Whats your advice to the homeowners and landlords to begin to remedy this issue?
Australia’s property boom making the nation poorer
- Thread starter themickey
- Start date
Whats your advice to the homeowners and landlords to begin to remedy this issue?
It isn't a landlord - home owner issue or fault.
I think it started with little johnny howard who turned housing into an open market business with tax reliefs for speculators.
Then when GST was introduced they also promises abolition of stamp dutes which was reneged on.
Once upon a time a married man didn't need his wife working to support a family, when women were encouraged to work, house prices began to rise in tandem with increases in household income.
Once the hamster wheel started spinning, that was the beginning of house price inflation along with the house flipping game.
Then there were seminars on how to borrow to max and get max tax relief for high income earners.
Yup, after howard, housing went bat shit crazy.
But the wheel is beginning to turn, renters are outnumbering owners and they'll vote politicians out accordingly.
I see.
Don't get me started on Howard! haha
Off topic,GST has been a horrible triple tax for Australia and elsewhere but I guess it is an effective way to deal with the cash economy,tradies etc pocketing cash and not paying income tax on it.
IMO its time for it to be a service only tax and remove it from 'goods'.You still keep the rogue cashies somewhat in check but you cease to tax the people for necessities.
Surprised the Greens or someone hasnt tabled the idea.
Actually I didn't really answer your question properly.
The solution is govt need to stop pandering to voters for votes using housing incentives to get rich quick as bait, and make some hard decisions.
One problem we have in Oz is the prime ministers 3 year term is too short.
5 years imo is better. (4 years still too short imo).
Oz pollys need go to Singapore for some schooling and learn from them on housing.
There they have 99 year leases.
A 3 year term in politics leads to short term thinking.
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What about a cap on number of investment properties?
It does have the feel of stifling enterprise and penalizing success but the international market would still be open for the empire builders.
If you own your house/home, it is like printing money, what is there not to like for homeowners?House prices continue to rise as number of landlords increase
By business reporter Nadia Daly Yesterday at 7:44am
https://www.abc.net.au/news/2024-04...ise-as-number-of-landlords-increase/103654522
National housing data is being skewed by more affordable segments of market.
While buying a home to live in remains out of reach for many Australians, investors are flooding back into the housing market.
Data from the Australian Bureau of Statistics shows lending to investors — otherwise known as landlords — has jumped almost 20 per cent in the past year.
Almost four in 10 people taking out a mortgage now are landlords.
The combination of rising house prices, rising population growth (due to migration), rising rental demand and slower housing construction has made housing investment a more attractive proposition, according to economist Rachel ViforJ.
"If we've got huge demand relative to supply that would normally push up rents. And that would be an incentive for investors to invest in rental housing," Professor ViforJ told the ABC.
The ABC visited an open house last week hosted by Adelaide real estate agent Aditya Singh.
Mr Singh said he had noticed an uptick in investors buying to rent or short-term lease (like Airbnb) had increased over the past year.
"At the last two months of open houses, we've had lots of investors," he said.
Adelaide real estate agent Aditya Singh has noticed an increase of investors at open houses in recent months.(ABC News: Morsal Haidari)
Meanwhile, housing data from CoreLogic shows prices in capital cities continue to rise — up 0.6 per cent in March and up 10.2 per cent since January of 2023 when prices began to rise again after a short slump.
CoreLogic's Tim Lawless said there had been 14-months of consistent growth.
"Despite very high interest rates and a cost of living crisis, we've been seeing housing values rising ever since, albeit at a slower rate of growth," Mr Lawless said.
In practical terms that means a house valued at $800,000 in January 2023 that increased by 10.2 per cent would now be worth $881,600.
All the while rents have continued to climb, largely due to those low vacancy rates which are the result of a post-COVID boost in migration over the past year.
CoreLogic chief analyst Tim Lawless said increased investor involvement could help ease the housing crisis.(ABC News: Geoff Kemp)
Mr Lawless suggested the increase in investors could potentially help to ease the rental crisis.
"Arguably more investment in the marketplace is a positive thing. Hopefully that is introducing more rental stock to the marketplace."
Though he noted: "Obviously, if investors are purchasing established stock off other investors, it doesn't necessarily add to overall rental stock."
Professor Rachel Viforj said young people looking to get into the housing market have a financial mountain to climb.(ABC News: Mark Leonardi)
Rachel ViforJ, a professor of economics at Curtin University is more blunt: the state of housing affordability is a "really, really massive problem … whether you're looking at the homeownership market or you're looking at the rental market".
"If a young person is looking to buy today, that young person will be facing much higher house prices than say 10 or 20 years ago and also facing much higher interest rates than several years ago," she said.
"The median house price in Sydney is now well over $1 million, and unfortunately, people's income levels are just not keeping up with house price growth."
The cause is widely agreed to be one of supply and demand.
"On the supply side, we've had historically low levels of building approvals and so we've also had labour market shortages as well in the construction industry," Professor ViforJ said.
"And on the other hand, we've actually got huge demand for housing, in the form of a large number of migrants who have come in over the last year."
Would-be-buyers are faced with stiff competition in their quest to purchase a property.(ABC News: Ethan Rix)
Tension between generations becomes an unintended consequence
The housing affordability crisis is having unintended consequences between generations, Professor ViforJ said.
"There's definitely growing intergenerational tension in the housing market.
"Most people who are home owners are older and many of them would have bought back in say the 1980s, or the 1990s, just before the worldwide housing boom."
"If you bought just before the housing boom, then you would be enjoying a huge amount of capital gain," said Professor ViforJ.
"Unfortunately, what that means is that it's actually locking out growing numbers of young people from being able to access first home ownership."
The divide was not just between generations but between classes, she said.
"if you're a young person, but you have access to the bank of mum and dad, you'll actually find it easier to be able to buy your first home"
That was the case for 25-year-old bartender Connor Roche-West who just purchased his first apartment in Sydney's lower north shore this past weekend.
Sydney apartment buyer Connor Roche-West and his partner, who asked not to be named.(ABC News: Ethan Rix)
Mr Roche-West was thrilled when he spoke to the ABC after the auction.
He said it had been a long hard journey to buy a property in the current market where he was often outbid by other buyers, some of whom he believed may have been investors.
"It's rough knowing it's going to be back on the market in a couple of weeks for renting, but it is what it is, there's not much you can do" he said.
He said he was able to purchase the apartment with some financial help from his parents which he said he was very grateful for.
The unfortunate reality was that it was "damn near impossible" for young people like him to get into the housing market without such monetary support, Mr Roche-West said.
'I think most politicians will be quite cautious'
Real estate agent Ajay Valanju and property officer Scott He. (ABC News: Ethan Rix)
Real estate agent Ajay Valanju who sold the apartment to Mr Roche-West said he had noticed an increase of investors since the start of this year.
"Last year it was mainly owner-occupiers who were active but now we're seeing investors coming back into the marketplace."
The tension at some auctions between different bidders is sometimes palpable.
"It's definitely the case that when you have large numbers of investors wanting to purchase properties, as well as large numbers of first home buyers wanting to purchase properties, that there will be intense competition for the limited supply of housing that's in the market," Professor ViforJ said.
"And of course, with rental investors, typically, they're on higher incomes than first home buyers, typically they have more equity behind them, and therefore more financially well off."
The Commonwealth Bank's own data shows most of those with investor home loans are comfortably earning six figures.(Supplied: Commonwealth Bank of Australia)
Aside from the generational divide referenced by Professor ViforJ, the other reason property investors can be an uncomfortable topic when it comes to housing affordability is that they often can price out younger buyers because of tax incentives.
One of those tax incentives is negative gearing, which essentially means any losses a housing investor makes on the shortfall between rent and interest will be offset against other income — and covered by the taxpayer.
Although touching negative gearing was not very politically palatable, Mr Lawless said there were some ways to scale it back if any politician is game to try.
"Speaking from a more personal perspective, I think there is room to change negative gearing policies, perhaps capping it at two properties or less than three properties, or capping the total amount that you can negative gear will be much more palatable to voters."
Mr Lawless said this may help to reduce the number of investors who have "a significant stable of investment properties that have treated it much more like an investment class than the housing asset itself."
Another possible tax reform would be adjusting capital gains tax concessions which allows investors who hold a property for more than two years to get a 50 per cent concession on that tax when they sell it. Removing that might disincentivise investment in the property market, Tim Lawless said.
Though like negative gearing, tinkering with capital gains tax hasn't proven a very popular political pursuit.
"The Labor government did have a policy of changing negative gearing policies and capital gains tax concessions, and they seemed to lose from an unlosable position. So I think most politicians will be quite cautious in adjusting these types of policies," Mr Lawless said.
Professor ViforJ said another approach could be winding back stamp duty, which is the tax someone pays when they purchase a house.
Instead, she proposed replacing it with something like an annual land tax "that is not an up-front cost that people have to pay upon purchase, but it's an annual tax that they actually pay on the value of the land year after year after year, but not in a lump sum."
Tax reform isn't the only option: experts
Aside from tax reform, the supply of housing clearly needed to be increased to meet demand, Professor ViforJ said, however that needed to include sufficient social housing.
"We do need to build new properties across the income and wealth distribution," she said.
"But we do need to make sure that we have a focus as well on people who are at the bottom end of the distribution, we're finding it difficult to access housing."
Tinkering with negative gearing or the capital gains tax hasn’t proven a very popular political pursuit.(ABC News: John Gunn)
"The supply of social housing has not kept up with the demand for it over a very long period of time now, which means that we are actually getting larger numbers of people who are slipping into homelessness."
Professor ViforJ said there were many options on the table to improve housing affordability and the reality was many of them would need to be used together as there was no silver bullet solution.
Mr Lawless said other shorter-term solutions included government grants such as the boost to the first home owners grant after the global financial crisis, which led to a surge in house sales.
"But as soon as that stimulus was removed, we saw our first home buyer activity fall to below what it was pre stimulus. So I think that there's a really good argument here that those sort of policy initiatives, those stimulus levels don't really do a great deal for home ownership in the long run, and arguably pushes prices higher."
Instead, Mr Lawless believes the problem is best tackled by increasing housing supply.
As for the outlook for the year ahead, Mr Lawless believed the numbers are only going to go up.
"I think the outlook for the housing market is it probably is further growth through the rest of this year and into next year. And arguably, if we did see interest rates coming down later this year, that could add a little bit more exuberance to housing activity."
While Mr Lawless doesn't believe the number of housing investors will rise this year, Professor Viforj believes it might.
"I think that as long as the rental vacancy rates are remaining, so low below 1 per cent, we will continue to see the amount of housing investment rise over the coming year. And I think that would especially be the case if interest rates start to fall."
So, in a democracy, if the majority of voters are home owners, it is hard to vote in measures to help would be home owners. Therefore it is the haves against the have nots.
Zero housing investment properties.
Housing is for home ownership, not scullduggery where landlords increase rents 6 monthly bs and taxpayers subsidize their greed because they're fat cats and looking to minimize tax at someone elses expense.
Hardline Mick! haha
Business insolvencies hit record highs with worse to come, warns CreditorWatch
By chief business correspondent Ian Verrender Posted 3 hours ago
https://www.abc.net.au/news/2024-04...cies-hit-record-highs-creditorwatch/103732960
A record number of businesses are collapsing under the weight of higher interest rates, rising costs, tax debts and weak consumer spending.(ABC News: Che Chorley)
While America's economy continues to defy the odds, with stronger-than-anticipated inflation, employment and spending, Australia's economy is labouring under the growing weight of the past two years of rate hikes.
Even though the Fed has hiked rates more than the Reserve Bank, the effect on mortgage interest rates here has been dramatically higher.
Australian mortgage rates have risen much higher than US mortgage rates, because most Americans are on long-term fixed loans (20-30 years).(Supplied: AMP)
That's now raising the prospect that we may end up cutting rates before the United States, an outcome that would place the Aussie dollar under even more pressure.
It is bang on 64 US cents this morning, and threatening to break even lower.
The latest piece of the domestic economic jigsaw puzzle shows a stark rise in business failures, which have risen to record highs, hit by a triple blow of weak consumer demand, cost pressures and a tax office now determined to collect what it's owed.
According to data from debt monitoring firm CreditorWatch, more Australian businesses are now in the hands of external administrators than ever before, rising more than 22 per cent since this time last year.
The pain is coming from all sides.
Construction firms are reeling from a crackdown by the Australian Tax Office, registering the most tax defaults, while also still facing rising building material costs and skilled labour shortages.
CreditorWatch finds smaller sub-contractor businesses in the residential sector are most at risk in the construction industry.
However, overall it is businesses in the food and beverage industries that are the most at risk of failure.
CreditorWatch chief executive Patrick Coghlan says businesses under pressure from higher costs are being starved of revenue from consumers battling with cost-of-living pressures.
"Most businesses, particularly those that are consumer facing, and therefore exposed to the vagaries of discretionary spending, are being hit by a range of heavy impacts," he said.
"We don't expect business conditions to improve markedly until consumer spending increases, and that is dependent on interest rate relief, which is not even on the horizon at this point given the high rates of inflation in the US."
According to the data, the difficulties in isolated industries are beginning to have a knock-on effect to suppliers.
Business-to-business payment defaults are surging, up more than 22 per cent since the same period a year ago, although the rate of growth appears to have tapered.
Even the mining industry has begun to show the strain, with rising insolvencies and late payments as commodity prices have dropped sharply this year.
The relative safe havens for business owners are to be found in healthcare and social assistance, benefiting from a government-funded NDIS boom, agriculture and fisheries, and the finance and insurance sector.
Restaurants, cafes and bars have the highest rate of business failures.(Supplied: CreditorWatch)
Pressure points on an uneven landscape
Geographically, the pain has not been evenly spread.
The worst-hit areas — those with the highest risk of business failure — are centred around Western Sydney and South-East Queensland.
The 10 areas identified by CreditorWatch as having the highest risk of business defaults.(Supplied: CreditorWatch)
Regional Victoria, inner Adelaide and north Queensland, on the other hand, are experiencing the least pain.
The ten lowest risk regions for business default, according to CreditorWatch.(Supplied: CreditorWatch)
According to the analysis, regions with a higher proportion of older businesses and older residents have shown greater resilience to the pressures as older businesses are less likely to be carrying higher debts, while older residents tend to have lower mortgage levels and their spending is more immune to interest rate movements.
CreditorWatch chief economist Anneke Thompson expects the situation to continue to deteriorate.
"Of particular concern is the continued high level of trade payment defaults which, coupled with the ATO now lodging defaults for tax debts outstanding of $100,000 or more at increasing rates, means more and more businesses are unable to meet their supplier payments on time," she warns.
"We expect these trade payment defaults to continue to increase while interest rates remain elevated."
By chief business correspondent Ian Verrender Posted 3 hours ago
https://www.abc.net.au/news/2024-04...cies-hit-record-highs-creditorwatch/103732960
A record number of businesses are collapsing under the weight of higher interest rates, rising costs, tax debts and weak consumer spending.(ABC News: Che Chorley)
- In short: The number of businesses in external administration has hit a record high, according to CreditorWatch.
- The highest-risk areas are dominated by south-west and western Sydney and south-east Queensland, while regional Victoria, north Queensland and inner Adelaide are lowest risk.
- What's next? The Australian Taxation Office is collecting tens of billions of dollars in debts owed by small businesses, likely to result in further insolvencies.
While America's economy continues to defy the odds, with stronger-than-anticipated inflation, employment and spending, Australia's economy is labouring under the growing weight of the past two years of rate hikes.
Even though the Fed has hiked rates more than the Reserve Bank, the effect on mortgage interest rates here has been dramatically higher.
Australian mortgage rates have risen much higher than US mortgage rates, because most Americans are on long-term fixed loans (20-30 years).(Supplied: AMP)
That's now raising the prospect that we may end up cutting rates before the United States, an outcome that would place the Aussie dollar under even more pressure.
It is bang on 64 US cents this morning, and threatening to break even lower.
The latest piece of the domestic economic jigsaw puzzle shows a stark rise in business failures, which have risen to record highs, hit by a triple blow of weak consumer demand, cost pressures and a tax office now determined to collect what it's owed.
According to data from debt monitoring firm CreditorWatch, more Australian businesses are now in the hands of external administrators than ever before, rising more than 22 per cent since this time last year.
The pain is coming from all sides.
Construction firms are reeling from a crackdown by the Australian Tax Office, registering the most tax defaults, while also still facing rising building material costs and skilled labour shortages.
CreditorWatch finds smaller sub-contractor businesses in the residential sector are most at risk in the construction industry.
However, overall it is businesses in the food and beverage industries that are the most at risk of failure.
CreditorWatch chief executive Patrick Coghlan says businesses under pressure from higher costs are being starved of revenue from consumers battling with cost-of-living pressures.
"Most businesses, particularly those that are consumer facing, and therefore exposed to the vagaries of discretionary spending, are being hit by a range of heavy impacts," he said.
"We don't expect business conditions to improve markedly until consumer spending increases, and that is dependent on interest rate relief, which is not even on the horizon at this point given the high rates of inflation in the US."
According to the data, the difficulties in isolated industries are beginning to have a knock-on effect to suppliers.
Business-to-business payment defaults are surging, up more than 22 per cent since the same period a year ago, although the rate of growth appears to have tapered.
Even the mining industry has begun to show the strain, with rising insolvencies and late payments as commodity prices have dropped sharply this year.
The relative safe havens for business owners are to be found in healthcare and social assistance, benefiting from a government-funded NDIS boom, agriculture and fisheries, and the finance and insurance sector.
Restaurants, cafes and bars have the highest rate of business failures.(Supplied: CreditorWatch)
Pressure points on an uneven landscape
Geographically, the pain has not been evenly spread.
The worst-hit areas — those with the highest risk of business failure — are centred around Western Sydney and South-East Queensland.
The 10 areas identified by CreditorWatch as having the highest risk of business defaults.(Supplied: CreditorWatch)
Regional Victoria, inner Adelaide and north Queensland, on the other hand, are experiencing the least pain.
The ten lowest risk regions for business default, according to CreditorWatch.(Supplied: CreditorWatch)
According to the analysis, regions with a higher proportion of older businesses and older residents have shown greater resilience to the pressures as older businesses are less likely to be carrying higher debts, while older residents tend to have lower mortgage levels and their spending is more immune to interest rate movements.
CreditorWatch chief economist Anneke Thompson expects the situation to continue to deteriorate.
"Of particular concern is the continued high level of trade payment defaults which, coupled with the ATO now lodging defaults for tax debts outstanding of $100,000 or more at increasing rates, means more and more businesses are unable to meet their supplier payments on time," she warns.
"We expect these trade payment defaults to continue to increase while interest rates remain elevated."
Maybe it is all due to China not buying Australian agriculture products and ores?Business insolvencies hit record highs with worse to come, warns CreditorWatch
By chief business correspondent Ian Verrender Posted 3 hours ago
https://www.abc.net.au/news/2024-04...cies-hit-record-highs-creditorwatch/103732960
A record number of businesses are collapsing under the weight of higher interest rates, rising costs, tax debts and weak consumer spending.(ABC News: Che Chorley)
The cracks are starting to appear. At least here.
- In short: The number of businesses in external administration has hit a record high, according to CreditorWatch.
- The highest-risk areas are dominated by south-west and western Sydney and south-east Queensland, while regional Victoria, north Queensland and inner Adelaide are lowest risk.
- What's next? The Australian Taxation Office is collecting tens of billions of dollars in debts owed by small businesses, likely to result in further insolvencies.
While America's economy continues to defy the odds, with stronger-than-anticipated inflation, employment and spending, Australia's economy is labouring under the growing weight of the past two years of rate hikes.
Even though the Fed has hiked rates more than the Reserve Bank, the effect on mortgage interest rates here has been dramatically higher.
Australian mortgage rates have risen much higher than US mortgage rates, because most Americans are on long-term fixed loans (20-30 years).(Supplied: AMP)
That's now raising the prospect that we may end up cutting rates before the United States, an outcome that would place the Aussie dollar under even more pressure.
It is bang on 64 US cents this morning, and threatening to break even lower.
The latest piece of the domestic economic jigsaw puzzle shows a stark rise in business failures, which have risen to record highs, hit by a triple blow of weak consumer demand, cost pressures and a tax office now determined to collect what it's owed.
According to data from debt monitoring firm CreditorWatch, more Australian businesses are now in the hands of external administrators than ever before, rising more than 22 per cent since this time last year.
The pain is coming from all sides.
Construction firms are reeling from a crackdown by the Australian Tax Office, registering the most tax defaults, while also still facing rising building material costs and skilled labour shortages.
CreditorWatch finds smaller sub-contractor businesses in the residential sector are most at risk in the construction industry.
However, overall it is businesses in the food and beverage industries that are the most at risk of failure.
CreditorWatch chief executive Patrick Coghlan says businesses under pressure from higher costs are being starved of revenue from consumers battling with cost-of-living pressures.
"Most businesses, particularly those that are consumer facing, and therefore exposed to the vagaries of discretionary spending, are being hit by a range of heavy impacts," he said.
"We don't expect business conditions to improve markedly until consumer spending increases, and that is dependent on interest rate relief, which is not even on the horizon at this point given the high rates of inflation in the US."
According to the data, the difficulties in isolated industries are beginning to have a knock-on effect to suppliers.
Business-to-business payment defaults are surging, up more than 22 per cent since the same period a year ago, although the rate of growth appears to have tapered.
Even the mining industry has begun to show the strain, with rising insolvencies and late payments as commodity prices have dropped sharply this year.
The relative safe havens for business owners are to be found in healthcare and social assistance, benefiting from a government-funded NDIS boom, agriculture and fisheries, and the finance and insurance sector.
Restaurants, cafes and bars have the highest rate of business failures.(Supplied: CreditorWatch)
Pressure points on an uneven landscape
Geographically, the pain has not been evenly spread.
The worst-hit areas — those with the highest risk of business failure — are centred around Western Sydney and South-East Queensland.
The 10 areas identified by CreditorWatch as having the highest risk of business defaults.(Supplied: CreditorWatch)
Regional Victoria, inner Adelaide and north Queensland, on the other hand, are experiencing the least pain.
The ten lowest risk regions for business default, according to CreditorWatch.(Supplied: CreditorWatch)
According to the analysis, regions with a higher proportion of older businesses and older residents have shown greater resilience to the pressures as older businesses are less likely to be carrying higher debts, while older residents tend to have lower mortgage levels and their spending is more immune to interest rate movements.
CreditorWatch chief economist Anneke Thompson expects the situation to continue to deteriorate.
"Of particular concern is the continued high level of trade payment defaults which, coupled with the ATO now lodging defaults for tax debts outstanding of $100,000 or more at increasing rates, means more and more businesses are unable to meet their supplier payments on time," she warns.
"We expect these trade payment defaults to continue to increase while interest rates remain elevated."