1968

    While Abbott was PM I remember reading just how he managed the family Budget and mortgage payments,
    Here is an excerpt,part from Financial Review, part blogger.

    “Mind you, the Abbotts bought the Forestville house way back in 1994 (around the time the Mad Monk first hit the frontbench) for $351,000. And 16 years later, the dual-income couple had a mortgage twice that size. What gives?

    While he was PM, he would’ve hardly spent a dime of his $540k salary (house, car, plane and staff all provided)

    It was then revealed that he took out a $710,000 mortgage against the family house in 2008, which he failed to declare to the Parliament until 2010.

    On 9 December 2013 as Australian Prime Minister Tony Abbott once more declared a joint mortgage with his wife on the family home, this time with the National Australia Banking Group:

    For a man who earns an est. $539,338 in combined salary and allowances and who virtually lives for free as Prime Minister of Australia, with a wife who is a paid company director/manager and no dependent children, this continuous level of debt on a house purchased in 1994 is rather curious to say the least.

    One has to wonder what the Prime Minister does with his money? Do they burn $100 bills just for fun in the Abbott household with little thought for tomorrow?”

  22. Sally K

    Re young people and their consumerism and cafe culture this article makes a good observation:

    https://www.themonthly.com.au/issue/2016/march/1456750800/richard-cooke/boomer-supremacy

    “Baby boomers were brought up in much more parsimonious times. Their parents marked the postwar rationing years with a high rate of saving. Consumer goods, such as electronics, were very expensive, while property was relatively cheap. Now that situation is inverted. A young person looking to maximise their happiness has little prospect of owning a home without familial assistance, so they turn to consumerism to improve their quality of life. This causal relationship is then interpreted in reverse: young people are too improvident to own property. If only they didn’t buy a coffee every morning.”

  23. Backyard Bob

    For Australians who live in their own home, their house’s value is only really relevant if they decide to sell.

    The more I think about this statement the more problematic I think it is. I’m not sure that without the support of statistics, it isn’t largely an appeal to sentiment.

    In any given year, what percentage of “home owners” look to upgrade for family reasons, or downgrade for retirement reasons (random other reasons included)?

    I feel the statement needs some statistical support to be meaningful. Perhaps stats show the numbers of “home” owners involved in such dynamics are greater than they once were.

  24. Kate M

    Hi Bob. I agree. That why I qualified my statement with an except when…… There are definitely people who downgrade in retirement. And I haven’t researched volumes. So in that scenario an increased value would be helpful. I wasnt actually trying to suggest that a house wasn’t an asset – although i potentially could have made that clearer – but more that it for most people it is primarily a home. If they also happen to make money from it, that’s great – but for many that wouldn’t be the primary objective necessarily when they buy. Hope that makes sense! Kate

  25. Backyard Bob

    Kate,

    Yes, of course that makes sense and I quite agree that after the rigours of purchase, for most people the “home’s” monetary value is secondary to its emotional value. I would, however, be interested to see what social statistics and analysis might say with regard to how that may have evolved over the last few decades. I wonder to what extent the Kerrigan worldview still holds and might accurately reflect contemporary Australian life.

    In short, I wonder to what degree that worldview has become anachronistic and a notion we hold to for nostalgic rather than factual reasons.

    I mean, I don’t actually know or have a firm view, but I suspect we’ve perhaps entered a somewhat different generational paradigm. I would like to think not, for those nostalgic reasons, but I wonder.

  26. Kate M

    Bob. That’s an interesting perspective. I hadn’t thought of that. If I have time tomorrow I may see if I can search something out. Kate

  27. Carol Taylor

    Going by memory here but when negative gearing was first introduced it was supposed to be for new dwellings only. The idea was jobs creation and to address the housing shortage. Then someone got into somebody’s ear (possibly Costello’s) and Howard changed his mind and the law was to apply to all dwellings. This then minimised the jobs creation idea plus the housing shortage, which of course has resulted in massive churning of property. Labor’s plan (which is often forgotten/omitted) is to restore negative gearing to its original intention, increase supply and to create jobs in the housing industry. Certainly there are jobs created with the current situation – for real estate agents whose incomes are now as massive as the housing being churned.

  28. mark

    australians have become dessicated fragments of what a human being can be. mark.

  29. Thursday

    Most people who have bought a residential property in the past 18 years in Australia have watched the value of their property increase in value. This constant rise in has been unprecedented. In this time; interest rates have gone from roughly from about 10% to around 3%which is extremely low as some of us remember 17% from 1990.In this period some properties have quadrupled in value. So all some have done is to stay still whilst their properties value went north. Many got wise when Banks said Hey! you have so much equity in this property we will lend you more to buy another property.

    All of a sudden many people from all walks of got savvy enough to purchase another property as the deals the Banks were offering were great and interest rates kept going down. It’s been a No Brainer for many in past 18 years. That’s why many have bought chains of residential properties. Conditions have been perfect; low interest rates, property values going up and population going up as well. And we allow foreigners to purchase Residential properties which increase prices across the board.
    And Boy Oh! Boy the Unbelievable gift that keeps on giving Negative Gearing and some people do Salary sacrifice. What a fertile period for making money. Perfect conditions one might say.

    Australian’s used to know what was a fair suck of Sav; used to be. Now all we have is self interest with so many pigs in the trough. The Conservatives don’t want to give up on this gravy train and they will play every trick in the book to keep Negative Gearing in tack.
    Listen! their clever language defending NG recently. They’re so worried about Mum and Dad investors. So caring aren’t they? All sorts of Rabbits will get pulled out the hat.

    Let Investors invest in Commercial Properties with Negative Gearing .Residential Properties are for people live in and have a roof over your. They should stop Negative Gearing at one Investment Residential property and keep it for new dwelling purchase also.
    There really needs to be a Royal Commission into the Housing issue. It’s a disgrace.
    Many rode on the sheep’s back and mining and so many have been rubbing their hands at this little beauty for past 20 years. Though; it has been absolutely miserable at bottom end for many renters and for some trying to buy a place to live.
    This has been a shameful period Australia. We have been sowing the seeds of community destruction. Australians have been called indifferent about many social topics. If we don’t heed this warning now we will get the society we deserve.

  30. Stephen

    Like, like, likey, like…thank you for the simple but accurate observations!

  31. Thursday

    And the next Rabbit out of the hat BIS Shrapnel Dodgy report on Negative Gearing. Just in time for the Crooks/or Chooks in power to run around scaring everyone that the Sky will fall in .Young ones don’t listen to their crap. It’s all self interest by greedy horrible people. Yes most of the Conservative Party.

  32. Wally

    Thursday

    You raise a good point why do we allow foreign investment in residential properties? This should be stopped.

    The effect of NG changes will not be known for some time after they are implemented, no one can say with any certainty how markets will react, everything people are saying could happen but in many cases the extent is exaggerated. For the changes to achieve what is desired house prices must drop or stop rising for an extended period but this is not guaranteed.

  33. Thursday

    If you have bought a home to live in; even at these exorbitant prices. You still have a home to live in.Interest rates will go back up sometime so lets hope people calculated that in. Australian property is so overvalued it’s ridiculous.The greedy can’t believe the conditions. Julie Gillard allowed foreigners to buy up our homes. Stupid woman; It’s crazy.The Chinese are buying up Residential Properties big time. How can you compete with that influx?

  34. Wally

    Thursday

    “Australian property is so overvalued it’s ridiculous”

    By comparison to what?
    Typically it would be by comparison to the average or median wage.
    Are houses to expensive or are wages to low?

    The only way to improve housing affordability without causing problems for people with big mortgages is to increase wages.

  35. Thursday

    So many issues. First you must deal with the Top down approach re overpaid CEOs and underpaid Ants at the bottom.Though globalism allows the Australian businesses to employ even lower paid Ants overseas. So that’s why we had little Johnny Howard discussing his great love Industrial relations recently.
    Crush the Ants at home.It’s not class warfare that’s going on it’s just the wealthy want conditions to stay the same.Little Johnny Howard hoodwinked Australia for so many years and did so much damage.He was the Simon the Likeable weapon who spoke the average mans lingo and they are wheeling him out again.This man is poison.He’s a Conservative man’s Conservative and a man of great privilege.
    Though in the end he’s just another fundamentalist.
    Wally so many issues.One issue at a time.Having a roof over your head is a human right.
    I don’t have the figures. But though someone else could check. The cost of purchasing housing compared to 35 years ago with the average wage has gone up 6 fold. Sorry getting fatiged but I think you know what mean.So I guess you would have say CEOs are paid too much and housing is too high.And Australian businesses should employ Australians and employ them in Australia.

  36. Wally

    Thursday

    Globalisation has had a huge impact on our disposable income but as you say the top earners are better off, something smells off.

    I read somewhere today (cant recall where) that 35 years ago a house in Sydney’s North cost 5 times the average wage, nowadays the same house would cost 13 times the average wage. Then you need to factor in where people are placed (number of) compared to the average wage. So few earn so much it distorts the figures, how many people earn close to or more than the average wage nowadays compared to 35 years ago?

    Years ago well before the resources boom some people believed that minerals should not leave our shores without value adding so we as a nation would receive much more for our resources than a quick dollar. I think we made a big mistake not continuing that agenda. Comalco was an endeavour to value add which was continued by Alcan but Rio Tinto have closed many operations since the takeover over.

  37. Richard Kopf

    Sorry Kate, but a house is an investment. Sure it is your home but will you stay there for ever? I think not. Think of life cycle costs. Will it send you broke in costs of repairs, rates and taxes? When it is time to sell, has its value appreciated enough to allow you to switch without great costs? If you are tempted to rent instead of purchase, will you be comfortable in your older life or will you be sucked dry in paying rent on a pension?

  38. Kate M

    Thursday – you raise an interesting point, which is the impact of foreign investment in Australian real estate on prices. I had a quick look for some data on this, and found that the NAB Quarterly Australian Residential Property Survey for the last quarter of 2015 said:

    “Foreign buyers in new property markets were less active in all states, except Victoria.

    “Foreign buyers accounted for 14.8% of total demand for new property in Q4, down from 16.8% in Q3. In Victoria, however, they accounted for a new high of 32.5% of total demand, or 1 in 3 all new property sales” said Mr Oster.

    New survey questions show that around 53% of all foreign purchases were for apartments, 31% for houses and 16% for houses or land for re-development. There were however some significant differences between states.”

    http://business.nab.com.au/quarterly-australian-residential-property-survey-q4-2014-9323/

    Given that pricing for housing – arguably more than almost any other item – is fairly and squarely determined by supply and demand, it’s hard to see how that many extra buyers in the market couldn’t be pushing up property prices. It would also explain why housing price increases have way outstripped rental price increases.

  39. Kate M

    Richard – I think you might be making my point for me – unless I’ve misunderstood what you’re saying, in which case apologies 🙂

    My point was that the purpose of a house – at least for me, and for others in this comment space is to have somewhere to live. You want it to maintain value, as you say, so that when you sell, you can use the proceeds to buy somewhere else to live! And that’s the primary purpose for most people, so that they can avoid the rental cycle as you say, or even worse, being homeless. Now if you are lucky, when you sell, you may also make some money out of it (ie some investment returns) – but for most people, the FIRST purpose – as you point out, is to have somewhere to live.

    People who buy an ‘investment property’ – as the name suggests, are doing so typically for the return they will get, rather than as a place to live.

    The two goals – living somewhere and making money aren’t mutually exclusive, it’s just a case of which one is your primary goal – at least in my view it is.

  40. Kate M

    Wally/Thursday – to respond to a later comment. There’s a link in my article to another article which compares wages/house prices and other items from 1975 to 2015. Over that forty year period, wages increased – on average – 10 times. But the average housing price increased 30 times. So in real terms, housing – as compared to average wage – now costs three times as much to pay off as it did 40 years ago.

  41. Wally

    Kate M

    This article also confirms the disparity between wages and house prices.

    http://www.heraldsun.com.au/realestate/is-it-generational-warfare-or-generation-notshare/news-story/5dcaca8e9fa97a520433406e255643ee

    I think the comparison between housing prices and the average wage is flawed, we should be looking at how the minimum wage compares to housing prices. This is a much more realistic picture of how affordable housing is for low income earners. As I commented earlier the average wage is no longer an indication of what people are earning because a few people earn so much it distorts the statistic.

    We need a wage explosion to improve housing affordability.

  42. Kate M

    Good point Wally.

  43. Thursday

    Wages need to go up Wally but the Elephant in room is definitely the cost of Purchasing a property and renting off course. So if you bring down this you take some of the pain away.

  44. Wally

    Thursday

    “the Elephant in room is definitely the cost of Purchasing a property and renting off course. So if you bring down this you take some of the pain away.”

    Dropping house prices by 20% would be enough to make buying a home affordable for a lot of people but it doesn’t help those suffering mortgage stress and it could force people who are over committed out of their homes with huge losses. Cheaper houses puts the rich and foreign investors in a better position to buy making changes to negative gearing ineffective and when the opportunity to speculate on future rises rears its head more investors will surface.

    By contrast increasing wages by 20% for those in the low to average income bracket (gives them the power to buy a house) and reducing absurd executive salaries removes competition in the housing market and stimulates the economy. Everybody is a winner, even those who lose some income will benefit from a better economy, greater job security and less tax burden. With a bigger pay packet families would be in a position where they could afford to buy Australian products again.

  45. Richard Kopf

    Kate, a house is a home but must be an investment too. You cannot trust luck to have sufficient capital in your house, when and if you sell. You must do your homework before you buy. That is what I mean.

  46. Thursday

    Wally, Richard, Sometimes your super goes up and down as do House prices.The House prices are so over valued at moment.I.m talking about their intrinsic value.They have been propped up by all conditions I spoke of previously.Wally it sounds like you own a place. That is why you don’t want it’s value to drop.Though the great thing you have in owning a home it’s yours and when it rains you stay dry.Residential property ownership shouldn’t be about making lots and lots of money.I say to the person who just bought their 10th Residential property. Get a life and do something meaningful with it.

  47. Richard Kopf

    Thursday. I bought my first home for $4000. It was brand X on the agent’s list. It was all that I could afford. I bought it knowing that with proximity to the station, a block of land that would allow flats to be built on in the future, one day its value would rise and we could buy a better house. It kept most of the rain out but I never ignored the investment aspect of home ownership and where it would lead.

  48. Wally

    Thursday

    I fit exactly with what Kate was on about, my house is my home. With no debt and no intention of selling what it is worth makes no difference to me other than its valuation affecting what I pay in council rates, so really cheaper is better for me but I am not looking at house prices from a single perspective like you are.

    You want cheaper prices because you believe that is best for you without any consideration on how that could be detrimental to other people and that is one of the biggest problems we have in our society. Not many people care about others anymore it is all about ME.

    If someone paid $400k for a house with 20% deposit, house prices fall by 20% and no fault of theirs they are forced to sell they walk away with nothing. While others in a similar financial (loan) situation will continue to pay for a house they no longer have any equity in. I don’t think that is a very fair situation, people who have worked hard to buy a home despite the obstacles do not deserve that.

  49. Thursday

    Wally My point is houses are overpriced bought on by all the conditions mentioned above.I am not thinking about it from a selfish perspective.Your talking about wages and wanting your real estate to go up and up.This article is called My house isn’t an asset. It’s my home’.The way the things are set up now is not fair.This price rises have been disproportionate in the past 20 years to any other time period. I bought my property in 1996 for $87,000 and sold it for $400;000. It’s good for me but it’s a ridiculous rise.And I don’t want to buy back into the market. I intend to rent for the rest of my life.

  50. jimhaz

    [Even if Labor’s modest – proposed – changes to NG were to deflate the housing market overall (it obviously won’t in fact) I would see that as a good thing]

    Sorry TB, but it just might do that. Even this light policy change could result in a trend change. When assets are in bubble conditions the butterfly effect becomes more probable.

    Falling house prices could lead to a financial recession, due simply to the fact that unsustainable financial conditions are in fact unsustainable at some point, unless propped up by market interference (ie excessive immigration, neg gearing, first home buyers, non-release of land, overseas buyers etc) which keeps the musical chairs game going until it stops and everyone rushes for the chair (selling up for cash). A finance recession could lead to a jobs recession – albeit a short term one.

    Not that I care about those who would lose by a crash, low income mums and dads included. All investments are speculation and speculation involves risk. It you take risks you simply have to pay the price of failure. It is both the ALP and LNP govs who have stuffed up the market via interference in order to sustain land and income tax income, and their own investments.

    The ALP is likely to drop this policy at the first sign of a >10% downturn, as politics is no longer politics but just another avenue for opportunists to use. No point talking about the LNP as they are braindead. The public will pretend that they cannot tolerate any form of housing deflation pain – again due to gov interference we have not had the recessions we need that would have trained them about risk involved in speculation.

  51. Wally

    Thursday

    “Your talking about wages and wanting your real estate to go up and up”

    Already stated that house prices make no difference to me except for the valuation determining how much rates I pay. Lower house values = lower rates.

    “price rises have been disproportionate in the past 20 years”

    In comparison to what? Wages of course because housing affordability is determined by how many years wages it takes to own a house. If wages had increased inline with house prices we wouldn’t be reading this article, it wouldn’t have been written. I want housing affordability to improve but not at the expense of others who could/would be affected by a drop in house prices.

    Have you considered the impact a drop in house prices would have on older people who have taken out reverse mortgages?

    “I bought my property in 1996 for $87,000 and sold it for $400;000”

    Has your income increased 450% over the 20 year period? It is not only house prices that are an issue, the cost of living has increased much greater than wages over time. Back when you purchased your house a family could live on a single wage, try doing that today!

    House prices are unlikely to fall considerably unless there is a major financial crisis and if that happens it will be irrelevant, most people will not have the financial security or job security to borrow money so those who are cashed up would make a killing.

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