Banks have treated our housing market like a Ponzi scheme, and it's about to bust

I don't think you're reading very well. The point you leapt on was in response to another poster talking about freedom and choice and other things. You leapt right on it and tried to run with it - not understanding it was pointless.

As for investors being "baddies"... once more, this isn't the "property investing is totes awesome" thread. If you want warm hugs and congratulations then there are plenty of other threads more than willing. Plenty of other threads on here where people who get knocked back for a loan for very good reasons are encouraged to find some lender stupider than the one who denied them rather than being told "hey, maybe don't borrow more then?".

I don't think investors are baddies. I think people are doing what people do - get greedy, get desperate, want to do whatever they can to improve their lives and once they take certain steps in a certain direction they can only end the cognitive dissonance they suffer by warping their mental position to support what should rightfully be condemned.

I mean, seriously, I/O loans with 95% LVR negatively geared. Does anyone deny these are not purely for gambling on capital gain? Could it be, at all, even a little, that perhaps these types of loans are not good for us as a society? If they were banned today, would everything fall in a heap?

Investors who are so deep in it can't seem to bring themselves around to think outside their little world. I/O loans are great! The best! We must have them because if you take them away something something democracy!

I want property investment to exist and continue. We need it. Very important. But it long ago disconnected from wages and it is indisputable that speculation has taken hold for many investors. A mania has developed and those only end one way.

A lot of the investors who defend the current system are desperately hoping the merry-go-round keeps going until they can jump off. I'm sure even a few of them who are going to go down and lose everything will blame APRA or the Government rather than themselves and their greed.

 

Yeah when people talk about why prices rise there are a lot of things mentioned - rising population, jobs, desire, etc.

Not many people talk about credit expansion. When the average loan rises by $60K across tens of thousands of loans that's a whopping amount of money splashing around. People go to auctions and bid against each other higher than they otherwise would.

I find it odd that some people don't seem to understand the role credit expansion plays in pumping the market up. Yet you can suggest that the rules are change so by law you can only borrow 3 x your yearly wage and suddenly they lose their minds! It'll crash the market!

Yes, damn right it'll crash the market because the main driver pushing it up was reckless credit expansion.

 

Only some. I bought my first house less than 10 years ago for $206,000. It is currently under offer for $260,000. That's not ridiculous. Plenty of properties for sale in my area (7km from CBD in Perth) for under $350,000. Unless you live in Sydney, there is no reason to get in stupid amounts for debt for your first home. It's personal choice. Essentially, the point of this thread is that people should not be allowed to get into stupid amounts of debt. The government should stop them. This is an interventionist approach that has been shown not to work in the past.

 

Can you sell the holes in your backyard for a profit? No? Not productive.

I bought my first house cheap and renovated it. I had it revalued and at the time I could have sold it for a profit. That is productive. I increased the value of something. To claim otherwise is ridiculous.

 

No, it's the thread where you make ridiculous claim and most other posters disagree with you. It's not really a discussion. It is more along the lines of rant, counter rant, rant.

It's a property forum so we must attack negative gearing to solve homelessness and poverty but we can't talk about urgent changes needed to superannuation concessions to decrease inequality and feed children? Why? Because you say so? Sorry, buddy, public forum. You can say "abolish negative gearing" and I can say "fix superannuation". You don't like it? Too bad!

I raise this because I actually do want inequality addressed. The worst inequality in our tax system that I can see is where low income earners have to pay the government to put money into super but high income earners get an effective 30% tax break. Super concessions will be worth $50bn by next year. NG is not even worth 5bn. You are picking on very small fish.

What were they talking about in Parliament yesterday? Negative gearing? No. Superannuation tax concessions? Yes. There is an increasing group of people who are calling for urgent reforms to superannuation. Because the system is creating inequality. That's bad.

Here is what the Greens say about it, so you know I am getting this from a creditable source:

http://christine-milne.greensmps.org.au/sites/default/files/150225_progressive_superannuation.pdf

I guess what I am trying to say is why fight so hard for less than $5bn where you have no support. Why not try for a slice of the $50bn, which is already on the agenda in Canberra?

 

The argument for why we must act now on super concessions:

http://www.smh.com.au/business/the-...ming--time-to-load-it-up-20151006-gk2xkh.html

• The cost of the thing is exploding
• You can't pursue other tax reforms that will look painful for the majority of the population if those at the very top continue to bask in the world's best tax haven. That's what our super system is.

On Tuesday, opposition leader Bill Shorten pressed PM Malcolm Turnbull over a 'fair and sustainable' superannuation system.

http://video.heraldsun.com.au/v/404685/Labor-presses-government-over-superannuation

Most of those who benefit from super tax breaks are high-income earners, not those in the so-called "middle".

Read more: http://www.theage.com.au/comment/ha...tax-breaks-20151012-gk7i16.html#ixzz3obc2PWfL

If you were going to pick and fight and put your energy into getting a slice of $5bn per year or a slice of $50bn per year, where would you direct your energy?

 

If you want to do this then go start another thread. Who's stopping you?

 

Seriously, look up productivity in an economic context. You have it entirely backwards.

https://en.wikipedia.org/wiki/Productivity

 

Source?

 

It works better in the context of this thread and no one is stopping me posting in this thread.

One person claims that NG is harmful and should be abolished to gain revenue to "do good" with. Another person claims removing NG would be harmful and much more would be gained by changing super concessions to raise more money to "do good" with. That's how a forum works. If you want people to agree with you, there's nothing stopping you from posting in another forum.

 

Christ people on forums are bizarre.

You want to talk about it go right ahead. No one is stopping you.

It's a forum and some semblance of order applies. Talking your favourite Sydney suburb in the Melbourne thread probably isn't going to get you far.

Talking superannuation concessions in a banks/ponzi thread, again, probably isn't going to get you far.

 

That's your opinion and you are welcome to it. I think it is a very valid comparison/alternative. I could say hey yeah, I have a much better idea than this guy, just wander over to my thread and let's discuss it. Doesn't really make much sense does it? Your comparison of Sydney vs Melbourne is invalid.

 

we.are.all.wasting.our.time.

He grizzles because the prices are going up, but then he grizzles because the prices are going down where he lives (that would signal a "buy" scenario pretty soon?), and then he grizzles because he has to rent and can't change anything in the house?

Sounds like - wait about 6 more months, then buy.

He cannot be pleased.

 

Sounds like bad to me.

 

See this is why you never talk about your personal situation online. It really gets the ad hominem attacks started.

Should I start talking about you and what you've revealed about yourself? Make some negative comments about who you are as a person?

 

Let's not forget about capital raising by way of rights issues, share purchase plans and dividend reinvestment plans. This is how listed businesses raise money for productive use. By being on the register, you are now a source of future capital. I really don't understand this "non productive asset" angle that you are using, capital is not only raised at the time of IPO.

 

I summarised 3 things you said about yourself, and then gave you a solution based on what you said.

Sometimes putting up stuff about yourself can help you.

 

Ok, so providing rental housing is supposedly unproductive even though it generates a lot of economic activity and provides a family with a place to live.

OP does not want us to invest in property because it is disgusting that I can buy a house, rent it out and sell it at a profit down the track. OP calls this unproductive.

I am simply pointing out if I can't invest in property, I will invest in shares. So, if I buy BHP, take the dividends and sell them down the track for a profit, that is even more unproductive than providing a family with a home to live in.

I am aware that IPOs, dividend reinvestment and share issues all raise capital. However, the predominant activity on the sharemarket is simply trading of existing shares. I find trading of existing shares even more unproductive than providing rental housing.

 

Are your arms tired from holding your lounge?