Society/Culture The housing crisis. How is it fixed?

[nut]

bzzzzzzzzt

wrong

Residential Construction costs generally are back down to earth. Outside of the known blip being COVID.

The cost to build an average dwelling is generally back to its pre covid decade average. CPI adjusted.

View attachment 2062362

The reason housing is expensive is all the costs you dont see, which aren't part of the physical house. As I mentioned above.

Ok show me the cost to build a new house..
it’s still over 250k to build a new cheap house.
So even on a cheap block in a country town you are looking at the median price to build new.

 

[HirdsTheWord]

Ok show me the cost to build a new house..
it’s still over 250k to build a new cheap house.
So even on a cheap block in a country town you are looking at the median price to build new.

250k is mega cheap for a house.

Even 10 years ago...

 

[Seeds]

bzzzzzzzzt

wrong

Residential Construction costs generally are back down to earth. Outside of the known blip being COVID.

The cost to build an average dwelling is generally back to its pre covid decade average. CPI adjusted.

View attachment 2062362

The reason housing is expensive is all the costs you dont see, which aren't part of the physical house. As I mentioned above.

That chart doesnt suggest costs are back down to pre covid real rates. All it says is that costs have stopped growing in real terms. The line has to go negative to bring costs back down.

 

[peetoo]

More snake oil

Article basically contradicts itself in a big big way

Australia’s super-sized mortgages climb $154 a day to record high — The Age

NSW’s average mortgage lifted to $780,000 last financial year, while Victoria’s rose to $604,300.

apple.news

 

[Gone Critical]

Lots of things can be done but governments at all levels are too beholden to lobbyists, too reliant on stamp duty and just too gutless to take action.

Remove the 50% discount on CGT
Remove the depreciation expense for NG


On SM-A125F using BigFooty.com mobile app

While I agree on reigning in negative gearing nobody really ever goes into detail of what they mean with removing the 50% CGT.

Do you mean remove it on investment property only?
Do you mean remove it from all investment income?
Do you mean remove it and go back to to CPI indexation which it replaced?

I am no expert but if only property I think the consequences would be huge with property investment suddenly massively less attractive. Developers and investors would desert the market. If all investment income then would be major implications for super and peoples retirement income etc. Going back to CPI maybe could be fairer but obviously more complicated.

It would seem if you have a CGT its only fair to make allowance for the inflationary creep that devalues the gain over time. 70% of investment properties are held by people with only one property. For many of them super only came to them later in their working life and at %'s much lower than they are now. They have often worked hard, used the systems of the day to provide for their own retirement at least partially and it would seem harsh to whack them. Presumably changes may not be retrospective so maybe that particular part of it isnt a worry.


Nonetheless some allowance should be made for inflation eroding capital gain over time. Whats your solution?

 

[Seeds]

While I agree on reigning in negative gearing nobody really ever goes into detail of what they mean with removing the 50% CGT.

Do you mean remove it on investment property only?
Do you mean remove it from all investment income?
Do you mean remove it and go back to to CPI indexation which it replaced?

I am no expert but if only property I think the consequences would be huge with property investment suddenly massively less attractive. Developers and investors would desert the market. If all investment income then would be major implications for super and peoples retirement income etc. Going back to CPI maybe could be fairer but obviously more complicated.

It would seem if you have a CGT its only fair to make allowance for the inflationary creep that devalues the gain over time. 70% of investment properties are held by people with only one property. For many of them super only came to them later in their working life and at %'s much lower than they are now. They have often worked hard, used the systems of the day to provide for their own retirement at least partially and it would seem harsh to whack them. Presumably changes may not be retrospective so maybe that particular part of it isnt a worry.


Nonetheless some allowance should be made for inflation eroding capital gain over time. Whats your solution?

The third option

 

[Gone Critical]

The third option

I dont know the answer but as I understand it Howards 50% discount came in to make it simpler to do the calculations and I think was meant to be about the same discount. Did that in fact happen or did it net benefit investors overall.

 

[DangerousD]

Building houses themselves isn't the issue.

Houses are cheap to build.

The problem is the infrastructure. Roads, Transport, Schools & Utilities etc that need to be built along with the houses to make the communities attractive to people. Thats the expensive part.

People need Jobs, the jobs are in cities. People dont want to move where they are commuting 1hr + to work each way because of our shitty transport systems compared to other countries.

Ill give response to your claim that houses are cheap to build, in most cases, they aren’t.

I purchased an investment property 5 years ago with the intention of sub dividing the back, building a house and selling it, contributing to the supply of housing.

The whole process has been very long, slow and expensive.

To get all the plans and permits done for the house and sub division, it cost about $20,000 and took about 4-5 months, now i could have saved $2000-$3000 if i did it myself.

When i then took these plans to builders for quotes the range to build the 3 bed 2 bath, double garage house, ranged from $550,000-$650,000 with lots of exclusions in every quote, i then explored all of those volume builders who advertise the real cheap houses, most of which only work in areas where they sell house and land packages and lots of the costs advertised only include the build itself but none of the other stuff.

I then decided to abandon the build and just sell off the block so someone else can buy it and build their own house, but to do this means you need different permits because the permits I’ve paid for are for a build and not to sell land, there are now a whole heap of different plans needed for sewerage connections, electricity connections, NBN connections, plumbing to be even able to get to the point to sell the block.

Roughly about $110,000 to get everything done to creat a block to sell.

So when we talk about what can be done to increase supply, the cost and time it takes for people to create land and build needs addressing, it seems at every turn there’s a council or government taking $$$$ at every turn.

 

[Seeds]

I dont know the answer but as I understand it Howards 50% discount came in to make it simpler to do the calculations and I think was meant to be about the same discount. Did that in fact happen or did it net benefit investors overall.

its really not hard to adjust for inflation. You shouldnt own assets if you arent capable of doing a simple division calculation.

 

[kickazz]

I'm now of the opinion that our kick the can down the road economic/fiscal/monetary policies are the problem - they just keep on inflating the bubble.

The only fix is pain. We need a lot of people having to sell at the same time. I used to think the answer was people moving to the regions/country but even they are expensive now.

 

[DangerousD]

I'm now of the opinion that our kick the can down the road economic/fiscal/monetary policies are the problem - they just keep on inflating the bubble.

The only fix is pain. We need a lot of people having to sell at the same time. I used to think the answer was people moving to the regions/country but even they are expensive now.

The only fix is pain? Nooooo, the fix is actually voting for politicians who advocate for improving the current situation and getting enough support, that a major party actually develops a good housing policy.

I struggle to see a scenario where lots of people would need to sell at the same time.

 

[kickazz]

The only fix is pain? Nooooo, the fix is actually voting for politicians who advocate for improving the current situation and getting enough support, that a major party actually develops a good housing policy.

I struggle to see a scenario where lots of people would need to sell at the same time.

I probably should have said the only fix involves pain rather that is pain.

Yes advocacy, policy and all that is good - but what specifically?

On your last point, a decent economic downturn or interest rates going to around 8 or 9 percent (that is, a bit above average) would likely see a lot of sales.

 

[Upgrayedd]

Foreign ownership is currently the biggest driver in investment into medium/high density apartments

bzzzzzzzzt

wrong

Residential Construction costs generally are back down to earth. Outside of the known blip being COVID.

The cost to build an average dwelling is generally back to its pre covid decade average. CPI adjusted.

View attachment 2062362

The reason housing is expensive is all the costs you dont see, which aren't part of the physical house. As I mentioned above.

Can say from working in the building sector, This graph is flat out bullshit and prices from 21 to 24 just at an overall are about 25% more from 2021, the material we use for our industry has gone up between 25-44% on anything which uses copper. I also know wholesalers are in general making less % profit on larger orders and pure materials then they were from pre 2019 so I can say for certain that graph is flat out bull.



As for bringing down dwelling costs? affordability and stock?
Land Tax for 3+propertys owned by a trusts/businesses or individual or a married couple excluding commercial zoned property
having to register Airbnb's and have the same conditions/compliance as hotels
View rental housing as more of a service, remove fines but bring in potential laws which exclude you from providing rentals for issues not fixed such as black mould, plumbing/electrical issues,

I also think instead of relying on developers to want to sell 70/80% of units even before a slab goes down on apartment complexes there could be a government developed fund which could help get projects off the ground instead of relying on foreign investment so much. I think the government would be well spent also looking and communicating with potential buyers from overseas if there is a chance they are using funds from overseas which could be confiscated to sink into Australia as a way to hide it

and actually crack down on Money laundering through rent/over+under valuations in Sydney from the drug trade. I think the most under-rated (Well only good) move the Morrison government did was pick up on the Abbott's government policy of slashing funding and started the wheels for the re-structure

While ironically Abbott should have rotten fruit thrown at him for what he tried to do to ASIC

 

[DangerousD]

I probably should have said the only fix involves pain rather that is pain.

Yes advocacy, policy and all that is good - but what specifically?

On your last point, a decent economic downturn or interest rates going to around 8 or 9 percent (that is, a bit above average) would likely see a lot of sales.

It would see a lot of sales, but in the event of an economic downturn, who then is buying these properties? Interest rates go up, borrowing capacity goes down.

I recently sold an investment property due to the rise in interest rates and increase to land tax, so i assume if i decided to sell, others are too.

I don think its a big of a problem to solve as its made out.

Ban All foreign investment in residential housing, excluding apartments.
Limit/restrict the availability of sites like Airbnb
Tax empty dwellings/expand the existing tax
Increase funding for public housing
Cut red tape at council level to speed up sub divisions
Reduce the CGT discount

I dont see any of those points having too much opposition in parliament and all would help in some way or another.

 

[Rob R]

It would see a lot of sales, but in the event of an economic downturn, who then is buying these properties? Interest rates go up, borrowing capacity goes down.

I recently sold an investment property due to the rise in interest rates and increase to land tax, so i assume if i decided to sell, others are too.

I don think its a big of a problem to solve as its made out.

Ban All foreign investment in residential housing, excluding apartments.
Limit/restrict the availability of sites like Airbnb
Tax empty dwellings/expand the existing tax
Increase funding for public housing
Cut red tape at council level to speed up sub divisions
Reduce the CGT discount

I dont see any of those points having too much opposition in parliament and all would help in some way or another.

The reason sensible measures aren't being introduced is pollies on both sides want to protect their own property portfolios and the interests of donors.

On SM-A136B using BigFooty.com mobile app

 

[leon123]

The reason sensible measures aren't being introduced is pollies on both sides want to protect their own property portfolios and the interests of donors.

On SM-A136B using BigFooty.com mobile app

I think the problem is a little more complex than that.

But, agree somewhat, in that there is a lot of vested interests and industries that prefer housing as an investment vehicle than a home.

 

[Seeds]

It would see a lot of sales, but in the event of an economic downturn, who then is buying these properties? Interest rates go up, borrowing capacity goes down.

I recently sold an investment property due to the rise in interest rates and increase to land tax, so i assume if i decided to sell, others are too.

I don think its a big of a problem to solve as its made out.

Ban All foreign investment in residential housing, excluding apartments.
Limit/restrict the availability of sites like Airbnb
Tax empty dwellings/expand the existing tax
Increase funding for public housing
Cut red tape at council level to speed up sub divisions
Reduce the CGT discount

I dont see any of those points having too much opposition in parliament and all would help in some way or another.

We shouldnt limit airbnb. Tourists have a right too.

The other points are all good.

 

[DangerousD]

The reason sensible measures aren't being introduced is pollies on both sides want to protect their own property portfolios and the interests of donors.

On SM-A136B using BigFooty.com mobile app

Most measures raised include grandfathering existing conditions though.

A lot of those sensible measures would have very little impact to a persons portfolio. Self interest does prevail though.

 

[DangerousD]

We shouldnt limit airbnb. Tourists have a right too.

The other points are all good.

Limiting something isn’t taking away tourists rights though.

There would be areas where Airbnb isn’t an issue and there would be areas where locals can’t find a place to rent because a large portion of the housing stock has been purchased by investors to turn in to a hotel.

In those circumstances i think a few things can be changed.

 

[Andre]

I probably should have said the only fix involves pain rather that is pain.

Yes advocacy, policy and all that is good - but what specifically?

On your last point, a decent economic downturn or interest rates going to around 8 or 9 percent (that is, a bit above average) would likely see a lot of sales.

If house prices were isolated from other things, such as if they tanked people would then just have a house worth less, then it'd be easy and some politicians would have done it, arguing it was just a 'paper loss'. The problem is those inflated house prices are used to borrow against to fund house improvements and more importantly general buying in the economy. You tank house prices and that'd disappear very quickly. A bad recession (with lots of job losses) at the minimum, affecting not just those whose house(s) went down in value.

House prices need to come down at least 50%, but it needs to be over a few years if a major recession is to be avoided.

 

[ReidBetweenTheLines]

Definitely seems to be a world wide phenomenon. This video that came out recently touches on the topic of the housing crisis in China and it’s very interesting to see how their young adults are responding

 

[Seeds]

Definitely seems to be a world wide phenomenon. This video that came out recently touches on the topic of the housing crisis in China and it’s very interesting to see how their young adults are responding

China has too many houses. The opposite problem of australia.

 

[DangerousD]

The reason sensible measures aren't being introduced is pollies on both sides want to protect their own property portfolios and the interests of donors.

On SM-A136B using BigFooty.com mobile app

Add to this. Any change to any laws regarding this issue is framed in the media as, stopping investment, will lower your house price and is painted in a negative light.

People complain about the lack of affordable homes, the ever increasing house prices, yet any attempt to slow it down is met with an attack by the opposition and an attack by the media.

It’s like people scream for action and then scream when there is action because they have no idea what the actual cause of the issue is.

 

[Chicken Treat]

Seeing someone get "piled on" over complaining about a $40 rent increase for "not feeling grateful" on Facebook tells me we are not a serious society with regards to dealing with deep seated housing problems.

 

[DangerousD]

Seeing someone get "piled on" over complaining about a $40 rent increase for "not feeling grateful" on Facebook tells me we are not a serious society with regards to dealing with deep seated housing problems.

Im a member of a few investment pages on facebook and the overwhelming majority on them are cheering for change, so that taxes and restrictions on investment will be eased, to rule another boom.

When 1000s of people have invested hundreds of thousands of $$$$, they are going to push back against any change and are a large voter block.

It’s a bit depressing tbh