The politics of housing

[think positive]

how big are the blocks? big enough for a couple of units or 4 townhouses? thats cheap!!

[pietillidie]

^

Not sure if he's correct about that. The family home doesn't count in the assets test but their super balance would once they reach pensionable age. Depending on other assets and if they spend off some of the super on holidays or home renovations etc they could still qualify for at least a part pension, which would increase as their super balance goes down.

With an investment property AND super, no pension.

I dont have time to finesse the cost shift right now, but I've seen those arguments before and along with most economists and virtually every behavioural economist view them as false economy and worse, sociallly destructive.

There is a cost either way, but denying young people the incentive of home ownership is far, far more socially damaging. Much better to up pensions than disincentivise your next generation of workers.

And that's by a country mile, most likely. Remember, you're going to have to up pensions for all the young people people who can't benefit from the inflated return of home ownership (housing is essentially a fake market with limited supply and dimishing space, so its returns are grossly inflated versus its risk level, which is, literally, 'safe as houses').

But the disaster of removing home ownership, which is the central behavioural economics benefit in people's lives, could be de-develop society in ways we're only just starting to grasp.

Consider: home ownership focuses careers, motivates work and savings, balances pipulation growth, improves health etc., and even better - it does this while giving something back right away (my own home/space!) regardless of the mortage burden. People's love for that space grows over time and grounds children and grand children. So even if a mortgage drags on, people can push through because of the incomparable tangible and intangible benefits.

So, the absolute last thing you want to do is remove the most powerful behavioural economics incentive we have.

But as I say, I've got no time to investigate the cost shift and the best strategy for that. But it's better to have a single whammy (bolster pensions/reduce taxes/increase super, or whatever) than a double whammy of depriving young people of incentive and life focus as well as then bolstering pensions/reducing taxes/increasing super, etc. because they lack the asset inflation of previous generations.

As clear as day, there's a generational disaster brewing right now with younger generations because of this. You can see it a mile off, and it's being worsened by slowing population growth which is shifting electoral power to people at the wrong end of their lives to be making decisions for the whole. Brexit is a classic example, with the elderly in the shires tipping the vote and costing everyone else billions and billions of dollars of welath and service deficits they won't be around to pay back.

[What'sinaname]

Getting rid of CGT adds a massive burden on the property owner to maintain records of all capital improvements to adjust the cost base. Can you imagine someone who has lives in a house for 30 - 40 years having those records?

[stui magpie]

how big are the blocks? big enough for a couple of units or 4 townhouses? thats cheap!!

The one that sold is a smaller block, the person who bought it is living there.

The one up for sale is a longer block, if it was a corner block you'd fit 3 units or 4 townhouses.

[think positive]

Getting rid of CGT adds a massive burden on the property owner to maintain records of all capital improvements to adjust the cost base. Can you imagine someone who has lives in a house for 30 - 40 years having those records?

changing rules to super and stuff like this drives me nuts!!

We built this house 15 years ago, I have every single invoice and I still keep all the bills!!! same for our beach house! i have major trust issues!

[Magpietothemax]

Getting rid of CGT adds a massive burden on the property owner to maintain records of all capital improvements to adjust the cost base. Can you imagine someone who has lives in a house for 30 - 40 years having those records?

changing rules to super and stuff like this drives me nuts!!

We built this house 15 years ago, I have every single invoice and I still keep all the bills!!! same for our beach house! i have major trust issues!

That is why the entire superannuation program, from the very start, was a massive deception, fleecing the working class and channelling wealth to the super rich.
It forces workers, without their consent, to invest a portion of their wages in the stockmarket/financial institutions. This has helped to inject massive amounts of cash over the decades into speculative markets, thus giving free rein to super hedge funds, banks, corporate speculation etc to use this low interest cash to amass massive profits. Super contributions were paid for by cuts to the real take home wages of workers.

It all appeared to go well for a while...until 2008.

Then of course, when the speculations of the super funds went bust, it was workers who bore the cost through diminsiehd retirement savings and being forced to work for longer than they had anticipated.

And of course, super is subject to the changing whims of the ruling elite. The government, in defence of corporate and financial interests, can change the rules of super anytime they feel like it.

Finally, one of the driving motives of introducing superannuation was to phase out as much as possible the old age pension. The plan always was to force/trick workers into accepting real wage cuts during their working life so that they could fund their own retirement, and the government could cut back on expenditure for pensions, and instead offer tax breaks to the corporations and the super rich to encourage global capital to find a home in Australia.

[think positive]

and thats why we have a self managed super fund!!

[pietillidie]

No, M2M, just no. That's not a sober analysis. You can't use episodic market failures to hide long-term market gains.

The market has done very well over the long run, while housing is a fake market which has skyrocketed disproportionately due to planning and supply barriers. Sane investing isn't the problem, insane housing prices favouring older generations is the problem. The sooner housing is priced according to its extraordinarily low risk, and not by human-created supply constraints, the better.

I'm not saying people should be investing in rubbish, high-fee, high-risk schemes. They should be investing long-term blue-chips, which accurately reflect national performance at low risk. But they also need decent housing, just not as an investment strategy. Housing is a national dividend and should be indexed accordingly.

You absolutely want people investing in blue chips, not turning fake planning and housing supply constraints into an investment business. The objective should be to remove housing as anything but a personal investment indexed to the whole economy, not as a money spinner driven by the fake NIMBY and politicking BS of a growing, greying generation.

They made their money buying cheap housing made widely available by goverment housing schemes, benefitting from the nation and increasingly irrational price rises at a time of space, low environmental care, and expanding populations. Those goldilocks conditions will never ever be repeated again, even though they fantasise they worked harder. They didn't, they were just lucky to be born when there was little international competition, peasants built things in poor countries for them for peanuts, resources were plentiful, social support was far more generous, goverment had a mission to provide housing, etc.

It was a one off sequence of decades during and beyond the post-war boom. Never to be repeated again. So, That leaves us to invest in other safe assets such as blue chips. Super was very sensible, even if Glib cowboy policy weakened it. The same sort of financial policy failures that caused the GFC, and left nations ill-prepared for Covid by cutting risk management budgets to the bone.

But none of that changes a single thing about the returns and stability of sane investing and savings allocation over time, and conversely the social distortion caused by the artificial housing market.

[pietillidie]

^TP, I want to emphasise I'm not questioning your work and specialisation in housing, which I greatly admire. It's much the same as I said to Skids about his speciality, mining; your expertise is absolutely crucial and businesses and investment in those areas is absolutely crucial, even if a shift is needed.

The fix with housing has to somehow even out the supply/returns to something more reasonable for such a very safe asset class, which probably involves government supply, trumping NIMBY self-entitlement, incentivising the right kind of private investment, etc.

Land is limited and in one sense no one really 'owns' it; it's not sovereign and not disconnected from national infrastructure, law, inflation and cost. We allow ownership for practical reasons of betterment, so if current laws are not promoting betterment because times have changes, those laws need to be adjusted. In fact, the practical reasons of betterment that are driven by ownership are one of the main reasons, we can't allow young people to lose access to that incentive system, as argued above.

Basic geography and infrastructure cost means space is constrained. So, people should be rewarded for their work maximising space (I think you mentioned units/apartments somewhere above, which is a perfect use of space), and penalised for doing the opposite. If people have big blocks, pressure them, and at the very worst don't allow them to pass on that huge piece of the nation without use intensification.

I don't know enough about infrastructure and the margins to be prescriptive yet as that's a big research project, so these are just ideas. But however it's done, we absolutely must bring housing prices down and increase affordability and accessibility. The population will have to keep growing for a while yet or government revenue and FDI will collapse, so environmentalists and faux enviro-entitlers who really just want special treatment until they die will have to pull their heads in.

Every cost can be offset, and offset fairly over economic time. The problem is you get BS arguments from investors on one side, environmentalists on the other, fake heritage 'concerns' and all sorts of protective BS. But my view! My light! My silence! Sorry, young people's right to affordable housing trumps all of those things, and by miles. Affordable housing underwrote the prosperity of virtually every single high-income country today, and stabilised society so that people could focus on work, remain happy and healthy, and create national wealth.

Every single impoverished, chaotic country lacks that anchor.

In the end people put forward any old BS to favour themselves; but buying into that isn't the job of governments, and certainly isn't leadership. There are always solutions if we stop thinking in self-serving, simpleton ways. Imagine if we'd done this with global warming? Desertification? Fish stocks? Urban sprawl? Water management? All of these are now very real and hugely burdensome costs, and we all have to pay the bill.

Fighting the economics is like shaking one's fist at gravity.

[think positive]

^TP, I want to emphasise I'm not questioning your work and specialisation in housing, which I greatly admire. It's much the same as I said to Skids about his speciality, mining; your expertise is absolutely crucial and businesses and investment in those areas is absolutely crucial, even if a shift is needed.

The fix with housing has to somehow even out the supply/returns to something more reasonable for such a very safe asset class, which probably involves government supply, trumping NIMBY delusions, incentivising the right kind of private investment, etc.

The fundamental problem is that geography means space is constraned. So, you should be rewarded for your work maximising space (I think you mentioned units/apartments somewhere above, which is a perfect use of space). If people have big blocks, pressure them and most definitely don't allow them to be passed on to their kids without subdivision, etc.

I don't know enough about infrastructure and the margins to be prescriptive, these are just ideas. But however it's done, we absolutely must bring housing prices down and increase affordability and accessibility. The population will have to keep growing for a while yet or government revenue and FDI will collapse, so environmentalists will also have to pull their heads in.

Every cost can be offset, and offset fairly over economic time. The problem is you get BS arguments from investors on one side, environmentalists on the other, fake heritage 'concerns' and all sorts of protective BS. In the end people put forward any old BS to favour themselves, which isn't the job of governments. There are always solutions if we stop thinking in simpleton divisions. Imagine if we'd done this with global warming? Desertification? Fish stocks? Urban sprawl? All of these are very real and very expensive, and someone has to pay the bill.

Fighting the economics is like shaking one's fist at gravity.

no offence taken mate, and we are done with domestic rentals now anyway! We were going to built units at one stage 25 years ago, but then we got 2 on a block for a ridiculous price, and bought them instead. The only building we actually did was this house and the beach house. We have built warehouses but thats done now too, we are working on retiring! supposedly!

Re the space thing, I'm going to strongly disagree!! Some off us like a bit of backyard! Not sure how long it is since you have been here but all the new estates around here, (Truganina, Tarneit, even point cook now) the blocks are unit sized! 400 and under! We moved from 800sqm to 640, I thought that was a huge difference, but our beach house is on 514! don't want a big yard there, too much work, just enough for a dog run and the boat to fit in the backyard is enough! Its 2 storey so still a good sized house. We still have the hobby farm, but unless they let us subdivide, we will sell it. Its a long story, one that quite frankly, has been too hard for me to share here. Im just glad we didnt sell the beach house! my daughter BF is looking to buy a house now, this week they are looking at one that is the exact same plan as my daughters, just with upgraded features and a slightly bigger yard. Perfect to start a family! they would rent her house out.

Im more than content now, ill leave the housing market and problems to others! cheers

[stui magpie]

^

TP, same thing is happening everywhere, the new estates have small blocks with huge houses and basically no backyards.

Mernda, Doreen, up to Kalkallo, even the new estates they're building here in Toc. I took my daughter for a drive around town when she was up here for Xmas and when we went through the new estate she just said, Geezus, it's just like Kalkallo.

A new house in Kalkallo starts from $500k for the record.

[Culprit]

I have houses on large blocks being sold near me and the houses bulldozed and 10 units go in. Cars pack the streets as they use the garages as storage areas. The Units are small in size.

[Skids]

With 3 people per square kilometer, you'd think we'd have plenty of room for 'big blocks'.

The failure to utilize our land has been a big driver in the cost of housing, along with the influx of international buyers. Cashed up Chinese are buying up in my suburb.

Why we have never harnessed the 125 cubic meters a second (average) of water that flows from the Ord River will baffle me until the day I die.

[stui magpie]

I have houses on large blocks being sold near me and the houses bulldozed and 10 units go in. Cars pack the streets as they use the garages as storage areas. The Units are small in size.

The blocks around me are a decent size, the original houses are 1950's 2-3 br weatherboards.

When the old people die, corner blocks get bulldozed and 3 units or townhouses get built. On non corner blocks the old house gets renovated, the property subdivided and a second house built in the back yard or the whole thing gets bulldozed to build a McMansion.

I've got instances of all 3 in my street.

[think positive]

What exactly is a McMansion! A cookie cutter 2 story spec home? Or any suburban big home?