RBA Suggests Review of NG Laws

Discussion in 'Property Market Economics' started by Phantom, 16th Jul, 2015.

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  1. Bayview

    Bayview Well-Known Member

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    We should see a lot more purchases from those who are anti-NG then.

    A lot less antii-NG noise I'd wager as well.
     
  2. Chilliblue

    Chilliblue Well-Known Member

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    Exactly. Much easier to save for a new car or overseas trip.
     
  3. Bayview

    Bayview Well-Known Member

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    Yeah, look; I don't want to sound like I'm big noting myself but here's what I did - and I'm very bloody average - so hence my no sympathy stance fore theses FHB sooks;

    At 22, I was working as an Assistant Pro at a public golf course, and earning below average wage renting and had no assets whatsoever and no savings. Car was a wreck (courtesy of hitting kangaroo in QLD the year before). Basically hand to mouth.

    Then, got my first Pro Shop gig at aged 23 - bought another car for $900, started trading with no working capital and no stock. Bought a bit on 60 day credit.

    Worked 15 months, 7 days per week, daylight to dark basically, with no days off, and saved enough for a deposit on a modest old triple fronted house in Boronia - while still renting - by 24.

    Miles from the CBD - working class suburb and lower.

    From nothing to deposit in 1.5 years approx

    That is what you have to do to save a deposit...

    WORK YOUR ARSE OFF AND SAVE YOUR ARSE OFF.

    How many full-time young folk would be able to afford a deposit if they worked that many hours and days for 15 months in their current job?

    Probably over 90%
     
    Last edited: 17th Jul, 2015
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  4. Sackie

    Sackie Well-Known Member

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    + 1 million to entire post!! Well done BV!

    When I first started, my 1 year of working was what most did in 2-3 years. I worked 7 days a week, sometimes 30 hours straight. Public holidays, all holidays. Day shift, night shift all bloody shifts. I snapped up all the overtime when others turned it down to have drinks at the pub and fancy dinners. That's how I got to where I am today. Average intelligence, really intelligence has little to do with financial success imo. And all the really successful investors I talk to, they all have a similar story of unbelievable hard work and massive sacrifice.

    Good on you Bayview.
     
    Last edited: 17th Jul, 2015
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  5. Big Will

    Big Will Well-Known Member

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    People just need to make sacrifices for the things they want. Even today my wife and I rarely go out or even get takeaway. Our last overseas holiday was our honeymoon to Fiji which we got the accommodation 50% off from Groupon and our last holiday was 3 nights in Daylesford spending $100 p/n with a self contained unit. We didn't go out for dinner or lunch we did go out for scones though...


    From what I wrote on SS as I feel it is relevant;

    I had 30k at 18, earnt 400 pw working McDonalds and spent $100 ($50 for fuel when I could drive or buses and $50 for spending) Do that for 2.5 years and you have $39,000, I did buy other stuff with the approx. $9k like TV or something.

    Eat maccas at work so no food expenses (if I did it was like $3 as you get 50% discount). Free parking at my parents office carpark as I worked at the city maccas.

    Had 100k by 24 (change jobs which 4-5x my maccas pay) but also came with increased expenses (rent, bills, food).

    I did want to buy in woodridge when I was 18 but got rejected (casual employee unless parents went guarantee) but glad I was rejected as it allowed me to buy better stock.

    Yes I had an easier lifestyle (didn't pay rent or food when at home (still had to pay for takeaway or out with friends). However I also didn't have a flash lifestyle of going to the pub on a Friday night and blowing $100 on drinks, instead I was the kid at maccas serving the people who had just spent their $100 whilst I earnt $150 for that night.

    I live by delayed gratifications but some people are just lucky or you can create you own luck...
     
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  6. 2FAST4U

    2FAST4U Well-Known Member

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    Absolutely!

    I bought my first house in February and am currently saving up for another one because I don't have the equity to release yet. I find saving easy as I stick to a budget but my girlfriend on the other hand spends every dollar she earns. I had a job interview yesterday, which will increase my salary by 23k a year if I get it so fingers crossed.
     
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  7. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    I often wonder how many mistake... bull market to an actual genius and disguise it in age old hard work / sacrifice and what not.
    Just ask the hardworking/sacrificing property speculator in US.

    Opposing 'NG for exisitng property' doesn't make one loser/lazy/soregrape etc as implied by some here.

    An entitlement which promotes speculation of essential human necessity is not good for a society and not good for economy as whole in long term. If we continue unabated soon people will max out their inflated borrowing capacity a significant portion of disposable income will be consumed in servicing mortgage/rents starving other segments of economy.

    I support the recent targeted credit rationing by ARPA, this will allow RBA to further reduce IR (much needed for other cylinders of economy) with limited investor speculation in housing.

    For the disclosure I have property investments and am a beneficiary of the same 'landlord entitlement scheme'. So I am part of the same hypocrisy, just that I don't pretend that I do Renters a favor, Its pure business and nothing more. For charity I use 'Medecins sans frontieres'.
     
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  8. 2FAST4U

    2FAST4U Well-Known Member

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  9. Big Will

    Big Will Well-Known Member

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    In business if the costs go up who pays for it? The business or the consumer? If a LL holding cost goes up who pays for it yes the LL actually pays for it but the tenant is the one who will be paying the LL.

    What are your thoughts on the generations of entitlements rather then taking control of your life.

    I have only gotten $1,282 from centrelink in payments ever in my whole life. I only took it as I was entitled to it for having a child, did I need the money no. Did it encourage me to have a child? No, does it encourage me to have more? No.

    If they removed that payment would I still have another child? Yes as I don't rely on the government for anything.

    When I was working at McDonalds there was people my age that didn't want to work more as it would affect their centrelink payments. This is clearly not the right mentality as the person is quite capable of working but are rather being lazy as they can get paid to do less. Guess what these are the people today saying I cannot afford to buy a house.

    I can recall a time when I was working the house I was living in all went to dreamworld for the day. In the house I was living in only 2 people worked (including myself) out of the 6 (4 non-workers). Yet here I was working whilst the others went to dreamworld and had no intention of working as they would play video games during the day and night. When I was unemployed (redundant) I cut my spending back heaps, I would apply each and every day for jobs, including weekends.

    If I lost my job right now, I would go and apply for jobs again and would also go right away to food joints seeing if I can get a night job. Even if I had to work 8 hours a night just to earn $500 a week I would do it. This is the difference between a person who wants something and will sacrifice things to get what they want.

    The item of clothing I bought was in Jan 2014, it was a polo top from my favourite winery. Doesn't mean I cant afford to buy clothes however I don't try to keep up with others, I have 10 polo tops different colours (some brand names but most not). I wear the brand names out if we go out otherwise if I am around the house or just going to the shops I wear the target/k-mart version. My haircut is $18 but I even get my wife to cut it on occasions if there isn't anything hugely important but esp on holidays she will cut it.

    My wife (love her to bits) she makes pasta sauce, gnocchi, pasta, soups etc from scratch. The last time we went out to a restaurant would be her fathers b'day (in June) but for us paying it would probably something back in April or March for Easter or my bday.

    Do we smoke? No, do we drink a carton of beer a week or a bottle of spirits a week or a bottle of wine a day? No, I think in the last 3 weeks I have drank 1 bottle of wine total (at home). My sisters ex would drink 2 bottles of spirits each week, one during the week S-T and then on Friday & Sat he would polish off the second one. If he drank 1 spirits bottle a month (1 drink per night roughly) $4,600 p.a. This would also improve his health in both mentally and physically.

    If he smoked, which he didn't but there others that do. If that person smoked a pack a day (1 packet $21.94 according to http://www.numbeo.com/cost-of-living/country_result.jsp?country=Australia) that is $8,008 a year again reduce that to 1 pack a week that is a $6,867.12.

    The difference just on these two things each year between someone who drinks 2 bottles of spirit a week and smokes a pack of cigs a day and my spending on this area is 12.2k (5.2k spirits + 8k smokes - $1k for my wine I just calculated $20 bottle per week).

    Do this for 5 years and you would have $61,000 (not including interest) which is enough for a deposit and that is without even cutting other spending and you could now afford your own place.

    TLDR people make their own choices, the 'haves' have gone without, the 'have nots' haven't gone without.
     
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  10. spludgey

    spludgey Well-Known Member

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    Good post! Now I think that you should head over to the tight arse thread and post the second half of it in there. ;)
     
  11. wategos

    wategos Well-Known Member

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    How hard someone has saved / sacrificed is irrelevant to the issue, which is that negative gearing has been a disastrous tax policy and has done enormous damage to society by encouraging property speculation at the expense of home ownership and productive investment.
     
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  12. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    upload_2015-7-17_12-42-54.jpeg

    [​IMG]
     
  13. Francesco

    Francesco Well-Known Member

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    BW, kudos for having the drive to live. In so many ways, your message has not got to many in Oz. This is the mentality that is missing, differentiating those who understands NG and use it, from those who think they understand it and would like to get rid of it.

    Rant proceeds below, it may be confronting to sensitive NG denial!

    IMO, accepting NG can be a high probability defining trait of those falling confidently in the Coalition camp, then Labor somewhat, and almost guilt-ridden in the Greens. The explanation of Coalition leaders from John Howard, Joe Hockey, Mike Baird, etc has been that one of the critical reasons for having NG is that it allows housing for tenants.

    Tenants have as much right to housing as any FHB. Not everyone wants to own a house or is in the circumstance that warrants owing a house. There are confirmed tenants such as bankrupts, marriage break-ups, students, workers just starting up, FIFO, recent migrants, and professionals requiring temporary postings. Investors are necessary to provide housing to them in in places wherever tenants want them. State Governments are stretched to provide housing for everyone, even though they are already a big LL. As it is, they are scrounging for money from all sources, notably from existing LLs, eg land tax in the ACT. Sometimes the housing required is in the established areas where NIMBY restrict developments but investors provide the limited renovation to convert an established house to the standard for tenancy. New housing in distant suburbs may not be what tenants (or owners) want, nor is travelling time efficient for the economy. How productive for the country is it to require owner-worker to travel 2 hours every working day? Investors in established and new RE are required. NG for both new and established housing is valid for tenants and for productivity in the economy.

    By now the technical message should be well understood that NG is not a subsidy (everyone in a capitalist society is treated to NG), to believe otherwise is tantamount to deeming everyone to be receiving a subsidy without the government raising any funds to give a true subsidy. The apparent high ground that prospective NG denial makes of merely removing an undeserved subsidy is not there.

    In many situations, investor housing for rent is more productive than owner housing. Already the message is adopted by a high proportion of savvy Gen Y, who rent the housing for work and lifestyle reasons and invest for best returns. (The statistics are out there that many investors are actually first 'home' owners, who opted out from being FHB, something like 30%. I cannot remember the actual figure.) The first home debt of these Gen Y is an investment property, embracing the utility of NG, driven by efficiency and profitability, rather than driven by emotional want of the ideal 'castle'.

    Which is more productive for the economy, housing by necessity, or indulgence and pride of own castle? NG used by investors is the positive context for this capitalist situation. However, removing NG will be a distortion of the capitalist norm, which is based on tax, accounting and moral principles. Those who have been subject to the capitalist discipline and use it will eventually deserve their own 'castle' .
     
  14. Sackie

    Sackie Well-Known Member

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    Well I disagree.

    I don't believe NG has caused our property market to rise in price so much over the years. For me the fact of the matter is Australia is a very attractive place to live and invest. A lot of demand and not so much supply, and over the years prices have risen in accordance with demand. Cut NG and people will still invest and the house next door will still be as in demand as ever before, causing values to increase accordingly.

    Home ownership was never 'easy' and even my dad worked his arse off to get his first home. If our youngsters are waiting for prices to come down before they buy then they will most likely be renting forever. Its time to work harder, save harder, make some sacrifices and get a place. That's the reality. That's my opinion.
     
    Last edited: 17th Jul, 2015
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  15. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    or as someone wise once said 'Get a better job' :)
     
  16. Sackie

    Sackie Well-Known Member

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    Hi SackedWiggle,

    I used to know quite a few people who would casual or part time - not because of family commitments or looking after children, but simply for no other reason but as they said to 'enjoy the life'. Well that's fine. Keep on renting then. There have been the odd few I managed to present to them a different way, another paradigm and actually some of them changed their ways and I personally helped 3 of those ppl buy PPOR who never thought it would be possible.
     
  17. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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  18. Bayview

    Bayview Well-Known Member

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    You keep dragging up this hand-wring argument all the time.

    For most of the time, approx 66% of all sales are PPoR purchases.

    Currently that figure has decreased and investors have increased - but this is always the case when rates are low and a boom begins...the Penguins start to run into the beach. Recall this post in a year and see how much NG noise is around then...I'm tipping there will be none, and the boom will have ended. The silence will be deafening.

    Neg gearing was alive and well when I bought my fist property, and I was on a low income, renting and had no savings at all only a year and a half before I got my deposit together. The place was no palace, I can assure you.

    There's a big clue to this whole argument that we keep hearing about from the FHB and hand-wring brigade.

    Without sacrifice, hard work, a savings plan - whether there is NG or not; you ain't buyin' nuttin.
     
    Last edited: 17th Jul, 2015
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  19. Phantom

    Phantom Well-Known Member

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    Bayview....couldn't have said it better myself. Excellent post.

     
  20. HUGH72

    HUGH72 Well-Known Member

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    Great effort, all sounds good apart from the eating at Maccas part.