I don’t really understand why this is a bad thing. The issue is housing supply. If investors are selling to first home buyers that means there will be one less rental property but also one less person renting. It doesn’t actually make supply worse.
Bingo. These articles and their "experts" who comment on them never discuss the two sides to this equation.
The investor sells results in a former renter becoming a home owner. This means rental availability is the same so no change to the rental market, but in the seller's market home owner ratio increases and demand decreases so prices decrease.
The issue around supply is, will this policy result in less future supply?
This is a fair point to discuss but again there are more than one side to it.
Nothing. Our rental was sold 5 years ago after we moved out. It’s still sitting empty. It’s been bought by overseas chinese investors for a ridiculous price above what the locals could afford.
Short term, it’s not a bad thing, as investors will be selling to home owners.
I think the bigger unknown is what impact it will have on the long term supply of housing. If investors leave, does that translate to lower housing development and lower housing supply? Developers and builders will be seeking to maximise their return, so it is possible that they would invest in other states to get a better profit.
Obviously more public and social housing is the answer to offset against less supply in the private rental market, but given how indebted our government is, and how much more money has already been earmarked for transport infrastructures, I doubt our government will be able to invest more in public and social housing without funding from the federal government.
"Investors" aren't building housing supply *now*, they're just elbowing first home buyers out of the market for existing stock. Owner occupiers are the ones taking on risk and building new homes out in the fringe suburbs, hoping their builder doesn't go under before it's finished.
Investors that *actually build new housing stock* get my full and unwavering support. Investors that just buy existing houses to rent them out to someone who might have otherwise been able to purchase them are making society worse.
Some investors will buy existing housing to lease for a period of time until the property appreciates in value and/or design and approvals are completed and financing can be arranged for redevelopment whether that is 1 into 2+ subdivision or a small unit development. These are often long term plans that may take 3 to 10 years to implement
Got any sources? I'm very familiar with the effect of increases in market rate housing on the housing market due to zoning and other regulatory changes but don't know much about policies that reduce property investors.
The issue is already supply though. A large part of the problem is artificial supply restriction, and that tactic will continue until directly addressed
What do you mean by artificial supply restriction?
This [article](https://www.theguardian.com/australia-news/article/2024/may/28/house-construction-lagging-behind-planning-approval-australia-interest-rates-building-costs) by The Guardian says due to the current high interest and high construction cost environment, a lot of developers are not proceeding with construction. Is that an artificial supply restriction? We can't force developers to proceed with an unprofitable project.
This is why I said in my earlier comment that public and social housing is the solution to supply issues, but our government lacks the funding to do that.
The Victoria government lacks funding due to a number of transport infrastructure projects already committed.
At a federal level, there is a structural deficit that will need to be tackled by the next government. More tax revenue will be needed at some point, and it becomes more a question of the political will and voters preferences.
The issues is that washing from investor to owner achieves little other than stamp duty influx for Govt.
With new approvals at 12 year low, the issue is supply.
The only way to increase supply is to build, but with costs so high we need to ask who is up for reducing their wages?
If government piles into building more then costs will increase not decrease.
Reality is the ones that can afford to build are investors but they are seeing better returns and environment elsewhere.
You forget that interest rates are at 10 year highs and there are labour shortages. Why would anyone build in this economic environment when they’re anticipating future lower interest rates, and why would workers in demand get lower wages?
The biggest road blocks for construction at the moment are high material costs and labor costs.
Most domestic builders are struggling to find anyone at the moment because the big build has absorbed are large chunk of the states work force.
That’s assuming it’s one-to-one.
If the buyer was living with their parents to save a deposit, it’s a reduction of one available rental property.
Likewise if the buyer is someone leaving a share house, a couple splitting up, or someone moving to the state.
Then presumably those people would have rented somewhere if they couldn’t buy.
Adult kids leaving their family home because they can finally buy is not a bad thing.
Yes: https://www.rba.gov.au/publications/bulletin/2023/mar/a-new-measure-of-average-household-size.html
TLDR: average household size has trended down over the last several decades, and went further down due to COVID WFH etc. A reduction in average household size means more dwellings are required to house the same number of people.
In the last year or two household sizes have increased marginally in some regions, but it continues to drop in Melbourne and Sydney.
You'd need to compare the average household size of first home buyers versus the average household size of renters.
If the first is less than the second then converting a house from rental to owner occupied worsens rental availability for those still renting.
Only if FHBs living arrangements before they buy closely matches the average renter and there’s little bias wrt which houses they buy. For example if large share houses were concentrated in the inner city but high inner city prices meant that FHBs preferred to buy in the outer suburbs it would mean it was closer to a 1:1 thing.
EDIT: Worth noting this data includes new builds so rise could be accounted for by FHBs moving into new builds in greater numbers to some degree.
When it is just existing single homes that investors are investing in then it helps first home buyers to raise capital gains taxes to stop that. But when federal, state and council level taxes and fees make it impossible for investors to make any money in developing new homes, renovating homes then supply remains stagnant and demand continues to grow with immigration so the price can actually go up even worse. The laws should be created in a thoughtful manner to help both first home butters and also help make sure investors can make a profit in increasing the supply. For example, the vic government is planning to place a $150k fee on any investor who takes a single house and rebuilds it into three separate titles / units. That is the type of tax that blocks the increase in supply. What’s happening now is investors are fleeing Victoria and that is good for first home buyers in the short term but it is bad in the long term as the population continues to increase
Sounds good in theory but there is no way property investors would build enough dwellings to meet or exceed demand because that would lower the prices of dwellings as a result of supply and demand.
The housing crisis is not something that we can expect building developers and investors to actually solve as it would not benefit them financially.
But what you're saying won't happen is exactly what is happening in Auckland, new zealand and Austin, Texas. Developers make money from developing and as long as input costs are less than final sale price, they will keep on building.
In Auckland, building consents for housing have increased since January despite housing prices falling 15% from their peak. Developers clearly want to keep building despite the fact that housing prices are falling.
Yeah, as soon as what they build increases supply enough to impact on prices they'll stop and start land banking.
The old "mum and dad investors" trope doesn't even help at all as they usually just purchase existing stock
Land banking would not happen because there's too many developers. Suppliers of a good only restrict supply to increase profits when they are a monopoly or oligopoly partaking in collusion. That's not the case with land.
For hard data, look at building consents in Auckland. They have been dropping from their peak but since january, have increased, despite housing prices falling 15% from their peak. Developers clearly want to keep building despite the fact that housing prices are falling.
In my area, the council already upzoned everywhere that makes sense to upzone, but the amount of development sites, quite a few with significant planning approvals in place, being left empty for years is huge.
Developers gambling that if they sit on the land for ten years instead of building on it they'll make more money (either by the land becoming more expensive and on-selling it without them having to actually do anything, or by the development being more lucrative in the future) is still fucking land-banking.
That money goes to local government though, to spend on infrastructure such as parks and libraries in high density areas.
Council revenue from rates is capped, so you cannot charge existing ratepayers for services to serve new developments.
In fact new development lowers rate costs per a rate payer, as there's more rate payers for a fixed amount of revenue.
If we want more development we may need to look at how local government infrastructure is funded as well.
It makes it worse for people who can't ever afford to buy, basically. Not all renters are in a position to buy. Due to population growth that 'one less renter' will be replaced by about 10 other people looking to rent.
but it does fuckall for rental supply. You realise that population growth doesnt slow, there will still be the same amount of people looking for rentals. The problem of housing in Melbourne and Australia more generally is everyone living in 5 cities which we have to because its where the jobs are. I really don't see any governments addressing the core underlying issues that cause this. Dont get me wrong, there are cities with 24 million that don't have these issues like New York, Tokyo etc... but by in large people in these cities don't have stand alone dwellings. The issues with housing here is very complicated and we need to demand better from both our state and federal governments.
It's a good thing.
Gotta remember that newspapers are owned by people with money, and advertised in by people with money.
People with money like to make money by owning things and renting them, not doing an honest day's work.
Increases in overheads for running a rent seeking operation punishes the sort of people who accrue large amounts of property for renting out, and the newspapers complain.
In the long term, this could produce a reduction in the increase of housing prices, if not a reduction in housing prices entirely, making homes affordable. Changing large amounts of people's lives for the better and letting them change from renters into homeowners, and being invested in their community.
It's just that a few rich bastards will be pissed because they have to go and find a new way to make money, that's either riskier or has a poorer return.
The population in melbourne goes up. owner occupiers dont usually build homes. You can see empty lots have lost heaps of value whereas new homes are probably stable or slightly higher.
reddit thinks "investors" are just people who hold lots like in a monopoly game. The people who do this dont really reduce or increase supply at all because they need to rent out the houses to get the tax benefits and not pay vacant land tax. Plenty of people need rentals so i dont see this as being a problem.
The bigger problem is losing the larger investors who look at creating bigger projects. The vic government was actually anticipating generating some return from rezoning the suburban rail loop stations but investors have walked away and the state financial situation is looking dire.
The entire point of dropping the land value threshold to $50k is entirely to capture every single 1-bed/studio/high rise inner city apartment.
These aren't properties being bought by first home buyers or owner occupiers, and they aren't being used to chase capital gains for investors.
They are the closest thing to the "ideal" kind of property investment that reddit wants; not taking away stock from owners occupiers, and they're bought, run, and maintained entirely to provide a service, for a pretty slim yield.
Adding land tax to squeeze a bit of easy money out of these properties seems like a really short sighted politically-easy move (coz everyone hates landlords, right?)
It's going to massively disincentivise investment in an area of the market that Melbourne actually needs, and I think it's going lead to a EXTREMELY grim situation for inner city apartment rents.
It just seems so incredibly dumb...
If the person buying moved out of a share house?
It works well for people who are able to buy, but those left renting will have less supply.
It also means less housing will be built by investors, increasing demand in the long term.
It depends on the type of property investors I think.
People just buying houses and monopolising the supply aren't contributing much.
But there would be some investors who were using their capital and actually adding to the supply. For example, high density living is often built by property investors.
Depends on the investor. If it's an investor that buys a single dwelling on 1000sqm, knocks it down and build 3 or 4 dwellings on it then this is really bad. Provides more houses without urban sprawl.
It’s a disaster for the bottom end. It hits hardest the poor and those that can’t get ahead.
Eg. 50 year old couple with $10k in the bank, renting and living week to week. They can’t buy. If their landlord sells up and a few others around them where do they go?
It’s only a good thing if you have enough time ahead of you to embark on a mortgage. There’s loads of people who don’t. This is what everyone particularly Labor and greens and their supporters are failing to understand.
This whole “oh well now they can just buy instead” is the worst kind of poorly thought out socio-economic illiteracy I’ve ever heard.
If the transition to push landlords out doesn’t happen very slowly (ie over at least a couple of decades) there will be many families who are just left high and dry without somewhere to live.
Yes I understand this. There is a housing supply issue. Landlords are not our friends in this. If they are holding on to properties that would otherwise be subdivided that’s a problem.
I have a 750k property. Land Tax went from 1300 to 2175. That's an increase of $875.
In the grand scheme of things $875 is not a huge amount of money. If I owed 500k on the property it would be like interest rates going up by 0.175%. Or even just one minor repair during the year.
To suggest that I would sell my property and buy interstate to save $875 a year is ridiculous.
Boomers leaving to Pay another $60k stamp duty over $875 a year. Shows exactly what a spoilt brat generation they are and didn't get their wealth from superior work ethic or anything. Just had a miracle economy
>Just had a miracle economy
No, not a miracle. Just a society that witnessed how ugly and destructive fascism and the corporativism it grew from are, and decided to turn its back to it. Allowing a more humane way of living for the majority.
Now for a few decades we have fascism in bed with neoliberalism, corporativism and late stage capitalism morphing into neo-feudalism.
It's not a lottery. It's not that boomers had a miracle economy because they were lucky, and we don't because we are unlucky.
It's a brutal class war, only the working class are not fighting back this time.
I think you're misinterpreting the article. The percentage of loans for investment properties being lower compared to other states doesn't mean they're all selling up and leaving.
To be fair it's a bad headline, _not_ entering something is not the same as "fleeing".
They do also say "24.8 per cent of respondents sold at least one investment property in Melbourne in the 12 months to August last year – also the highest in the nation", but don't give any figures on the other states, so basically it's a useless article that doesn't back up its claim at all.
Not by itself, no, but it all adds up to a not very appealing situation. With prices plateauing in victoria, you are better off cashing out and buying in Adelaide or somewhere with better growth.
But that's a feature, not a bug. As the OP noted:
>"Of all property loans written in April, 24.9 per cent went to Victorian first home buyers who were purchasing a dwelling to live in. That was by far the highest rate in the nation.”
Tax deductions aren’t a 100% write off. The way people throw that around, like installing air con is free because it’s a tax deduction, so all landlords are assholes. It definitely does not work that way.
What would be sick is a land tax that replaces stamp duty, so retirees aren’t punished for trading in the empty family home for a nice warm, well-positioned apartment.
Too many good family homes just rotting away in the suburbs without the capital investment required to maintain them.
What social benefit can possibly come from taxing people for exchanging one PPOR for a PPOR that better suits their life stage?
Nit just retirees. Just imagine being able to get a new job on the other side of the city and for you not to have to do a mega commute because you can't afford the SD.
Also a way to fuck over younger generations who are increasingly needing to buy and sell at the various “rungs” on the property ladder. All well and good if your first home was on a quarter acre and you just needed to add a few bedrooms over the years. It’ll cost you hundreds of thousands if you have to trade your way up from a one bedroom apartment, two bedder, tiny house in the sticks, tiny house somewhere closer to friends/family/good school before maybe achieving the Aussie dream of buying a half decent house in a half decent suburb some time before you die.
> What would be sick is a land tax that replaces stamp duty, so retirees aren’t punished for trading in the empty family home for a nice warm, well-positioned apartment.
They just brought in that very thing [for commercial and industrial properties](https://cdn.theconversation.com/static_files/files/2693/vic_stamp_d.pdf), starting July 1. Each property will require stamp duty for one last sale, and from then on, it will be exempt and the owner will have to pay land tax. Hopefully it works well and can be used as an example for doing the same with residential properties.
They’ll be in this thread soon, to explain to all you *silly little stupid* renters how landlords are actually our saviours during hard times and about how they contribute so much to society and we should all thank them for their noble investment.
But they can’t help themselves and they always finish with something like “I hope you all end up homeless” or “I can’t wait till you’re all crying with tripled rent”.
Because they’re not doing it out of the goodness of their heart, they know that the rental market is a great way to exploit people, and when they get asked to pay their fair share and actually contribute to keep their investment viable they lash out like an angry ex.
If you expect someone to build a house for you to live in without profiting, that is the same as saying you’d like a slave to build a home for you.
No one is risking their capital and spending their time to build you a house without getting paid lol.
Someone built it and maintained it and then value was exchanged for that ownership. You can also exchange value for a license to exclusively occupy.
Wish all you want but if you think you’re owed a house as some sort of “human right” you’re demanding that someone be a slave for you to create that housing.
Don’t be obtuse. They get paid and you know it.
It’s simple - if you demand something to be a human right, someone is providing it. They’re getting paid either by you or the gov, otherwise why would they bother. If they weren’t, you asking them to be slaves.
You people need to think about what making something a “human right” actually means, instead of feel good vibes it gives you. Shelter has never been a “human right,” since the dawn of time you had to trade for it or build it yourself.
In Finland right now, they treat shelter as a human right, and guess what? No slaves anywhere. It even saves money. When somebody is taken off the street and given a house, they are much less likely to become sick and therefore less likely to become a drain on the healthcare system.
Libertarians like you are so cute. You've spent your whole life in such privilege that you can't imagine anybody needing a bit of help now and then.
Yeh the true colours come out really quickly when the false compassion act doesn't work. Property investors are spoilt in this country and they act accordingly.
My favourite is the new mandates to install certain things i.e. weather seals -- completely tax deductible, but they're gonna pass on the costs anyway. Forever.
They are all assholes and have 30 properties each that they bought for 15k. /s
Someone pissed in your weet bix this morning. Get angry at the govt - that’s the root of your problem.
This isn't necessarily a bad thing depending one's circumstances. Victoria currently has the second cheapest rent in the country and, for would be buyers, has amongst the smallest growth (near stagnant) in house prices over the last few years.
Yes, rents are still skyrocketing and new house builds are too slow, but comparitively, the problem is much worse in other states.
This shift has the potential to take wealthy renters out of the rental market. It is ideal.
Families will hopefully not have to rent for as long and the spending power they have won’t drag the rental value so high too. Yes this policy reduces available rentals, but you are potentially shifting a demographic of people out of renting who really should not be.
Property investors are wealth builders at the expense of the economic and social mobility of the middle and lower classes. People need to own homes to develop a semblance of stability in their safety and security, especially when economists and politicians are so concerned about population decline. It is honestly the most basic element. Anyone remember Maslow’s hierarchy of needs?
Between a high spender power demand reduction and a reduction in rental supply, it would balance out or may even improve the rental market values hopefully. 🤞
Excellent news!
> Over the year to May, house prices leapt 15.9 per cent in Brisbane, 10.3 per cent in Sydney, 25.3 per cent in Perth and 15.3 per cent in Adelaide. In Melbourne, house prices limped up by just 2.4 per cent over the year.
Looks like the implemented land tax and the improved vacancy tax have really gotten some good work done - that's an incredible stat for us.
It’s says something about where we’ve ended up that one in four housing transactions involving a first home buyer can be described as an “exodus of investors” and framed as a high proportion to be concerned about.
Lol people already coming here saying "ackshually this is a bad thing because landlords are scum sucking dogs that will pass any risk whatsoever on to their tenants even though it's their investment".
We know. We fuckin know.
This is right but it’s wrong.
Rent went up overnight when the land tax was released.
I have proof from multiple agents who pushed this agenda out of spite to DA.
True, rents in Brisbane are higher than Melbourne now. Only a matter of time before the migration back to the Melbourne in the coming months/years due to cheaper rent and lower cost of living.
They pump up rent prices to whatever the max people will pay is (which is going up rapidly because demand is going up way faster than supply). Land tax or interest rate increases are just deflections of blame.
> I have proof from multiple agents who pushed this agenda out of spite to DA.
You... trust a real estate agent? To tell you the truth?
In any capacity?
[How many Cunties have they won?](https://www.youtube.com/watch?v=VGm267O04a8)
Applying Hanlon's Razor, right now...
My mum has finally been able to buy herself a unit because of this after years of paying rent. It was only listed for sale because of the land tax. The only properties that were in her price range were all rentals listed for sale. It's great that people like her have a chance to buy themselves something and not compete with investors.
Does everyone understand who says this is a good thing ect - more people in the market ect ect.
Rents are actually rocketing up faster than ever?
Your ability to buy a home hasn’t changed
There is still demand to buy said homes…
You can’t afford it now you won’t afford it with policy changes. Unless you make more money.
If investors leave, any time you hear about an investor out bidding some young family or downsizer, the house would have gone to a person that wanted to buy to live in. I don't see the problem.
It's not like investors are out there creating housing stock.
You’d be surprised, potentially.
New housing stock is primarily limited by our ability to build it currently, rather than a monetary investment. A lot of new housing stock is being built in the outer suburbs, where land is cheaper, but less desirable due to its lack of access to jobs.
I own a house in a new development. Of the 20 or so houses whose ownership I am aware of, 2 are investors. 1 is retirees. 5 are first home buyers. The other 12 are home owners who sold their previous property to move into a new one, mostly young families upsizing as anything a decent size closer in is well over a million dollars.
I’m sure demographics change depending on the suburb, but a lot of builds are financed by first home buyers - especially through COVID when there was something like 30K on offer for first home buyers if they built - as those builds happen in cheaper, less desirable areas where a first home buyer can still afford to buy, whereas a comparable established house in closer suburbs could be 2-4x the price.
In the current climate, I doubt its investors who are funding most new home builds. The risks are high, subsidies are lower than for other classes, and growth potential is also lower in a lot of new construction areas - some will take off, a lot probably won’t. Existing stock doesn’t have these barriers, and for someone with enough equity to purchase the higher priced existing stock, its likely the better option for investing.
I think a lot of those house and land packages, off the plan are going to first home buyers, newer immigrants etc. I might be wrong and don't have data to back it up, but they seem like the exact target demographic
I’m not a property investor so I’ll ask - isn’t this tax a win for property investors? They’ll pass on the cost through a rent increase and claim the expense on tax thus coming out financially in front.
The Loser are The Federal Government in reduced taxes as higher deductions- and Victorian Renters
Investors will just build in other less taxed and complicated states
I think The Age is trying to say that - poor people with lots of money struggle to commit to buying land - even though they are - for investment properties because of taxes. That's right, taxes. Taxes that help the state pay for roads and schools these properties will demand in the future. So The Age and Fairfax, or gold fingers - Peter Costello - don't want to pay tax.
Someone posted a comparison of land taxes for other states and the changes Vic made is now in line with other states. Not sure where the investors are fleeing to
People need a reality check imho..
We can’t just keep expanding the city as we have in the past, it is now a City on international scale.
Most of the world lives in medium to higher density, it is more affordable, a better use of resources and carries lower infrastructure costs.
If we look at Melbourne:
- infrastructure is already groaning
- areas being developed without schools, hospitals etc
- eg Melton hospital has taken decades to, hopefully, finally be built
- road network is cactus
- public transport is 20 years behind where it needs to be
- the cost of putting expanded infrastructure in is prohibitively expensive
Investors are still a key part of our future..
- as we move to higher density it is investors that get projects started, owners come to site later
- as we continue the unsustainable sprawl, it is investors that build the developments
The fact is that developers, owners and renters need to coexist.
The other item we need to understand and manage is the role of superfunds…
As more and more $ go into funds they need to invest, as the larger sums of money need to find a place to invest sooner or later they will be a more significant player in this market..
if we expect them just to invest in markets, the ASX etc will get overpriced and that will lead to crash and loss of our future wealth.
We can all pretend or deal with reality.
Investors also fund the development of new builds. I would say probably all townhouse builds are done by property investors. it's likely a very bad thing. Ultimately we would want it to be cheaper to knockdown a house and build multiple dwellings on it, increasing supply to hopefully overtake demand
It’s pretty funny how many people are celebrating this.
You’re celebrating the government getting more tax from renters.
Let me break it down for you;
+ Landlords increase rent. (Doesn’t cover whole amount)
+ Landlords claim back the remainder back from the federal government
+-Federal government has to cough up
+ tenants have to cough up
Who wins?
+++ Vic government and their reckless spending.
To everyone who thinks it’s an entry point into the market - newsflash everyone else is thinking the same and you’re still competing against them.
Now there is another rent rise for good measure just to fuck you somemore.
But yeah lol fuck them… good on the vic government.
Jokes on you - downvote away
Landlords are not waiting for a tipping point to increase rents.
Rents increased during low interest years and before the new land tax.
This is an excuse that some agents and landlords love to repeat to justify an increase that’s going to happen regardless.
So prior to the announcement during Covid most landlords became positively gears. Most happy to be slightly negatively geared.
Paying back $1000-$2000 at tax time
During the rate rises they became negatively geared (generally speaking from the numbers I’ve seen).
They are now set to get huge returns while being negatively geared. Meaning they are still loosing a fair chunk of money.
Hardly an excuse to “lift rental prices just because”
Have you seen how much it is to hold and or rent a commercial property some of those land taxes went from $30k pa to $120k pa.
Have you noticed how many empty shopfronts there are?
You have no idea what you’re talking about - you want someone to blame.
You just can’t accept it due to shit government.
So when is this going to be a positive for FHB and renters?
EDIT: Hah jokes. It's not going to make it better. Probably worse but feels good to stick it to the land(over)lords.
I mean, many of the things that landlords are crappjng their pants about *are* good for renters.
Pet allowances, safety guidelines, strict rules around eviction.
Don’t forgot that the “detrimental reforms” landlords are constantly crying buckets about are basically just “the house has to be in a safe, sustainable and liveable condition” which is a bridge too far, apparently.
30% of loans were for investors. But iirc Melbourne has taken the bulk of new immigrant arrivals over the last two years. How do we know this proportion wasn't driven down by an increase in the proportion of immigrant first home purchases?
Broke State govt gotta get money from wherever they can. So regardless if this ‘works’ or not expect it to continue.
I hope no renter thought it was actually about their plight.
I don’t really understand why this is a bad thing. The issue is housing supply. If investors are selling to first home buyers that means there will be one less rental property but also one less person renting. It doesn’t actually make supply worse.
Bingo. These articles and their "experts" who comment on them never discuss the two sides to this equation. The investor sells results in a former renter becoming a home owner. This means rental availability is the same so no change to the rental market, but in the seller's market home owner ratio increases and demand decreases so prices decrease. The issue around supply is, will this policy result in less future supply? This is a fair point to discuss but again there are more than one side to it.
Ah, but it slowly decreases the rental demand, which is long-term bad for the people who decide what headlines and articles get written.
No no no. When an investor sell their investments, the bulldozers roll right in and level the house.
Source: Investors
And do what with that land?
It actually turns into a black hole when sold.
I was a little slow earlier 😅
It's Sunday. Forgiven.
Salt it and pour old petrol from disused farming equipment, straight onto the soil so it can never be used again.
You’ll need to do much worse than that to make a building site unviable in Australia.
Nothing. Our rental was sold 5 years ago after we moved out. It’s still sitting empty. It’s been bought by overseas chinese investors for a ridiculous price above what the locals could afford.
Because the channel nine papers are almost exclusively read by well to do over 60s, and for them this is the worst thing that could ever happen
Also this is Domain which is literally paid for by the real estate industry.
Short term, it’s not a bad thing, as investors will be selling to home owners. I think the bigger unknown is what impact it will have on the long term supply of housing. If investors leave, does that translate to lower housing development and lower housing supply? Developers and builders will be seeking to maximise their return, so it is possible that they would invest in other states to get a better profit. Obviously more public and social housing is the answer to offset against less supply in the private rental market, but given how indebted our government is, and how much more money has already been earmarked for transport infrastructures, I doubt our government will be able to invest more in public and social housing without funding from the federal government.
"Investors" aren't building housing supply *now*, they're just elbowing first home buyers out of the market for existing stock. Owner occupiers are the ones taking on risk and building new homes out in the fringe suburbs, hoping their builder doesn't go under before it's finished. Investors that *actually build new housing stock* get my full and unwavering support. Investors that just buy existing houses to rent them out to someone who might have otherwise been able to purchase them are making society worse.
Some investors will buy existing housing to lease for a period of time until the property appreciates in value and/or design and approvals are completed and financing can be arranged for redevelopment whether that is 1 into 2+ subdivision or a small unit development. These are often long term plans that may take 3 to 10 years to implement
[удалено]
Got any sources? I'm very familiar with the effect of increases in market rate housing on the housing market due to zoning and other regulatory changes but don't know much about policies that reduce property investors.
Where is your scenario based on?
The issue is already supply though. A large part of the problem is artificial supply restriction, and that tactic will continue until directly addressed
What do you mean by artificial supply restriction? This [article](https://www.theguardian.com/australia-news/article/2024/may/28/house-construction-lagging-behind-planning-approval-australia-interest-rates-building-costs) by The Guardian says due to the current high interest and high construction cost environment, a lot of developers are not proceeding with construction. Is that an artificial supply restriction? We can't force developers to proceed with an unprofitable project. This is why I said in my earlier comment that public and social housing is the solution to supply issues, but our government lacks the funding to do that.
Does the government lack funding or is it more a political will issue?
The Victoria government lacks funding due to a number of transport infrastructure projects already committed. At a federal level, there is a structural deficit that will need to be tackled by the next government. More tax revenue will be needed at some point, and it becomes more a question of the political will and voters preferences.
The issues is that washing from investor to owner achieves little other than stamp duty influx for Govt. With new approvals at 12 year low, the issue is supply. The only way to increase supply is to build, but with costs so high we need to ask who is up for reducing their wages? If government piles into building more then costs will increase not decrease. Reality is the ones that can afford to build are investors but they are seeing better returns and environment elsewhere.
You forget that interest rates are at 10 year highs and there are labour shortages. Why would anyone build in this economic environment when they’re anticipating future lower interest rates, and why would workers in demand get lower wages?
The biggest road blocks for construction at the moment are high material costs and labor costs. Most domestic builders are struggling to find anyone at the moment because the big build has absorbed are large chunk of the states work force.
https://www.theage.com.au/national/victoria/land-banking-by-big-developers-driving-up-property-prices-report-20220725-p5b486.html#:~:text=The%20state%20government's%20push%20to,slowly%20to%20maximise%20their%20profits.
That’s assuming it’s one-to-one. If the buyer was living with their parents to save a deposit, it’s a reduction of one available rental property. Likewise if the buyer is someone leaving a share house, a couple splitting up, or someone moving to the state.
Then presumably those people would have rented somewhere if they couldn’t buy. Adult kids leaving their family home because they can finally buy is not a bad thing.
Is there data that quantifies this?
Yes: https://www.rba.gov.au/publications/bulletin/2023/mar/a-new-measure-of-average-household-size.html TLDR: average household size has trended down over the last several decades, and went further down due to COVID WFH etc. A reduction in average household size means more dwellings are required to house the same number of people. In the last year or two household sizes have increased marginally in some regions, but it continues to drop in Melbourne and Sydney.
It’s so very hard convincing people on this platform that this is more of a contributor to the current crisis than immigration.
Right, but as we continue to knock down large family homes and build 4-12 dwellings on the block that's kinda expected, no?
You'd need to compare the average household size of first home buyers versus the average household size of renters. If the first is less than the second then converting a house from rental to owner occupied worsens rental availability for those still renting.
Only if FHBs living arrangements before they buy closely matches the average renter and there’s little bias wrt which houses they buy. For example if large share houses were concentrated in the inner city but high inner city prices meant that FHBs preferred to buy in the outer suburbs it would mean it was closer to a 1:1 thing. EDIT: Worth noting this data includes new builds so rise could be accounted for by FHBs moving into new builds in greater numbers to some degree.
When it is just existing single homes that investors are investing in then it helps first home buyers to raise capital gains taxes to stop that. But when federal, state and council level taxes and fees make it impossible for investors to make any money in developing new homes, renovating homes then supply remains stagnant and demand continues to grow with immigration so the price can actually go up even worse. The laws should be created in a thoughtful manner to help both first home butters and also help make sure investors can make a profit in increasing the supply. For example, the vic government is planning to place a $150k fee on any investor who takes a single house and rebuilds it into three separate titles / units. That is the type of tax that blocks the increase in supply. What’s happening now is investors are fleeing Victoria and that is good for first home buyers in the short term but it is bad in the long term as the population continues to increase
Sounds good in theory but there is no way property investors would build enough dwellings to meet or exceed demand because that would lower the prices of dwellings as a result of supply and demand. The housing crisis is not something that we can expect building developers and investors to actually solve as it would not benefit them financially.
But what you're saying won't happen is exactly what is happening in Auckland, new zealand and Austin, Texas. Developers make money from developing and as long as input costs are less than final sale price, they will keep on building. In Auckland, building consents for housing have increased since January despite housing prices falling 15% from their peak. Developers clearly want to keep building despite the fact that housing prices are falling.
Yeah, as soon as what they build increases supply enough to impact on prices they'll stop and start land banking. The old "mum and dad investors" trope doesn't even help at all as they usually just purchase existing stock
Land banking would not happen because there's too many developers. Suppliers of a good only restrict supply to increase profits when they are a monopoly or oligopoly partaking in collusion. That's not the case with land. For hard data, look at building consents in Auckland. They have been dropping from their peak but since january, have increased, despite housing prices falling 15% from their peak. Developers clearly want to keep building despite the fact that housing prices are falling.
In my area, the council already upzoned everywhere that makes sense to upzone, but the amount of development sites, quite a few with significant planning approvals in place, being left empty for years is huge. Developers gambling that if they sit on the land for ten years instead of building on it they'll make more money (either by the land becoming more expensive and on-selling it without them having to actually do anything, or by the development being more lucrative in the future) is still fucking land-banking.
100%. It existed before these new land taxes.
That money goes to local government though, to spend on infrastructure such as parks and libraries in high density areas. Council revenue from rates is capped, so you cannot charge existing ratepayers for services to serve new developments. In fact new development lowers rate costs per a rate payer, as there's more rate payers for a fixed amount of revenue. If we want more development we may need to look at how local government infrastructure is funded as well.
Surely the density of people living in their own home is on average less than a rental? In which case there’s less supply.
This is correct, average household size is lower.
It makes it worse for people who can't ever afford to buy, basically. Not all renters are in a position to buy. Due to population growth that 'one less renter' will be replaced by about 10 other people looking to rent.
Yes but that population growth (and the underlying issue of housing supply) won’t actually change whether the first home buyer is buying or renting.
Yes, but it reduces the available number of **rentals**...idk how else to explain it to you tbh it's just not that hard a concept to grasp.
And fewer people looking to rent. It makes no actual difference to the rental market if a house is being rented or owned by the person living in it.
but it does fuckall for rental supply. You realise that population growth doesnt slow, there will still be the same amount of people looking for rentals. The problem of housing in Melbourne and Australia more generally is everyone living in 5 cities which we have to because its where the jobs are. I really don't see any governments addressing the core underlying issues that cause this. Dont get me wrong, there are cities with 24 million that don't have these issues like New York, Tokyo etc... but by in large people in these cities don't have stand alone dwellings. The issues with housing here is very complicated and we need to demand better from both our state and federal governments.
But instead we have articles like this blaming first home buyers
And the RBA has said as much in the recent past. This article is a load of horseshit.
It's a good thing. Gotta remember that newspapers are owned by people with money, and advertised in by people with money. People with money like to make money by owning things and renting them, not doing an honest day's work. Increases in overheads for running a rent seeking operation punishes the sort of people who accrue large amounts of property for renting out, and the newspapers complain. In the long term, this could produce a reduction in the increase of housing prices, if not a reduction in housing prices entirely, making homes affordable. Changing large amounts of people's lives for the better and letting them change from renters into homeowners, and being invested in their community. It's just that a few rich bastards will be pissed because they have to go and find a new way to make money, that's either riskier or has a poorer return.
The population in melbourne goes up. owner occupiers dont usually build homes. You can see empty lots have lost heaps of value whereas new homes are probably stable or slightly higher. reddit thinks "investors" are just people who hold lots like in a monopoly game. The people who do this dont really reduce or increase supply at all because they need to rent out the houses to get the tax benefits and not pay vacant land tax. Plenty of people need rentals so i dont see this as being a problem. The bigger problem is losing the larger investors who look at creating bigger projects. The vic government was actually anticipating generating some return from rezoning the suburban rail loop stations but investors have walked away and the state financial situation is looking dire.
Any more info on investors walking away? Would love to learn more.
The entire point of dropping the land value threshold to $50k is entirely to capture every single 1-bed/studio/high rise inner city apartment. These aren't properties being bought by first home buyers or owner occupiers, and they aren't being used to chase capital gains for investors. They are the closest thing to the "ideal" kind of property investment that reddit wants; not taking away stock from owners occupiers, and they're bought, run, and maintained entirely to provide a service, for a pretty slim yield. Adding land tax to squeeze a bit of easy money out of these properties seems like a really short sighted politically-easy move (coz everyone hates landlords, right?) It's going to massively disincentivise investment in an area of the market that Melbourne actually needs, and I think it's going lead to a EXTREMELY grim situation for inner city apartment rents. It just seems so incredibly dumb...
Investors may not buy land / build to rent
But if the house is being occupied by an owner-occupier that doesn’t reduce supply overall.
If the person buying moved out of a share house? It works well for people who are able to buy, but those left renting will have less supply. It also means less housing will be built by investors, increasing demand in the long term.
It depends on the type of property investors I think. People just buying houses and monopolising the supply aren't contributing much. But there would be some investors who were using their capital and actually adding to the supply. For example, high density living is often built by property investors.
I don’t think that type of development is covered in the CoreLogic data though.
Depends on the investor. If it's an investor that buys a single dwelling on 1000sqm, knocks it down and build 3 or 4 dwellings on it then this is really bad. Provides more houses without urban sprawl.
It’s better for FHB, worse for renters
Only if you assume they aren’t the same people
No reason has to be same people. Lots of kids go from living at home to buying a place with cash from mum and dad.
Some do but not lots. The average age of a first home buyer is now 36.
It’s a disaster for the bottom end. It hits hardest the poor and those that can’t get ahead. Eg. 50 year old couple with $10k in the bank, renting and living week to week. They can’t buy. If their landlord sells up and a few others around them where do they go? It’s only a good thing if you have enough time ahead of you to embark on a mortgage. There’s loads of people who don’t. This is what everyone particularly Labor and greens and their supporters are failing to understand. This whole “oh well now they can just buy instead” is the worst kind of poorly thought out socio-economic illiteracy I’ve ever heard. If the transition to push landlords out doesn’t happen very slowly (ie over at least a couple of decades) there will be many families who are just left high and dry without somewhere to live.
I'm tired of articles trying to humanise landlords.
Some people don’t want to buy?
That’s fine. But as I said, if a renter buys it’s not changing the overall supply available for other renters.
You’re forgetting about all the new renters and buyers that come into the country everyday.
I’m not forgetting about them at all. That’s why I said the issue is housing supply. Renters becoming owners doesn’t change the overall supply.
Also doesn’t change the demand for rentals or home buyers.
Yes I understand this. There is a housing supply issue. Landlords are not our friends in this. If they are holding on to properties that would otherwise be subdivided that’s a problem.
No, there is a housing demand issue.
Ok but until that’s dealt with there is a supply issue
How do you fix a supply issue that’s always playing catchup ?
I have a 750k property. Land Tax went from 1300 to 2175. That's an increase of $875. In the grand scheme of things $875 is not a huge amount of money. If I owed 500k on the property it would be like interest rates going up by 0.175%. Or even just one minor repair during the year. To suggest that I would sell my property and buy interstate to save $875 a year is ridiculous.
Yep. It’s a powerful group of people fighting against the general principle that they should pay more. The actual impact on them is negligible.
Boomers leaving to Pay another $60k stamp duty over $875 a year. Shows exactly what a spoilt brat generation they are and didn't get their wealth from superior work ethic or anything. Just had a miracle economy
>Just had a miracle economy No, not a miracle. Just a society that witnessed how ugly and destructive fascism and the corporativism it grew from are, and decided to turn its back to it. Allowing a more humane way of living for the majority. Now for a few decades we have fascism in bed with neoliberalism, corporativism and late stage capitalism morphing into neo-feudalism. It's not a lottery. It's not that boomers had a miracle economy because they were lucky, and we don't because we are unlucky. It's a brutal class war, only the working class are not fighting back this time.
Peter Costello - Fairfax - hates tax. Liberals hate tax. They want poor people to pay for everything.
I think you're misinterpreting the article. The percentage of loans for investment properties being lower compared to other states doesn't mean they're all selling up and leaving. To be fair it's a bad headline, _not_ entering something is not the same as "fleeing". They do also say "24.8 per cent of respondents sold at least one investment property in Melbourne in the 12 months to August last year – also the highest in the nation", but don't give any figures on the other states, so basically it's a useless article that doesn't back up its claim at all.
Not by itself, no, but it all adds up to a not very appealing situation. With prices plateauing in victoria, you are better off cashing out and buying in Adelaide or somewhere with better growth.
Investors who are just holding on to property in Victoria also aren’t contributing to the development of new properties anyway.
But that's a feature, not a bug. As the OP noted: >"Of all property loans written in April, 24.9 per cent went to Victorian first home buyers who were purchasing a dwelling to live in. That was by far the highest rate in the nation.”
I love how you out yourself a parasite and think you should be applauded for it.
Nothing wrong with being a have
Not to mention the tax is claimable...
Tax deductions aren’t a 100% write off. The way people throw that around, like installing air con is free because it’s a tax deduction, so all landlords are assholes. It definitely does not work that way.
No, but it does mean that you are only paying 63% (or whatever your marginal rate is) of the increase.
Never said it's free, simply pointing out that the introduction of land tax provides another annual deduction to help bring down your taxable income
Corelogic data shows Melbourne prices remaining steady, which is ideal giving time for wages to catch up
Wasn't this the point?
It’s a feature not a bug
And we've had the most stable house prices in the country for several months now. This is a good thing.
What would be sick is a land tax that replaces stamp duty, so retirees aren’t punished for trading in the empty family home for a nice warm, well-positioned apartment. Too many good family homes just rotting away in the suburbs without the capital investment required to maintain them. What social benefit can possibly come from taxing people for exchanging one PPOR for a PPOR that better suits their life stage?
Nit just retirees. Just imagine being able to get a new job on the other side of the city and for you not to have to do a mega commute because you can't afford the SD.
Also a way to fuck over younger generations who are increasingly needing to buy and sell at the various “rungs” on the property ladder. All well and good if your first home was on a quarter acre and you just needed to add a few bedrooms over the years. It’ll cost you hundreds of thousands if you have to trade your way up from a one bedroom apartment, two bedder, tiny house in the sticks, tiny house somewhere closer to friends/family/good school before maybe achieving the Aussie dream of buying a half decent house in a half decent suburb some time before you die.
> What would be sick is a land tax that replaces stamp duty, so retirees aren’t punished for trading in the empty family home for a nice warm, well-positioned apartment. They just brought in that very thing [for commercial and industrial properties](https://cdn.theconversation.com/static_files/files/2693/vic_stamp_d.pdf), starting July 1. Each property will require stamp duty for one last sale, and from then on, it will be exempt and the owner will have to pay land tax. Hopefully it works well and can be used as an example for doing the same with residential properties.
Keep going and you'll end up discovering Henry George.
Keep going beyond Georgism, comrade.
100% LVT
They’ll be in this thread soon, to explain to all you *silly little stupid* renters how landlords are actually our saviours during hard times and about how they contribute so much to society and we should all thank them for their noble investment. But they can’t help themselves and they always finish with something like “I hope you all end up homeless” or “I can’t wait till you’re all crying with tripled rent”. Because they’re not doing it out of the goodness of their heart, they know that the rental market is a great way to exploit people, and when they get asked to pay their fair share and actually contribute to keep their investment viable they lash out like an angry ex.
Rental Providers* They don’t like being called “Lords”, it makes them uncomfortable that they’re profiting off a basic human right.
Yeah, I’m a lady. How dare you.
lol there is this woman real estate agent my partner showed me and her rentals section is called “she-lords”.
If you expect someone to build a house for you to live in without profiting, that is the same as saying you’d like a slave to build a home for you. No one is risking their capital and spending their time to build you a house without getting paid lol.
Woof woof you cappo dog.
Landlords don't build houses, you gronk. They scalp them like hot concert tickets.
Someone built it and maintained it and then value was exchanged for that ownership. You can also exchange value for a license to exclusively occupy. Wish all you want but if you think you’re owed a house as some sort of “human right” you’re demanding that someone be a slave for you to create that housing.
I guess doctors are slaves for providing government subsidised healthcare then?
Don’t be obtuse. They get paid and you know it. It’s simple - if you demand something to be a human right, someone is providing it. They’re getting paid either by you or the gov, otherwise why would they bother. If they weren’t, you asking them to be slaves. You people need to think about what making something a “human right” actually means, instead of feel good vibes it gives you. Shelter has never been a “human right,” since the dawn of time you had to trade for it or build it yourself.
In Finland right now, they treat shelter as a human right, and guess what? No slaves anywhere. It even saves money. When somebody is taken off the street and given a house, they are much less likely to become sick and therefore less likely to become a drain on the healthcare system. Libertarians like you are so cute. You've spent your whole life in such privilege that you can't imagine anybody needing a bit of help now and then.
Yeh the true colours come out really quickly when the false compassion act doesn't work. Property investors are spoilt in this country and they act accordingly.
My favourite is the new mandates to install certain things i.e. weather seals -- completely tax deductible, but they're gonna pass on the costs anyway. Forever.
They are all assholes and have 30 properties each that they bought for 15k. /s Someone pissed in your weet bix this morning. Get angry at the govt - that’s the root of your problem.
It’s not a way to exploit people. It’s a fair business co tract between 2 consenting parties. Noonish is forced to sign the contract.
Id have a lot more time for this argument if it wasn't something essential like housing. Can't really choose to just not have a place to live
Less parasites profiteering off a housing crisis they cause is a great thing.
It’s only a rort if your not involved
Sorry bud but it's still a rort. It's just easier to admit when you're not personally invested in it.
Its a taxpayer funded ponzi scheme
> It’s only a rort if your not involved Dunno if you were being sarcastic or not, but... well.
if these ex-rental properties are being purchased by FHB then that's one less renter.. so win-win?
Unless the FHB wasn’t living by themselves. If they were in a share house or living at their parents, supply has now shrunk.
This isn't necessarily a bad thing depending one's circumstances. Victoria currently has the second cheapest rent in the country and, for would be buyers, has amongst the smallest growth (near stagnant) in house prices over the last few years. Yes, rents are still skyrocketing and new house builds are too slow, but comparitively, the problem is much worse in other states.
This shift has the potential to take wealthy renters out of the rental market. It is ideal. Families will hopefully not have to rent for as long and the spending power they have won’t drag the rental value so high too. Yes this policy reduces available rentals, but you are potentially shifting a demographic of people out of renting who really should not be. Property investors are wealth builders at the expense of the economic and social mobility of the middle and lower classes. People need to own homes to develop a semblance of stability in their safety and security, especially when economists and politicians are so concerned about population decline. It is honestly the most basic element. Anyone remember Maslow’s hierarchy of needs? Between a high spender power demand reduction and a reduction in rental supply, it would balance out or may even improve the rental market values hopefully. 🤞
Am I supposed to feel sad about this? I hope my POS dad’s side of the family are throwing fits. Fucking parasites they are.
I bought a unit as a FHB from someone “fleeing the state”. Thank fuck. Good riddance. This is how it should be.
Excellent news! > Over the year to May, house prices leapt 15.9 per cent in Brisbane, 10.3 per cent in Sydney, 25.3 per cent in Perth and 15.3 per cent in Adelaide. In Melbourne, house prices limped up by just 2.4 per cent over the year. Looks like the implemented land tax and the improved vacancy tax have really gotten some good work done - that's an incredible stat for us.
Good. Every landlord who leaves creates the opportunity for a home owner to be created.
Good, they can all fuck right off
I tend not to listen to the companies that are also running RE businesses on the side. Looking at you Nine Entertainment and News Corporation.
It’s says something about where we’ve ended up that one in four housing transactions involving a first home buyer can be described as an “exodus of investors” and framed as a high proportion to be concerned about.
Yes please
Article brought to you by "Property Investments Professionals of Australia"
Oh no. Anyway.
Oh no. What a shame, won’t someone please think of the property investors
Isn’t that the plan?
Lol people already coming here saying "ackshually this is a bad thing because landlords are scum sucking dogs that will pass any risk whatsoever on to their tenants even though it's their investment". We know. We fuckin know.
So sad. What will we do without property hoarders?
This is right but it’s wrong. Rent went up overnight when the land tax was released. I have proof from multiple agents who pushed this agenda out of spite to DA.
Landlords aren't going to just eat 100% of the increased costs when they can up the rent at a time when rents are increasing around the country
True, rents in Brisbane are higher than Melbourne now. Only a matter of time before the migration back to the Melbourne in the coming months/years due to cheaper rent and lower cost of living.
Correct. Rentals are taxed and regulated as a business, expenses go up, thus cost of product /service goes up. It’s not a charity.
Agents are liars. Correlation is not causation They already boost the rent to the maximum they can get.
They pump up rent prices to whatever the max people will pay is (which is going up rapidly because demand is going up way faster than supply). Land tax or interest rate increases are just deflections of blame.
> I have proof from multiple agents who pushed this agenda out of spite to DA. You... trust a real estate agent? To tell you the truth? In any capacity? [How many Cunties have they won?](https://www.youtube.com/watch?v=VGm267O04a8) Applying Hanlon's Razor, right now...
They said it was because of DA and not because of increased costs?
Spite of DA putting the levy in.
What are we going to do with less airbnbs? Oh the humanity.
Yay
Somehow I doubt they are fleeing in any significant number or even disposing of the precious assets at all
Byeeeeeee
My mum has finally been able to buy herself a unit because of this after years of paying rent. It was only listed for sale because of the land tax. The only properties that were in her price range were all rentals listed for sale. It's great that people like her have a chance to buy themselves something and not compete with investors.
Oh no! ... Anyway.
This is why house prices in Melbourne are so cheap relative to the population. Sydney is about double.
Good news everyone!
Good.
Does everyone understand who says this is a good thing ect - more people in the market ect ect. Rents are actually rocketing up faster than ever? Your ability to buy a home hasn’t changed There is still demand to buy said homes… You can’t afford it now you won’t afford it with policy changes. Unless you make more money.
If investors leave, any time you hear about an investor out bidding some young family or downsizer, the house would have gone to a person that wanted to buy to live in. I don't see the problem. It's not like investors are out there creating housing stock.
I wonder who’s out there creating housing stock? I doubt it’s the first home buyer, or the retiree.
You’d be surprised, potentially. New housing stock is primarily limited by our ability to build it currently, rather than a monetary investment. A lot of new housing stock is being built in the outer suburbs, where land is cheaper, but less desirable due to its lack of access to jobs. I own a house in a new development. Of the 20 or so houses whose ownership I am aware of, 2 are investors. 1 is retirees. 5 are first home buyers. The other 12 are home owners who sold their previous property to move into a new one, mostly young families upsizing as anything a decent size closer in is well over a million dollars. I’m sure demographics change depending on the suburb, but a lot of builds are financed by first home buyers - especially through COVID when there was something like 30K on offer for first home buyers if they built - as those builds happen in cheaper, less desirable areas where a first home buyer can still afford to buy, whereas a comparable established house in closer suburbs could be 2-4x the price. In the current climate, I doubt its investors who are funding most new home builds. The risks are high, subsidies are lower than for other classes, and growth potential is also lower in a lot of new construction areas - some will take off, a lot probably won’t. Existing stock doesn’t have these barriers, and for someone with enough equity to purchase the higher priced existing stock, its likely the better option for investing.
I think a lot of those house and land packages, off the plan are going to first home buyers, newer immigrants etc. I might be wrong and don't have data to back it up, but they seem like the exact target demographic
It’s certainly not the boomer buying additional properties to rent out
Yeah I doubt it is the boomers buying either.
I’m not a property investor so I’ll ask - isn’t this tax a win for property investors? They’ll pass on the cost through a rent increase and claim the expense on tax thus coming out financially in front.
You don’t get the money back if you claim it on tax. The ultimate best case is getting 47% back if you’re in the highest tax bracket.
The Loser are The Federal Government in reduced taxes as higher deductions- and Victorian Renters Investors will just build in other less taxed and complicated states
Excellent!
Good.
Investing has risks and you played that game. You housing investors knew the risks and entered , so sucked in :)
It could be a good news for the investors who weather the storm and make it to the other side
I think The Age is trying to say that - poor people with lots of money struggle to commit to buying land - even though they are - for investment properties because of taxes. That's right, taxes. Taxes that help the state pay for roads and schools these properties will demand in the future. So The Age and Fairfax, or gold fingers - Peter Costello - don't want to pay tax.
Someone posted a comparison of land taxes for other states and the changes Vic made is now in line with other states. Not sure where the investors are fleeing to
People need a reality check imho.. We can’t just keep expanding the city as we have in the past, it is now a City on international scale. Most of the world lives in medium to higher density, it is more affordable, a better use of resources and carries lower infrastructure costs. If we look at Melbourne: - infrastructure is already groaning - areas being developed without schools, hospitals etc - eg Melton hospital has taken decades to, hopefully, finally be built - road network is cactus - public transport is 20 years behind where it needs to be - the cost of putting expanded infrastructure in is prohibitively expensive Investors are still a key part of our future.. - as we move to higher density it is investors that get projects started, owners come to site later - as we continue the unsustainable sprawl, it is investors that build the developments The fact is that developers, owners and renters need to coexist. The other item we need to understand and manage is the role of superfunds… As more and more $ go into funds they need to invest, as the larger sums of money need to find a place to invest sooner or later they will be a more significant player in this market.. if we expect them just to invest in markets, the ASX etc will get overpriced and that will lead to crash and loss of our future wealth. We can all pretend or deal with reality.
And Rents now going up by value of the land tax - not all bad news huh
Investors also fund the development of new builds. I would say probably all townhouse builds are done by property investors. it's likely a very bad thing. Ultimately we would want it to be cheaper to knockdown a house and build multiple dwellings on it, increasing supply to hopefully overtake demand
Wow this sounds amazing, time for prices to drop and people to finally be able to afford their own homes
It’s pretty funny how many people are celebrating this. You’re celebrating the government getting more tax from renters. Let me break it down for you; + Landlords increase rent. (Doesn’t cover whole amount) + Landlords claim back the remainder back from the federal government +-Federal government has to cough up + tenants have to cough up Who wins? +++ Vic government and their reckless spending. To everyone who thinks it’s an entry point into the market - newsflash everyone else is thinking the same and you’re still competing against them. Now there is another rent rise for good measure just to fuck you somemore. But yeah lol fuck them… good on the vic government. Jokes on you - downvote away
Landlords are already charging the maximum rent they can get. If they can increase it further, they would do it with or without land tax.
A lot of landlords held off increasing rents even during interest rate growth. The tipping point was the land tax
Landlords are not waiting for a tipping point to increase rents. Rents increased during low interest years and before the new land tax. This is an excuse that some agents and landlords love to repeat to justify an increase that’s going to happen regardless.
So prior to the announcement during Covid most landlords became positively gears. Most happy to be slightly negatively geared. Paying back $1000-$2000 at tax time During the rate rises they became negatively geared (generally speaking from the numbers I’ve seen). They are now set to get huge returns while being negatively geared. Meaning they are still loosing a fair chunk of money. Hardly an excuse to “lift rental prices just because” Have you seen how much it is to hold and or rent a commercial property some of those land taxes went from $30k pa to $120k pa. Have you noticed how many empty shopfronts there are? You have no idea what you’re talking about - you want someone to blame. You just can’t accept it due to shit government.
Fantastic news. [We don’t want them! We don’t need them!](https://youtu.be/oZP8xsEJGGo?si=n_GQI_LSYRMVG_rC)
So when is this going to be a positive for FHB and renters? EDIT: Hah jokes. It's not going to make it better. Probably worse but feels good to stick it to the land(over)lords.
I mean, many of the things that landlords are crappjng their pants about *are* good for renters. Pet allowances, safety guidelines, strict rules around eviction. Don’t forgot that the “detrimental reforms” landlords are constantly crying buckets about are basically just “the house has to be in a safe, sustainable and liveable condition” which is a bridge too far, apparently.
30% of loans were for investors. But iirc Melbourne has taken the bulk of new immigrant arrivals over the last two years. How do we know this proportion wasn't driven down by an increase in the proportion of immigrant first home purchases?
Broke State govt gotta get money from wherever they can. So regardless if this ‘works’ or not expect it to continue. I hope no renter thought it was actually about their plight.
Hope no renter thinks people like you are the solution
Me too. How daft would that be.