Walk The World Another deep dive into the data with Journalist Tarric Brooker as we explore the recent events in China, the housing story (and political announceables), the mortgage cliff (or not) and lots more.
Slides are available here: https://avidcom.substack.com/p/dfa-chart-pack-18th-august-2023
Tarric’s article which we mention is here: https://avidcom.substack.com/p/aussie-fixed-rate-mortgage-cliff
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Perhaps one week Martin and Tarriq can talk about this topic on GenZ etc needing 3 jobs in this economy we have before us in Australia. As a GenX I found it disturbing that Parliament isn't noticing their plight. And for them I would desire a double dissolution election on housing if it means that we stop fois gras-ing those who already have enough tax cuts and tax minimisation. Imagine the combined tax rate they pay. And burn out at 40. Shame Australia that we do "I'm alright Jack". ABC report on GenZ working 3 jobs
https://youtu.be/r7GnGB1f88c
Don’t worry about inflationary living costs and house prices just get a 4th job. I hear Mr Lowe’s looking for a buttler.
We will follow canada's housing crash!
So the government creates a housing problem by importing too many people, then they ride to the rescue to milk political capital out of the situation! Why do we put of with this?
15:40 this chart. Maybe there is a method to the madness of the immigration policy. Push up yields so that removing negative gearing doesn't seem so bad to the aggregate population 😩
i think its time to find and burn down these conglomerate housing portfolio's, greed will push it to this point soon enough
RBA doesn't seem to care that the dollar is getting crushed.
all this whining about negative gearing fails to appreciate that those on high salaries (250K+) will still be liquid enough to invest in property.
I got my first property when making 60k and negative gearing provided much needed liquidity.
it’s not a taxpayer funded handout, as you’d be entitled to offset the costs against future passive income, so if anything it’s a taxpayer funded “advance” (unless you go NZ style, but they don’t even have CGT, so that’s even more of a handout)- all you’ll be doing is robbing the upper lower middle class to help the lower middle class. The big end of town will be fine either way and perhaps even better off now that social climbers are tripped up.
If property investors are in the minority then why are there issues politically in rolling it back?
1:00:15
I dont know how you fix that
Ungodly levels of expensive and just basically a giant fire hose that sprays Yuan out all over everything.
Gum On Shoe.
Rod Culleton has done amazing works concerning Land ownership in WA! Deserves a BIG mantion!😃
It's not that they are doing the same thing over and over and getting it wrong. They don't want to get it right. You know this, we all do. Do you honestly think anyone wants house prices to go down? You know the people who hold power do not, same as UK, Canada, etc. South Australia had a scheme where ideal family homes were kept off limits from investors for a few months to allow families to bid on them. There are plenty of good policy options. But they are not being taken in the main states on purpose. EVERYONE KNOWS IT.
Here is a macro view of corporate vs individual taxation. There is only one tax break that salary earners get that corporations get – negative gearing. Yet all of us salary earners begrudge the minority of salary earners who use it – big business is laughing. No surprise that for 50+ years it is the only tax break that big business advocates for. Getting rid of it for salary earners will still leave big business being able to use negative gearing.
To many Chinese families are moving to Australia how many millions of families do you think will move here and bring their wealth? We are the lucky country.. we will alway have a housing shortage for the next 10 years and material costs + labour costs will only be more expensive to build new homes
Another option is to change the negative gearing from a deduction to a rebate say at the corporate tax rate of 30%. This would reduce the 'deduction' for $180k+ salary earners by a third. Also, the rush to sell by investors would be less than that caused by a complete scrapping of the negative gearing option. Lets think of the nuances, not just retaining vs complete scrapping of negative gearing deduction.
Great presentation thank you
The jobs market has definitely changed over the past 6 months – thx again gentlemen 🙄
The tiny brain whirls, war in Ukraine affecting Chinese belt and road, energy crisis in Europe, changing demograpgics in developed countries, huge debt in US and many other nations, impact of AI on jobs and so much more background noise.
The imagination perceives situations that may not match reality.
Then there is always the black swan event to contend with.
Always great data and info in this World of lies.
One issue facing Australia is the risk inflation takes off as our dollar falls given the interest rate differential between Australia and the US. This may be compounded by lack of demand for resources.
I was speaking to an academic and he was saying in China officially unemployment is 20% in some age categories. He said its actually much higher. Hes concerned economic instability will enhance the likelihood of a disagreement with tiawan.
Who in their right mind would invest in China given the political ravings?
I always enjoy these Friday Chats, thank you
@ 8.06 , the reason all the business are going bust , is all the uneven tax's , they voted for .
business has been living on govt hand outs and laws changed to stop them failing , for 40 years .
Sorry Gen Millennials and Gen Z's…. even the boomers and Gen Xers advocating for you only want your votes, nothing will ever change. Ive worked for the one gov department my whole life. I came from a wog family so owning a home was drilled into us from birth. Social outcast when young so i didnt fritter my money away on stupid meals, cocktails and "gap years". Home owned outright plus two investments and a SMSF on a commercial property. I went on holiday earlier this year – all the bells and whistles including business class – and my bank balance had increased by more than what it was when I left including the flights and accommodation cost. Not to mention my shares performed well during this time. Now Im not gloating or saying sucked in… Im a small fish in a big pond. What I am saying that a high number of us boomers and Gen Xers (including pollies) will never allow this gravy train to cease. Im 46, need to get to 48 to get my 30 years service which in turns give me a remainder of life benefit in the field I'm working in. Then at 50, i think ill have enough to retire and do some part time work to keep me occupied. So when a pollie says he is here to help you, remember any perceived benefit to you is actually helping them more
I don’t believe that people’s portfolios of property ownership is impacting on housing prices that much, in the graph of rental income that’s only a $3 billion net return from all the millions of properties that may be owned by investors? Didn’t the cba just record a record profit of $10billion that’s there net return. So if you couple all the banks profits at $60 billion(estimate )that’s nearly 20 times the earnings of property investors. I really think this closest war against Australian property investors has to stop,as it is misdirecting valuable cognitive Brain 🧠 power at the issue which imo has the least impact on housing prices. Imo by far the main drivers of property prices is.
1. Low interest rates coupled with loose monetary regulation (last 15 -20years )which has always increased property prices upwards 50% of the reason
2.state government intervention or lack of intervention in land supply (15%)
3 government high population growth policy (10-15% and growing )
4. Debt driven government spending , causing people to leave the country towns to pursue higher standard of facilities in capital cities as the government destroyed the regional posts offices , refusing electricity offices. And centralised everything in the capitals leading children’s of country towns to go to cities. As the jobs in government pay more/are more secure then country town jobs.(15-10% diminishing)
5. And last would be property investors at less then 3% really has an impact to property prices imo. I thinks this this is the narrative mainstream media wants to push to distract from the above issues that I have discussed.
Claiming a loss on a rental property is no different from claiming a loss on any other business. People saying their tax is being given to a landlord is a stretch.
100% on immigration, if it were necessary build the infrastructure first. Build the housing first, build the railway, the highway, the hospital. Let us examine how much tax a new immigrant pays.
Tarric, on one hand you & Martin discussed the fact that the vast majority of property investors pre covid were losing money holding their investments. Then you went on to say that the greedy investors buy all the property and shut people like you out. The reality is that you could have bought something affordable a couple of years ago if you had some modest savings & a the determination to do so. True, it might not have been much of a property or one in an area/State in you wanted to live. Please stop feeling so sorry for yourself. Get ready now because in future there will be other opportunities. As far as you paying for my tax breaks, we have done what we've done in 1 ordinary income with 4 kids & no help from anyone. I could whinge that my taxes are now owning for rental subsidies, home buyer incentives etc that help keep the balls in the air. Be proactive! Don't blame others. PS All my kids bought homes before age 30 (3 by 25) & no we didn't help them! Definitely not in Sydney or Melbourne however.
You're worryin' about nothing, Tarric.
Just import some more immigrants and prop up the real estate market some more!
She'll be right, Mate. Head down to the beach with a 6-pack.
Another very informative show. Question…. Are you able to show a graph of interest rates going back as far as records go? It would be interesting to put some perspective on what is actually an average interest rate, given we've experienced ultra low and high interest rates in one lifetime.
Any amount of money that the government puts into housing will just be gouged out by the construction “industry”
I don't think the Politicians have much power. The governments job seems to be to empower the private sector, if the MSM media tells you that high houses and giving money to rich is good, they have the biggest sway.
Tarric you are wrong. The best thing a Government can do is to make people independent of the state, not more reliant on them.
PS Tarric..
Negative gearing is investors claiming some of their own tax back against investment property losses….its not using YOUR tax money!
G
Well, this is all just a wee bit awkward for me- I worked for Wall Street English (one of the biggest English training centres in the world) in Shenzhen in 2011-2012- the CCP decided to collapse this completely during the pandemic. I then went to work at Country Garden in Guangzhou for 3 years- now they've collapsed. Bit worried now about my currently employer here in Australia- am I bad luck lol?!
Yes Martin it is intentionally done to not fix the property problem. It’s basic logic given all they have and are doing to prop it up for decades.
@ 28 .00 the free market died the day the fed was formed .
the words , let me control a nation's money , i care not who rules it .
was why the fed was formed
Japanese lost decade. Is there a good book around or something I could read please? Fascinating stuff
The politicians don't want to reduce the cost of housing as that reduces the collateral value for the banks of their biggest asset, if the banks assets the housing stock they lend against falls whilst their liabilities stay the same then they are insolvent and as all the recent financial crisis show governments will do anything to protect the financial system, they will sacrifice anyone they have to
Politicians believe that the up and comming demographic has no financial acumen.
They'd be right, me thinks. No offence to Tarric.
What is real inflation rate especially in Australia , not the BS rate the government tells you ? clue much higher !!.
Idiocracy is one very funny movie. Sadly though, Australia is just like it now in every way except for their digital money, oh wait, that's coming too soon 😡 Thanks guys, a very good duscussion as always!
Will the sheeple ever learn ?, NO !!.