Light house, heavy cost
Do you want the government to have stake in your house?
That is something that is being proposed again in Australia in the leadup to the national election by the opposition, where the government would take up to a 40% stake in the house for those struggling to get into the market.
What do you think this does to prices?
This is another money grab. It will drive the prices of homes further up and use taxpayer money to do so, but eventually, the money runs dry and the houses drop in value again - leaving the 40% the tax payers paid, worth far less than they bought the stake for.
Is there no end to the stupidity?
Not really -this is what governments tend to do - they make promises that on the surface make sense, but essentially kick the can down the road far enough that by the time it is realized it is nonsensical, it no longer matters that it was their idea.
Housing prices are a problem because real estate is an investment. Yes, if I buy a house I am glad it goes up in value, but for the most part, houses don't have a very good ROI if it is a lived-in home, as once maintenance, interest payments on mortgage and inflation are factored in, it is more of a "store of value" factor. The investment return is that it isn't rent money down the drain, which is gone for good.
But, because there is a rental market, housing in general is a decent investment when it is a rented out property, because the rent covers the mortgage components (generally) and that means someone else is paying it off for the owner, whilst not getting any investment benefit themselves directly.
But, because of the way the economy works and how some people are able to work the economy, other investments are able to drive wealth generation and then, it is possible to convert the gains into other assets that offer an ROI, like rental properties. This means that the person may not even need the initial mortgage on the property and instead, just have the land tax and maintenance to take care of, so the rental gains are nearly all liquid. This liquidity can then run the investment gauntlet again.
For those who don't own property and aren't getting the "free money" of investment returns, they are going to have to buy their house from someone who is looking to make a profit. If a private owner living in it, they want to cover their initial investment, maintenance and upgrade costs as well as the inflation in order to get into another property. If buying from an investor, they are going to want it to be worth it, in relation to what that property can earn rented. Either way, it is likely to be more.
At face value, the problem appears to be that housing is too expensive and salaries too low, which is true, but why this is the case is what matters. Housing is expensive because of the investment status of it and salaries are too low because of the drive for profit maximization of business.
However, the real problem is that the average person doesn't have adequate investment ownership, meaning that they aren't broadly invested enough in assets that provide an ROI alongside their salaries. If they were, they would be able to afford housing and not rent, but of course, this drives the price of housing up too, doesn't it? But, what is the cap on how much housing a person can own, what is a fair ROI on it?
Let the market decide?
Sure, but that is not what is happening either, as there really is no such thing as a free market in this economy or life, because legislation is going to affect possibility. If there was a "trade as you want" scenario, things would look quite different to the engineering that governments enact to "protect" us from ourselves.
We just can't be trusted to act for ourselves.
Perhaps this is actually true, but I wonder what the world would look like if we were in a free market system - would there be the level of handouts happening? Would there be people long-term unemployed? Or, would "survival of the fittest" rule us? I think it would be a very painful exercise, but would we end up stronger on the other side? Probably - but that is not the way society works - well, not directly anyway.
Just look at the last couple years and note that for the first time in history, the protection of the elderly came before the protection of the young. The repercussions of the decisions made in the last two years are going to be far-reaching and profound, but that can seems to be successfully kicked far enough down the road, that when we connect the dots, those who made the decisions will no longer be liable - they will be dead from old age. But, the kids of today will still be alive to feel the effects.
Say what you want about boomers, but they are very good at extracting all they can for themselves, not caring about what is going to be left after they are dead and buried. Just look at the movement on the environment over the last decades - and follow where the money for it has gone.
Essentially, every time a government says they are doing something to "help the poor" I assume that the eventual outcome will be that it will come at the expense of the people just up from them and it will generate additional profits for the pointy end of the 1 percent. Am I too skeptical?
I don't think so.
But you might disagree.
Taraz
[ Gen1: Hive ]
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Governments rarely go out of their way to 'help the poor'. S0 many times they have been doing exactly the opposite, so I am always wary if a government is trying in any way to help someone :D
When they put out a hand, it is to stop you from getting up.
Nah not too skeptical.
this is a dangerous time for those in the middle in Australia. Unhappily there is always poor people that rely day to day on government handouts. There are always rich people that as long as they don't do anything too stupid they will remain so.
The issues above hit home to people that are between these categories. These changes and these issues are quickly moving that invisible but obvious BREADLINE. Its moving people down into the bottom bracket. They ones that now rely on the government and just simply can't get a foothold up. Its quite scary really.
Most of my friends are solidly in the middle bracket. As am I, but the rate im seeing friends that were only just in that middle bracket slip down is just crazy. Friends who have GOOD jobs. 2 kids, limited vices, non extravagant lifestyle. They rented because the didn't buy a house for work reasons... Now... well... During middle of Covid lockdowns i have 3 of these friends ask on FB for Food handouts because they had nothing. I took over boxes of food. They are now wanting to buy a house, but were priced out months ago. With rising rent and cost of living the chance of this is slipping and slipping while they lose the investment opportunity of owning a house.
That line is a scary one coming to claim people that i never thought it could. I don't know how Australia can fix this. But it better do something drastic as poverty is creeping into places i never thought it could.
Sarah
Yes - people focus on the extremes, so fail to recognize this crush. The difference in wealth between the bottom of the 1 and top of the 1% is far, far greater than the bottom of the 1 and the bottom. The last decade or two have been the fastest move of wealth from poor to rich ever.
It is insanity what is happening in Australia and elsewhere and I think that there are going to be more handouts from friends and family to come - "go fund me" for things that should never need external funding for.
I am not sure if Australia can fix it through legislation - I reckon it is going to come through collapse, violence and pain - unfortunately.
In my opinion, they should be incentivizing earning on the side at all levels and in all places. But, they seem to punish hard work.
Broccoli at $9kilo and capsicum at $12/kg well... they buy a $1bag of cheep mixed veg instead until now that isn't there either due to transport issues.
Yes it is crazy. And yes that crush is real. Hopefully it doesn't come for us!!! But who knows what will happen. The uncertainly is worrying. No doubt the tax man will come for his share of the lovely rewards i earn here today. because.... darn it... i'm sure they deserve it... rolls eyes Its crazy how much they don't like you earning money but are happy to take it away. No doubt the beer i give friends for work helping move furniture should be taxable and i should have to give them the monetary value of the beer payment they received. don't get me started.
anyway you have a nice day. I think the sun has finally come out here.
Sarah
"In my opinion, they should be incentivizing earning on the side at all levels and in all places. But, they seem to punish hard work."
This is happening all around the world and it looks like the governments want the vast majority of the population dependent on them because then they can mandate whatever they want and the people don't have that much power to say no. Using food and housing as a weapon to make people comply has been documented through the ages, they're just doing it in a wolf in sheep's clothing fashion. It's going to mess up economies more and most of the government interventions are like putting band-aids on artery lacerations. Short lived and then the problem is far more difficult to fix afterwards like you say kicking the can down the road.
Crazy.. I don't know so much about housing outside my country but I guess the government is just terrible everywhere.
The real estate system seems so complex.
I totally agree that a lot of people do not have their money invested in places with good ROI and they just depend on their housing ROI.
This is the case of so many landlords in Nigeria too.
Rentals seem to be very lucrative over there too..
I saw a video today saying you can rent a room in your private house and earn profit..
in Nigeria, it might not be so easy
Well.. Nice analysis of the government. It's just sad that the government that is meant to serve the people are the ones going against the people.
I don't know what the rental markets are like there, but in Finland it is getting pretty expensive to rent even crappy places and I think people are looking to share more now - even though there is plenty of housing available.
Hmmmm
I think that those who don't own property will not have for a long time in my country. Housing prices have increased more than double. I can understand it could increase due to rising costs, but people here increase the price of any property they have because of the hyperinflation.
Those houses, cars would not be worth that money in a normal economy.
It is an endless money grab globally, by organizations, corporations and institutions that are able to circumvent the "rules" through creative accounting practices.
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Concerning living in Australia, if a person wants to buy a small house at an affordable price, is it possible to pay the amount in installments especially with low salaries, or should the purchase be made in one sum ?
The average house price in Sydney is around a million dollars, so there aren't too many people with that kind of cash laying around.
Property market is always an inflationary in nature due to the fact someone will come and buy, and that someone is real estate investors. Here, I see taking a piece of barren lands without any infrastructure sells for millions, many investors also buying agricultural lands and turning them into real estate empires, even the government does not intervene but happily issues them permits.
You are right about the salaries, it is super hard to save money after spending on routine stuff, the inflation has already devouring our savings and made it pretty impossible to even think of our own home.
I was looking at the cash needed to get a loan there and it was around 320K dollars - that is about 3 years full salary, before taxes and any expenses - going on the "save 10% rule" it would take 40 years to save the money....
Oh my goodness! 40 years to buy a place to live, if you start working at 25 years, add 40 years to it, 65 years, what life would you enjoy your home? It is totally frustrating.
Question - what happens to a property when an owner defaults on mortgages or taxes, and the government owns 40% of it? I'm guessing it becomes the property of the government.
By then, the perpetrators have written up history so that they actually look good (see the environmental movement) and their heirs will be working a different scam of the common man. This seems to be the way of the world, but it doesn't have to be. We could all wise up, as many of us seem to be doing.
The function of a government must be to protect its citizens' rights, not the citizens themselves. No government should force us to do this irrational act:
I assume so.
I think the governments will keep moving "rights" to benefit whoever is sitting with control at the time.
Seems like a piece of the global land grab I keep hearing tell of.
I could not be more disengaged with politics than I am at this point.
No matter which side of the political sphere you sit, they're ALL in it for their own short term self-interests.
Do you have to vote in the Aus election from Finland?
How does that work?
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Yes and the ones who actually are trying to make a positive difference, are cutdown or manipulated so they can't.
Yes - but I will not answer more details here and you can read between the lines if I do :)
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Not really -this is what governments tend to do - they make promises that on the surface make sense, but essentially kick the can down the road far enough that by the time it is realized it is nonsensical, it no longer matters that it was their idea — exactly ! What the govt will tell you is that this will help a lot of Australians buy a home with a smaller mortgage that they can afford to repay, instead of renting for the rest of their lives ; is this really true and achievable??!!
It is not achievable this way5, because they are not encouraging real investment or ownership - a house is necessary for life - a second house or apartment is an investment.
There are some people who find the trade-off (which seems to be mostly along the lines of better mobility) worth the "loss" there. And also I remember some people froms ome of the online places I used to hang out who got furious about it being considered a "waste" when it's paying for a roof over their heads (they either can't afford to buy because it's cripplingly expensive or they're choosing not to for better mobility or whatever).
Given how many people literally SCREAM for legislation ("there oughtta be a law") to validate how they want things done or to actively prevent htings they personally believe no one should be able to do (sometimes it makes sense, a lot of the time it's purely because they personally don't like it therefore nobody should), this isn't that surprising XD
is this how we got here? O_O
This generally seems to equate to "might makes right" and severely further disadvantages already disadvantaged people (any disabilities at all, wrong age, wrong gender identity, wrong skin colour, any excuse really) this is probably worse than the mess that's going on right now.
just because there's worse doesn't mean we shouldn't try for better
My follow on from this sentence is "I burst out laughing, ask if they were being serious, then start laughing harder if they were".
Sceptical is probably healthier than being cynical :)
They had a similar system in the UK, it was called shared ownership, you picked the percentage and paid mortgage on it and the other percentage you paid rent. Was very popular.