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I don't agree that it isn't a primary suspect. If you took the tax incentive out of housing investment, demand would plummet. Nobody's relying on yield anymore and expectations for capital gains are lower, I think.
Take foreigners that shouldn't legally be purchasing property as well as investors and prices would be like Wile E. Coyote going over a cliff. The government has increased the distortions and penalized the thrifty.
Yes, the policyinentivises investment over residential buyers.
Most of the first world countries do, excepting of course the US. Any moral society is goingto institute a welfare system once the average proserity is high enough to afford it.
Does US have its own superannuation/retirement pension systems? How is it different to Australian/Kiwi's? Which one is more "generous?"
Obviously Australia is somehow different. It's different because we have been selling huge amounts of iron ore to the Chinese. Australia is also different because of negative gearing. Of course, none of this means that we don't have a housing bubble. We do. Negative gearing is one reason why it hasn't popped yet.
I was living in the USA during and after the bubble. I sold my property and shorted the stock market. Australian real estate is dangerously over-expensive.
You know you don't have to be a mathematician to spot a trend here, and its clear some markets crashed while others powered on (for now). You could add most other OECD nations to that graph that would look virtually identical.
The rapid price growth throughout the OECD started at the same time. Most countries don't sell Iron ore or have negative gearing :P and many have lower rates of population growth for the record.
The largest contributing factor to this phenomenon is banking deregulating changes throughout the Western world in the late 90's, it pretty much allowed banks to lend to anyone and removed LTR restrictions that caused huge borrowing and a speculative housing market.
I am not suggesting negative gearing, state of the economy and immigration does not have SOME effect, but those factors are clearly not the root of the problem.
Why does the mainstream media not pick up on this?, well who are amongst the mainstream media's biggest clients?.....Banks & Real Estate, they prefer other explanations
You know you don't have to be a mathematician to spot a trend here, and its clear some markets crashed while others powered on (for now). You could add most other OECD nations to that graph that would look virtually identical.
The rapid price growth throughout the OECD started at the same time. Most countries don't sell Iron ore or have negative gearing :P and many have lower rates of population growth for the record.
The largest contributing factor to this phenomenon is banking deregulating changes throughout the Western world in the late 90's, it pretty much allowed banks to lend to anyone and removed LTR restrictions that caused huge borrowing and a speculative housing market.
I am not suggesting negative gearing, state of the economy and immigration does not have SOME effect, but those factors are clearly not the root of the problem.
Why does the mainstream media not pick up on this?, well who are amongst the mainstream media's biggest clients?.....Banks & Real Estate, they prefer other explanations
I don't disagree with you, but LVR restrictions aren't going to implement themselves now. If we implemented macroprudential controls, wouldn't it exclude all but debt-fueled equity investors rather than new homeowners? LVRs aren't going to cut now and it won't be tested.
The way this thing pops is going to be different in terms of the way the punch bowl is pulled. I've been early and wrong for years, but after having had no opinion for years, I believe that we are finally at the event horizon.
If AUD falls faster than prices increase, we lose safe-haven status with foreign investors. Why would anyone buy Aussie bonds?
Then, how can you explain the above article? Does the Australian gov't really have plans in changing the current system?
That has got nothing to do with the amount of contributions, but how you draw the money out. Currently the Australian system allows most retired people over the age of 60 to take out as much as you want, when you want, and tax free.
Which of course leaves it very open to abuse. You get some people using their Superannuation Pension to fund luxury cars, luxury homes, pay off that mortgage you could not afford in the first place, overseas holidays etc etc. Only to find the Superannuation money runs out very quickly and they end up relying on the government pension to fund their retirement, which the Superannuation Pension was meant to pay for.
Still I think the current guarantee rate of 9.5% is not high enough.
Last edited by danielsa1775; 11-09-2014 at 11:42 PM..
Then, how can you explain the above article? Does the Australian gov't really have plans in changing the current system?
I don't know. It's a British newspaper's comment on a report the Australian government commissioned, whether they act on it is another matter. You'd have to find something more authoritive in the Australian press to get a fuller picture.
Retirement is a long way off for me but is buying an annuity a bad thing or good?
It seems the New Zealand Reserve bank has somewhat proven LVR limits have a significant impact (realistically the biggest impact) on house prices growth in a time of the economy doing well and high immigration having upwards pressure on prices. Big surprise for anyone aware of the banking regulation changes in the late 90's
Before anyone cries "NZ first time home buyers are being overly penalised" which is the NZ banks paying for negative press spin, its worth noting first time buyers in NZ make up a far greater percentage of new mortgages than in Australia ooops!
As for Australia, I am betting the banks are panicking as most of them also operate in NZ a very similar market and a precedent has either been set or at the very least growing.
The Australia Reserve Bank imo knows LVR is the problem but like the current Aus climate change policy, its all boils down to bringing in government $$ revenue with a lot of power and vested interest groups preventing action.
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