Why do Australians prefer property over other investment vehicles

yes it did ......but unfortunately private superannuation companies were not regulated at this time and its fact that large super companies literally raped their clients blind.

The only winners were private super companies, government eventually stepped in and made many changes, too little, too late IMO. A great percentage of funds were tied up in fees, sad but true. I know this because we were ripped off.

I retired at 47 and self funded. I am not interested in exploiting anyone, very much interested in giving my children a leg up that's my goal

anyway..back to topic

MTR

 

I gotta laugh when i hear that being a successful property investor building millions in wealth is easy and requires no real skill.

ah...yeah ok sure lol

 

That was my point... Baby Boomers have the sense of entitlement that it's the government's job to pay for their retirement (whether that attitude is fair, correct or justified is a whole different topic) as has every previous generation, it's just been the accepted way that the government pays for your pension as long as you don't make the mistake of having your wealth horded outside the main residence and as such you have a generation being heavily incentivised by the government to keep investing their wealth into their main residence as much as possible because the government will continue to give you handouts for doing it.

It's not a shot at them, the government has specifically designed the system to be used like that, people are given money for hording their wealth into property in many different ways and the people would be stupid to not get as many of their tax dollars back by doing so.

Doesn't change that Gen X will be the first generation where it's reasonable to expect that there will be genuine difficulties in accessing the government handouts and that they will be, reasonably I may add, expected to support themselves in retirement at a much higher rate than boomers who for a large portion of their working life were only planning to have the pension.

As you said, whether this should be accepted or even is justifiable is a whole different topic!

 

Before and when superannuation was a word the oldies just saved money to retire on - that could have been by selling their business, having IPs, putting money in term deposits, or simply moved in with their family and were looked after.

There always has been quite a few 'self funded' retirees

 

The question was why do Australians in general prefer property investing, ie from a broad pov. very few investors build millions, the ones who do are not the average.

besides, the point made was that resi investmenting is easy to do, doing it well and making Millions is another story which is why so few people do it.


bit sensitive for a Sunday night Leo? ?

 

For a lot of mum and dad investors, the perception of property being a safer asset is an attraction. A nest egg invested in a company's shares can disappear overnight if a company goes out of business. As mentioned in an earlier post, in the near impossible scenario of a house losing all market value and being worth $0 the owner would still have a roof over their head, with the added possibility of the house increasing in value again sometime in the future.

I think that basic line of thought is one of the main reasons as to why a lot of first time investors choose property over other asset classes.

 

For me it's the fact that it's the only investment option that's not 100% investor driven but also has

• Possibility to create own equity and/or gain CG
• Three people are paying off your debt instead of one
• Leverage relatively small sums of money to control significantly bigger sums
• Lower risk and less liquidity (good and bad)
• Have never met anyone who has retired from any other asset class
• Tangible and in demand
• Lots of research material available
• Myriad of ways to create large amounts of $'s through subdivision, strata title, reno, adding bedrooms or increase yield with granny flats, dual occ etc
• Graphs look good for the last 50+ years and the GFC etc didn't take too much of a toll on the majority of housing (-10% in Syd?)
• Control
• Outsource decisions to those much smarter than you and deal with people like mortgage brokers who have been successful at investing themselves
• Immigration and population growth forecasts

 

It's bloody Taiwan...and all those ktv outings...instilled too much sensitivity in me at times ..

 

Australians are also the worlds biggest gamblers, I think this has something to do with the extreme speculative positions many property investors have. Losing money hoping for capital gains doesn't make sense to most overseas property investors.

 

Again, an assumption about baby boomers that is just plain wrong.

There has been plenty of media coverage for at least the last 10-15 years or so that people were expected to provide for their retirement.

My dad retired in 1970 on a superannuation pension which he contributed to ever since returning from the war and leaving the army in 1947. At one stage he was contributing over 20% of his pay as he wanted to be independent of the pension.

As a baby boomer, I am retired, fully self funded, can't even get the health care card. All of our retired friends are in a similar situation, though a few have managed to get the card, and one or two get a few $$$ pension (under $10 a week).

I have never had a sense of entitlement, and find the constant baby-boomer-bashing becoming a bit tedious.

How about stopping playing the blame game for just about everything???
Marg

 

As an expat in Australia, I'm amazed at how mainstream property investing is here. It's much more visible than in the UK, and I've seen adverts on TV promoting services, something you don't get back there.

Small scale development is far more common. Virtually any run-down property will be sold as a renovation project, or opportunity to build a pair of townhouses or dream home (STCA). New houses tend to be sold as a house and land package, and so there's more awareness of the possibility of building your own place, and a large number of project builders to do the work.

One of the drivers is favourable tax treatment of investment properties. This was a feature of the Henry Review a few years back. This is one chart that illustrates the advantages of gearing.



The other is that property prices have consistently risen ahead of incomes and inflation for about twenty years. It's seen as being risk free, and there's an expectation that future capital gains will be of a similar magnitude.

 

Any data to back that up.?

 

The property complex is very powerful in this country. think of how often you see/hear/read ads proclaiming "why rent when you can buy!?" home ownership seems to be enshrined as a national right that everyone should aspire to. Think of the billions the industry makes flogging finance/construction/etc...all hinging on people continuing to or aspiring to continue to buy. I would not bet against this machine.

When you wade into the share or any financial market you are up against bigger/better/smarter competitors. you are wading into waters infested with algorithmically driven hedge funds running things like high frequency trading operations. You will never be able to compete and if they go against you, what can you do? very different to punting against Joe Blow from down the road. I know who i would rather be dealing with/against.

So many have done so well out of property in the past few decades that it has formed a positive reinforcement self-feedback loop. If society as a whole continues to subscribe to this belief AND can continue to act on and finance how they act on these beliefs then theoretically it can become a self-fulfilling prophecy ad infinitum until some catalyst tears it apart.

 

This chart shows which countries have the worst gambling problems

When I first moved here I was working in a bar and went for after work drinks in some dumpy Bondi Junction pub at 3am. I was shocked at how many older generation folk were there mindlessly putting coins in the machines. It was actually quite depressing watching it. Looked it up and per capita Aus are the #1 gamblers.

 

Yep because your anecdotal evidence changes that 75% of boomers are expected to be at least partly dependent on the age pension as per the Australian government projections. Most Boomers have had about 20 years now of knowing that they were "expected" to provide for their own retirement unless they kept their wealth in property in which case the government would pony up. People are advised high and wide to get their wealth into their main residence as they approach pension age so as to ensure they can get their entitlements that they otherwise might not get.

It's not boomer bashing it's just plain hard fact, as a generation they were told for the majority of their working life that they would get an age pension, especially if they horded the vast majority of their wealth into their primary residence. This expectation has led to specific targeting of property as the location for the majority of their wealth. I dare say that if they were told your share portfolio doesn't count for age pension reasons but your main residence does that we'd have seen the exact opposite mentality to where the money was horded.

Again, a few anecdotal cases of people who aren't going to rely on the pension doesn't change the fact that the majority will rely on the pension in some part in retirement and that the exemptions that property investment get allow them to maximise that entitlement and thus there is a steering towards property as an investment class.

I'm not taking a shot at all here, as a generation the majority will need the pension because the majority planned for it and that having their wealth in property maximises that pension for them. People will by and large do what is in their best interests, having an asset class that allows you to grow your wealth and still get government handouts at the end of the road is going to be a popular asset class that is heavily utilised and absolutely plays a role in why property is so much more popular than other investment classes that have costs down the road.

 

Or just ask Google, plenty of articles

 

How do they know the nationality of the person losing money...hmm very interesting.

Usually when I go to the casino here in Sydney, its basically Chinatown 24/7.

 

Seeing a friend getting burned from buying One Tel shares at $20 odd dollars and being almost worthless the next week pretty much scared me off shares.

 

Does that include the stockmarket or just the horses?

 

Thanks everyone for your input on this.
I've seen people get burnt on property deals too, although it is perceived as relatively easy due to the low volatility.