What do you make of this? The state owning 25% of the house you just bought with a 50k deposit? | PUNT ROAD END | Richmond Tigers Forum
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What do you make of this? The state owning 25% of the house you just bought with a 50k deposit?

DavidSSS

Tiger Legend
Dec 11, 2017
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The State would be covering a quarter of the cost so I suppose they get a quarter of the asset. In any case, you can pay that quarter back later (I would presume with interest but no detail in the article) which might help some.

I think we would be better off trying to reduce the ridiculous price of housing here. FFS I could sell my house, buy an apartment in the middle of Paris, and get change. Unfortunately the policies taken to the last election about getting rid of negative gearing and the capital gains tax concessions failed because of a scare campaign, one no doubt supported by the Murdoch rags.

The biggest issue with this is that it might just lead to house prices going up more, but that would be hard to determine given house prices have already been rising at insane levels for the last few decades.

DS
 
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Dyer'ere

Licensed to kazoo
Sep 21, 2004
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The State would be covering a quarter of the cost so I suppose they get a quarter of the asset. In any case, you can pay that quarter back later (I would presume with interest but no detail in the article) which might help some.

I think we would be better off trying to reduce the ridiculous price of housing here. FFS I could sell my house, buy an apartment in the middle of Paris, and get change. Unfortunately the policies taken to the last election about getting rid of negative gearing and the capital gains tax concessions failed because of a scare campaign, one no doubt supported by the Murdoch rags.

The biggest issue with this is that it might just lead to house prices going up more, but that would be hard to determine given house prices have already been rising at insane levels for the last few decades.

DS
I don't think you pay interest, David. (But I'll double check that.) I think you pay for the upkeep. You pay the rates too. That amounts to interest.

Anyway the biggest issues facing the electorate in the coming months may not be COVID related. I haven't seen any testing on this as yet but I get the feeling from my own straw polls that COVID criticism runs along existing party lines. And that swinging voters see COVID as unknowable and mistakes as understandable/inevitable. As, I said, not that I've seen any actual testing.

There will be other issues. At state level housing affordability could be a big deal. And non partisan.

BTW this kind of scheme was introduced by Bolte back in the 60s. In those days a Liberal government could do such a thing. In 2021 the highbrow Murdoch headlines the scheme as "Victoria's controversial bid to own part of your home".

FWIW I think the scheme is a winner.
 
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hutstar

Tiger Superstar
Dec 17, 2002
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While I think on face value the scheme makes tons of sense, it's not solving the problem at all.
 

mrposhman

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Oct 6, 2013
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While I think on face value the scheme makes tons of sense, it's not solving the problem at all.

Its not designed to. The government don't want the housing market to cool just yet. Its in their interest to maintain the current scenario.
 
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tigerman

It's Tiger Time
Mar 17, 2003
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I don't think you pay interest, David. (But I'll double check that.) I think you pay for the upkeep. You pay the rates too. That amounts to interest.

Anyway the biggest issues facing the electorate in the coming months may not be COVID related. I haven't seen any testing on this as yet but I get the feeling from my own straw polls that COVID criticism runs along existing party lines. And that swinging voters see COVID as unknowable and mistakes as understandable/inevitable. As, I said, not that I've seen any actual testing.

There will be other issues. At state level housing affordability could be a big deal. And non partisan.

BTW this kind of scheme was introduced by Bolte back in the 60s. In those days a Liberal government could do such a thing. In 2021 the highbrow Murdoch headlines the scheme as "Victoria's controversial bid to own part of your home".

FWIW I think the scheme is a winner.
I reckon it's a winner too Jack.

I'd much rather an Australian State having some ownership than an overseas country.

I wonder how many dodgy people have been allowed into Australia with their dirty money.


 
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DavidSSS

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Dec 11, 2017
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Interesting


Interesting policy, would also reduce the amount people can borrow if they are minimising tax and declaring a lot less income than they actually earn, which would be ironic!

Why not do it, but at the same time why not a few more policies to reduce pressure on house prices.

The thing about house prices is that a fair bit of the pressure on price is a result of people buying properties for investment - mainly speculation on rising prices but also getting rental income. So the prices rise because people are of the view that prices will keep rising and therefore it is a "safe" investment.

So, what we can do to reduce this if the aim is to stop the prices going through the roof as they have been for decades, is to make speculation on house prices less attractive.

Some policies to do this would be: remove negative gearing, remove the capital gains tax discount on profits from selling a house, massively increase public housing to reduce rents.

The problem for government here would be that there is potential political fallout from those who own houses, especially those who bought recently, if the value of their houses fall. Those who bought in the last few years, and likely have massive mortgages, would be furious if the value of their house falls while they still have a massive mortgage to pay off. The trick would be to try and stabilise prices for an extended period rather than have them drop.

I simply see no reason why the house I live in, which cost 5 times my income when we bought it, is now valued at around 20 times my current income which is a fair bit higher in real terms than my income all those years ago. It is simply ridiculous. Yet another market failure, pricing people out of a safe secure roof over their heads is a failure.

Also, might be worth acting now before the inevitable rise in interest rates from their current historic lows. When that happens there will be blood on the streets, possibly even literally.

DS
 
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Dyer'ere

Licensed to kazoo
Sep 21, 2004
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Interesting policy, would also reduce the amount people can borrow if they are minimising tax and declaring a lot less income than they actually earn, which would be ironic!

Why not do it, but at the same time why not a few more policies to reduce pressure on house prices.

The thing about house prices is that a fair bit of the pressure on price is a result of people buying properties for investment - mainly speculation on rising prices but also getting rental income. So the prices rise because people are of the view that prices will keep rising and therefore it is a "safe" investment.

So, what we can do to reduce this if the aim is to stop the prices going through the roof as they have been for decades, is to make speculation on house prices less attractive.

Some policies to do this would be: remove negative gearing, remove the capital gains tax discount on profits from selling a house, massively increase public housing to reduce rents.

The problem for government here would be that there is potential political fallout from those who own houses, especially those who bought recently, if the value of their houses fall. Those who bought in the last few years, and likely have massive mortgages, would be furious if the value of their house falls while they still have a massive mortgage to pay off. The trick would be to try and stabilise prices for an extended period rather than have them drop.

I simply see no reason why the house I live in, which cost 5 times my income when we bought it, is now valued at around 20 times my current income which is a fair bit higher in real terms than my income all those years ago. It is simply ridiculous. Yet another market failure, pricing people out of a safe secure roof over their heads is a failure.

Also, might be worth acting now before the inevitable rise in interest rates from their current historic lows. When that happens there will be blood on the streets, possibly even literally.

DS

People who minimise tax are already hampered in their borrowing, if not stymied, David. But You make a beautiful point. Perhaps those on the margin will declare more. That's a neat way to sell to the idea as well as an altogether desirable outcome.

On whether we need more policies to improve housing affordability, I'm very happy with one. Not to say that the Federal Government may not look at reductions in negative gearing and perhaps a capital gains tax. It won't be this one. FWIW I think steady adjustment would be the way to go there.

Spot on. It's important to keep the market stable for all the reasons you outline.

Credit pressure is exerted by Victoria's 25% programme. But not much. And nothing in comparison to the debt brought on by COVID. And inflation has been observable at the supermarket for a couple of years now. The impact of that might very well mean a reduction in housing prices.

My guess is that inflation and credit will be big issues in the federal election that follows the impending one. The free press may focus on those now but I think it will take a bit more time for them to become salient.
 

Barbieup

Tiger Cub
Nov 13, 2021
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Only two banks offer this scheme, I enquired with the Bendigo but because of my age, 51, they couldn't offer me enough to buy a bathing box, despite 20% deposit in savings. I've watched 2 bed units at the cheap end, in the outer east increase by $150,000 in the past 18 months. I'm currently considering other suburbs like Ouyen and Yemen.

The govt share in the capital gain of their share. You pay them back when you sell or pay-off your mortgage.
 

MB78

I can have my cake and eat it too
Sep 8, 2009
7,660
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Housing affordability is going to be made worse in the short term with this policy. But if there is sufficient social housing ever built up it can help in the long run according to this article.

I don’t like the fact that they are not going to pay council rates. The money must be directed to local councils in kept in the region the houses are. Local councils have rate caps so they have even less ability to pass the costs on of losing this revenue.
 
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Barbieup

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Nov 13, 2021
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Will only effect 30% of projects ? Most blocks in my street are turning into strips of 6 town houses or 15 apartments. Ching ching ching. Maybe first home buyers grants will go up?

Pending a positive building and pest inspection next Monday, I bought my first home during the week. Good bye landlord, hello rates !
 
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MB78

I can have my cake and eat it too
Sep 8, 2009
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Congratulations that is awesome news. And well done on having a deposit.

Having a deposit is the hardest thing for so many people that for many reasons live week to week by there own actions or what’s forced on them.

I was once told by a finance specialist I really rate is that earning and keeping your first $100,000 cash, shares etc, is harder than making your next $900,000 cash, shares, property etc. And it’s true.
 
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Barbieup

Tiger Cub
Nov 13, 2021
23
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51
Congratulations that is awesome news. And well done on having a deposit.

Having a deposit is the hardest thing for so many people that for many reasons live week to week by there own actions or what’s forced on them.

I was once told by a finance specialist I really rate is that earning and keeping your first $100,000 cash, shares etc, is harder than making your next $900,000 cash, shares, property etc. And it’s true.
Thanks. Lockdown really helped, I just have to live like lockdown forever! I started working for myself in 2019, I could never have done it on a disability Support worker employee wage.

A lot of my friends in their 40s who rent accept the fact that they'll never own their own home, until they inherit it.
 
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DavidSSS

Tiger Legend
Dec 11, 2017
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Well done Barbieup, so difficult to buy a house now, so much easier for a lot of us a few decades ago. How you save a deposit with the rents these days I really don't know.

My daughter just figures the only house she will ever own is the one she inherits when we die.

DS
 

MB78

I can have my cake and eat it too
Sep 8, 2009
7,660
1,492
Well done Barbieup, so difficult to buy a house now, so much easier for a lot of us a few decades ago. How you save a deposit with the rents these days I really don't know.

My daughter just figures the only house she will ever own is the one she inherits when we die.

DS
There are a few options for her if your income is high enough, and you can show that you can save part of it. Many turn to the bank of mum and dad to get a gift of the first deposit or use the equity in their parents home to get the 20% needed.

The catch will be in later when rates hit 5%.

Below is a really balanced article. The most important thing is that the person getting the support has the right traits regarding savings etc to pay the loan.

 
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DavidSSS

Tiger Legend
Dec 11, 2017
7,857
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Melbourne
There are a few options for her if your income is high enough, and you can show that you can save part of it. Many turn to the bank of mum and dad to get a gift of the first deposit or use the equity in their parents home to get the 20% needed.

The catch will be in later when rates hit 5%.

Below is a really balanced article. The most important thing is that the person getting the support has the right traits regarding savings etc to pay the loan.


The banks seem quite relaxed about their mortgage portfolios if interest rates rise, the claim is most borrowers are ahead on their payments. I am not so convinced. With the over-priced housing market I reckon a lot of people have had to borrow too much and are going to struggle. Interest rates are incredibly low, when they go back to more typical levels it is going to be quite a big rise. Unfortunately a fair number of people will be caught out.

DS
 

Barbieup

Tiger Cub
Nov 13, 2021
23
38
51
LeetoRainestoRoach used to work at the State Bank in the late 80s when interest rates were almost 20% and he had a story of visiting ppl who hadn't made a mortgage payment in four years.

I was told banks work on an interest rate of 3.5% to work put if you can service a loan.

I talked to new owners in my street, property listed at 450-500 ... sold for 615. Young couple during lockdown, not a lot of choice but both still working and more in savings.
 
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