State Government

[Baloo]

That would work, or for their second and subsequent purchases, they get hit with a 40% Stamp Duty fee

Singapore recently put in measures to reduce the property market explosion. Rents in the last 12months have risen on average 60%.

Stamp Duty on a 2mil proprtey (might get you a 1200sq ft 3 bedroom apt)

Citizen: Stamp Duty only - $69,600
Permanent Resident: Stamp Duty + 5% - $169,600
Foreigner: Stamp Duty + 60% - $1,269,600

 

[tigersnake]

Googled, Foreigners have to pay a FIRB fee before buying a house, if they get approved, in NSW and Vic, extra 8% stamp duty on top of normal charges and SD.

 

[daniel30]

How about the new land tax fee on top of the tax for investors to cover the covid debt what a joke.

 

[The Big Richo]

Heard Tim Pallas on the news talking about capping rent increases as well.

The worry with all this stuff is the rental market will become even worse as people will shift to alternatives like Air BnBs.

As much as I don't like it, I've moved my properties to Air BnBs over the past few years after the legislation became too onerous. Because the locations are pretty suitable for tourists I find I get better returns for less use with the added bonus of being able to use them myself anytime I like.

I recognise doing that stops important people in our society from finding somewhere to live but unfortunately self interest rules.

I can see a lot of other people currently operating rentals having a good look at the same option in the future if the sorts of things continue to be implemented.

 

[Sintiger]

This is now an arrogant state government, they are drowning in hubris .
I have seen the budget papers for the parts I understand and am close to and I have also seen the press releases from ministers. Selective truth is letting them off lightly, fake news would be closer.
Pallas is a problem. He is one of those people who thinks by giving essential services less it will result in those services miraculously costing less to deliver, despite many of their costs spiralling.
This budget is fiction. They better hope that revenue rises more than budgeted to because nothing is surer than many essential services blowing out costs higher than the budget and needing bailouts.
I said a while ago that arrogance will eventually be the demise of Andrews but Pallas will go with him imo.
All that is needed is a competent and functional opposition but we are miles from that in Victoria

 

[RoarEmotion]

Heard Tim Pallas on the news talking about capping rent increases as well.

The worry with all this stuff is the rental market will become even worse as people will shift to alternatives like Air BnBs.

As much as I don't like it, I've moved my properties to Air BnBs over the past few years after the legislation became too onerous. Because the locations are pretty suitable for tourists I find I get better returns for less use with the added bonus of being able to use them myself anytime I like.

I recognise doing that stops important people in our society from finding somewhere to live but unfortunately self interest rules.

I can see a lot of other people currently operating rentals having a good look at the same option in the future if the sorts of things continue to be implemented.

Getting a bit ‘atlas shrugged’

Imagine telling a business losing money due to cost increases that effect everyone isn’t allowed to raise prices.

Sorry taxi drivers. Know the price of petrol went up but prices are frozen. But you need to keep driving.

Will lead to either what TBR says or shorter length leases and the lease ending and go find some where else to live while I put it on the market at market price.

 

[Baloo]

Imagine telling a business losing money due to cost increases that effect everyone isn’t allowed to raise prices.

If that business is forcing families to live in tents and their cars because they can't afford a place to live, then yeah, I can imagine it and support it.

 

[K3]

Googled, Foreigners have to pay a FIRB fee before buying a house, if they get approved, in NSW and Vic, extra 8% stamp duty on top of normal charges and SD.

Should be higher. Much, much higher imo.

 

[tigersnake]

Getting a bit ‘atlas shrugged’

Imagine telling a business losing money due to cost increases that effect everyone isn’t allowed to raise prices.

Sorry taxi drivers. Know the price of petrol went up but prices are frozen. But you need to keep driving.

Will lead to either what TBR says or shorter length leases and the lease ending and go find some where else to live while I put it on the market at market price.

With the greatest of respect RE, here up north rents have gone up between 30 and 60%, and even more, extremely rapidly. basic 3 bed house was $450 not long ago is now $650-$700. I'd argue landlord costs have gone up, depending on what expenses we are talking about and what is required, 10-to max 20%.

Its gotten to the stage, extremely rapidly, 2 years, that your average family on an average wage struggle to afford rent on a mid-level house. They are either paying so much for that house they are sacrificing elsewhere, or they are renting a far inferior property. And its a struggle to get any property. people who should be able to get ahead can't.

Its a real worry IMO. Terrible. And its happened so quickly. Landlords are only giving 6 month leases so they can raise rents more rapidly.

 

[RoarEmotion]

With the greatest of respect RE, here up north rents have gone up between 30 and 60%, and even more, extremely rapidly. basic 3 bed house was $450 not long ago is now $650-$700. I'd argue landlord costs have gone up, depending on what expenses we are talking about and what is required, 10-to max 20%.

Its gotten to the stage, extremely rapidly, 2 years, that your average family on an average wage struggle to afford rent on a mid-level house. They are either paying so much for that house they are sacrificing elsewhere, or they are renting a far inferior property. And its a struggle to get any property. people who should be able to get ahead can't.

Its a real worry IMO. Terrible. And its happened so quickly. Landlords are only giving 6 month leases so they can raise rents more rapidly.

As an investor if you borrowed 700k on a 1000k house ie 30% deposit.

You interest bill will have gone from say 3% to 6%.

This is 21k / year to 42k / year.

(a homeowner may have gone from 2% to 5% as investors get charged more for some weird reason).

That is a $400wk increase in interest from 400/wk to 800/wk.

If you have a job and get 40% of that back offsetting your income tax that is a 240/wk increase.

Pretty much what you are describing in a the cost of capital going up.

If property prices don’t go down then that is the cost that barely makes the property break even as an investor.

There is nothing evil or malicious here - it’s the consequence of supply side driven inflation (war and material:energy shortages) being managed with demand side rba action on interest rates.

Let’s wait until the real cost of climate change action hits and we will see further cost of living pain and / or massive environmental damage and pain on that side. Earth is living way above its carbon allowance drawing down millions of years of diniosaur and plant juice in 150 years to fund an amazing quality of life - it’s what we are all used to and see as a base minimum. (Sorry got a bit sidetracked here but I see the cost of energy going up massively to handle climate change - was on a call yesterday and $2/kg h2 is bs).

 

[tigersnake]

1. This investor has somewhere to live. They are already ahead of the game. Not saying thats bad, but thats how it is.
2. If this investor purchased the house prior to 2019 and its located anywhere in Aus where people want to live, and the price suggests it well and truly would be, they now have got $250-350k extra equity in their kick. That is a lottery win.
3. As we discussed earlier, NG mate, NG. The rent on your example was never going to pay the bills, never expected to, never intended to, never, ever. Any investor with half a brain would have factored in a interest rate rise to at least 7%. 8 or 9% if they're savvy. Higher expenses, the bigger the write-off for many. The same investor with half a brain would have factored in rent increases at CPI.

Agree on the living above our means point.

 

[RoarEmotion]

1. This investor has somewhere to live. They are already ahead of the game. Not saying thats bad, but thats how it is.
2. If this investor purchased the house prior to 2019 and its located anywhere in Aus where people want to live, and the price suggests it well and truly would be, they now have got $250-350k extra equity in their kick. That is a lottery win.
3. As we discussed earlier, NG mate, NG. The rent on your example was never going to pay the bills, never expected to, never intended to, never, ever. Any investor with half a brain would have factored in a interest rate rise to at least 7%. 8 or 9% if they're savvy. Higher expenses, the bigger the write-off for many. The same investor with half a brain would have factored in rent increases at CPI.

Agree on the living above our means point.

Well if they sell the new investor has that cost of capital. You are ignoring the reality of what interest rate rises do at least in the short term.

You have stamp duty acting as a massive break on property prices coming down in line With the change in the cost of capital. People are hanging on for dear life as the cost of switching is just insane. Banks aren’t going to want massive defaults either since that will kill them so I’m sure they will offer interest only to many people Struggling. So I reckon the liquidity of the property market is another big factor.

And for any benevolent investors who 100% own their property and aren’t raising rents then those tenants aren’t going to vacate in a hurry. They will be riding that unicorn hard.

 

[tigersnake]

I'm not ignoring it. I addressed it head-on in my previous post. Your ignoring the reality that the vast majority of residential real estate investors have just experienced a 1 in 50 year boom and are sitting pretty.

If the investment landscape is not profitable or stressful, hanging on for dear life, cash-in and invest somewhere else. Simple. If a new investor can't afford the costs don't invest, nobody owes them a investment property.

There will always be money to be made in real estate, it just won't be, or shouldn't be, the armchair ride it has been.

 

[Brodders17]

If that business is forcing families to live in tents and their cars because they can't afford a place to live, then yeah, I can imagine it and support it.

Yeah, some people invest in property to make money. Some people rent so they and their family can have a roof over their head. I know where sympathy's should lie here.

Property investors, like any investors or any business, take a risk based on current conditions and possible changes to those conditions. If the new conditions dont make it worth while to ow property they should sell.

While governments are constantly trying to move towards freer and freer markets, housing, like health care and education are basic human rights and they should not be left to the free market to decide who has access.

 

[RoarEmotion]

Yeah, some people invest in property to make money. Some people rent so they and their family can have a roof over their head. I know where sympathy's should lie here.

Property investors, like any investors or any business, take a risk based on current conditions and possible changes to those conditions. If the new conditions dont make it worth while to ow property they should sell.

While governments are constantly trying to move towards freer and freer markets, housing, like health care and education are basic human rights and they should not be left to the free market to decide who has access.

The independent arm of the government in the RBA literally just made everything more expensive by raising interest rates to create unemployment and dry up the money people have to spend on things. (With the aim of reducing inflation).

We can argue if housing should be a public good or not but it generally isn’t except for those on the edge or / in poverty. We need a massive swing in how we as a country think about housing to make that a reality and how we could transition to something like that.

If that’s your position then everything else is kind of moot other than who should fund it and who should run it. If we are going that way I’d say basically stuff with everyone’s super / change long term capital gains discounts etc vs picking on any particular investor class and build/buy more social housing so everyone lives in that and ban / phase out renting altogether / have the state only run it. (I’m not advocating for socialism but if you want housing to be a basic right you have to pretty much socialise it somehow).

I’m sure it will only cost $2-5 million to have the Vic state government build a 1br flat with the stamp duty they would no longer have.

 

[Baloo]

Surely property investors don't believe they have a god given right not to lose money from their investment. Markets changes, Governments regulations change, investments will be impacted and may not be as profitable as hoped, or as the case with my share market investments, practically disappear into thin air.

 

[RoarEmotion]

Surely property investors don't believe they have a god given right not to lose money from their investment. Markets changes, Governments regulations change, investments will be impacted and may not be as profitable as hoped, or as the case with my share market investments, practically disappear into thin air.

Absolutely spot on.

Although i imagine many investors don’t think about it that way.

You are at risk of gov reg changes for sure.

If you see governments heavily regulate rental prices you will see very little new investor stock being built i imagine which will have its own consequences.

Better to be too big to fail if you want to socialise your risk.

 

[The Big Richo]

I would have thought if the government wanted to regulate, they should start by attacking Air BNBs.

Not only are they bad for renters but I'd imagine for the accomodation industry, employment and tax revenue.

 

[RoarEmotion]

I would have thought if the government wanted to regulate, they should start by attacking Air BNBs.

Not only are they bad for renters but I'd imagine for the accomodation industry, employment and tax revenue.

Been good as a traveller Though.

If you make accomodation cheaper that should stimulate and not block tourism. So good for lots of other businesses relying on tourism.

Also good environmentally to not have unused space vs unneeded construction.

 

[tigersnake]

very difficult policy challenge air bnb. I don't have any answers on that one.