Canberra Property - boom before the bust?

The land where Canturf is based just off Dairy Flats road is a flood plain. I’d love to see people build their houses there in the current drought, and then get the suprise of their lives when we next see a significant rainfall.

The world is returning to the old convention: Nobles who owned the land, and the Serfs who rented it off them. Quit your whingeing and either plot a revolution, or get back to work and farm my potatoes.

Some might say I’m speaking too philosophically without practical solutions, so here is how I would fix things:

The main one I see every day is the absolutely huuuge amount of land taken by the turf farm near Fyshwick/airport. Rezone to residential. Pay out the leaseholder, I’m sure the govt would still come out ahead with the sale of residential blocks.

More the exhibition grounds/show grounds and the racetrack 10 km further out. That’s an enormous quantity of land that’s used only part-time only 5km from the city.

I’ve got my point across so will shut up now.

I agree completely with Caf.

Special G, you’re describing me, I come from bayside inner Melbourne. Tiny 2 br terrace, $1.4M. Why? No supply, there is no more land. Here, there is plenty of land that is artificially held back from supply.

Perform a thought experiment: you can do a squatter and pay the Crown for any vacant land you find. How would prices in inner Melb change? Not one bit. How would prices here change? Drop by half.

Prices here are artificially high.

Is the issue for new home buyers the deposit or the repayments – or both?

boomacat, it may well be ill will but so is ‘laughing’ (not directed at you though) at those who can’t afford to buy a house.

The cost of a house is BS. No one should be made to pay the ridiculous prices that are out there today but they do, all because they want a house.

I, too, want a house, but I am not prepared to pay that much when I can buy a 4br outside the ACT for less than $300,000 and pay off my HECS debt (minor) with the left over amount.

The ACT prices are unrealistic for such a ‘small’ city.

caf, I agree with the releasing of land. Bonython “West” has land for sale but with some of the land sizes, you’ll need to build up and up and up if you want more than 1 room.

We live in a market economy, but one in which the Government does regularly make interventions.

It is true that reducing the incentive to purchase and hold investment properties will drive up the cost of rent, so *that’s* not a viable solution.

The only viable solution is to improve the supply situation – which involves both increasing land releases and implementing policies to remove the capacity constraints in the building industry.

It’s a bit rough wishing ill will upon those who have purchased investment properties – you might find Nyssa that many of those individuals are just ordinary working people like you trying to get ahead for their families.

As has been said, if no one owned investment properties, there’d be nowhere to rent. There aint enough places to rent in this town as there is.

We DO NOT live in a centrally controlled economy – we live in a market based economy. You CANNOT expect the government to fix this problem for you. Right or wrong, you are going to have to fix it yourself.

Special G, I’m sure he’d love to be in Iraq….

But in the real world it’s not like that.

Compassion and empathy are no more. It’s all about ‘what can I get for me?’.

I hope the market drops to the point that the price of housing halves. Maybe then all the greedy bastards paying off $450,000 loans will realise just how greedy they were.

And I even had pizza tonight – I’ll laugh right now though. Centre of Melbourne you get a tiny shoe box 2 bed town house for upwards of $700,000, why? because that’s what people will pay.

Times by people lived with parents while saving for a deposit, or never bought. If you want a cheap house on a big block, get out of Canberra, or any big city, and move to Woomera.

Nyssa – I understand from previous posts your husband is in defence – send him off to Iraq or somewhere for a couple of months and by the place outright. I’ve got single income mates in defence and Police who did exactly that – went overseas on the gravy train, saved their money, and on return bought an apartment/house.

A saying in real estate is ‘Time in, not timing’ – Previous history has shown the real estate market doubles every ten years – In the mid 70’s my parents bought their place for $68,000, at the time stretching their budget completely, large house, large block and at the time in the boonies, Aranda. 30 years on they are cheering and it was payed off along time ago.

What I am saying is wait another 30 years and a standard house in Canberra will be worth over a mil. But hey then again a mil just won’t buy what it used to.

Here’s my advice – buy a house/townhouse/unit that you can afford, sell it in a couple of years or use the equity to buy another place – sit back and laugh into your pizza at all the people whinging about how they can’t afford a house.

Ha Ha Ha

jemmy, I agree with you.

However, those who do have multiple homes will ‘whinge’ because their ‘investment’ went down and they might have borrowed more than what they could afford.

Plane, yes I rent. I’m paying someone else’s mortgage. Someone who bought this house for $200,000 and could sell it for $500,000 in a heartbeat.

There wouldn’t be investors if there weren’t tenants. Most tenants are now stuffed by a rental ‘auction’ as well as pay exorbitant rental prices to boot.

Either way, if you don’t own the house you live in, you’re well and truly screwed.

Special G, how is the government changing home ownership from being an investment to being a roof over everyone’s head screwing home owners?

You get tax breaks on the primary residence because it is primarily a home, not an investment. That it has also been an investment in the past doesn’t make that investment a right. When people can’t have a home because other existing owners want an investment as well as a home, something is wrong. It is up to the government to fix societal wrongs.

I know perfectly well everyone is chortling in their pizzas at my naivete. The thing is, people like Nyssa are growing and will force change. For someone who’s always lived in big cities and has recently come to Canberra, which is chock full of vacant land, it is completely ludicrous that the median price here is $450,000, for what are really pretty crappy houses built to housing commission standards where I come from. It’s like an investment bubble; you look at it and shake your head because it just doesn’t make sense. Nyssa and others will be the catalyst that breaks it. IMO, median housing here should be around $200,000 given the quality of the stock.

nyssa,

the problem is, that without people owning the second house, or the fifth or the twentieth then where would you be living at the moment. It is the landlords that own the rental properties that make renting a viable prospect.

So the owner of the house doesn’t “need” it, but certainly the tenant needs someone to own it.

(and no I don’t own any investment properties…)

Special G, good idea, I wonder why I hadn’t thought of it myself.

Oh wait, I did. A box is a better option than to buy anything in Canberra. I’m now looking interstate for a much better option.

Oh and I do without the ‘luxuries’ and am saving and saving and saving. Shame my saving isn’t catching up to a decent deposit thanks to the interest rates and greedy Govts/multiple homeowners.

Do people actually NEED a second house? Will they die without it? Will they have nowhere to live without it?

No.

People WANT that second, third or eightieth house. This is where the problem lies.

There are some people who will rent forever because they have no other option.

I’d rather pay $400pwk for my own house and not to subsidise someone else’s mortgage.

Problem is, like most ‘first homebuyers’, there is nothing within range, unless I want to borrow much more than I can afford.

I’m thinking realistically and not buying a $1.5 million dollar house just because the bank will lend me the money.

I want something I can pay off with ease, even with interest rates going up.

Bla bla, I can’t afford a house, whinge whine. Get off your arse, do without some of the luxuries and save.

Prices are set by what people are prepared to pay.

The bank owns most of my place although I worked 60 hour weeks to get the deposit.

How is the goct causing the housing market not to drop not self serving for people who want to get into the market and not screwing home owners?

And Nyssa maybe you need to look at 3 bedrooms instead of a modest 4 – I’d like 4 too just can’t afford it.

Nyssa has a good point about 350k+ being a ridiculous price for a basic house. The response that – well that’s market forces – would be fine except for one thing – it’s got nothing to do with market forces. The market forces are subject to all manner of distortions that force the prices upwards. I’m not aware of any other country that has the suite of state and federal policies operating in concert to push house prices to ever more outrageous levels – capital gains tax concessions, negative gearing, social security concessions, land banking, infrastructure taxes on new land releases – the list goes on.
Essentially those under 40 are subsidising the 2, 3 and 4 properties of those over 40 and it is about time it stopped. We are getting royally screwed over because we arent a cohesive voting bloc.

No it wouldn’t. I shouldn’t have said “satellite” which implies reliance or adjunction to a bigger city. Cities of say 500,000 to 1M have enough critical mass to be self-supporting. If anything greenhouse gas emissions are less because travel distance is shorter from suburb to suburb and to the CBD.

We need to go the American way and stop pushing big cities and increase satellite towns.

What? This would dramatically increase transport needs, thus greenhouse gas emissions. Not what we need at all.

Morally, no one could say that the right to own a home is overriden by the ‘right’ for existing owners to have their home also serve as an investment. Yet that is what is happening now: capital growth has been so high for so long that home owners now expect it and it has become part of their investment strategy.

Deano is right that changing it will cause pain, but so what? Is that a reason not to implement policy that is better for society? Home owners have had it so good for so long, they shouldn’t expect as a right that the bonanza continues. Instead, they should be grateful they got what they did.

I don’t know how to fix it, but the brake needs to be put on home owners constantly leveraging and driving up the price of existing homes. One way would be to change capital gains so that a low rate applies to the primary residence, and a graduated stamp duty scheme that penalises home owners and rewards investors to encourage more investment properties. I know this will encourage the investor owner who also rents, I did this myself for 15 years, but most people wouldn’t bother and it slows down demand.

Ultimately we need an exponential increase in supply. We need to go the American way and stop pushing big cities and increase satellite towns. It’s ludicrous that we have 5 cities with populations greater than 1M, then the next is Canberra and Hobart at 350,000, then nothing. We should have a dozen cities of 500,000. (This would help water collection too, and stop the dependency on single sources of supply like our rivers.

Frankly, I haven’t read a comment arguing against Nyssa’s point of view that hasn’t been self-serving for a home owner.

Still better than renting forever = zero capital growth.

But if Capital growth is decent, then even owning half the property will get you enough to buy it out from the govt. Or sell it back to them and move onwards and upwards.

But your capital growth is only going to be half of the capital growth of the rest of the market.

re – Treasury – I had heard that these days all they do is ‘consult’ with big business, and then implement laws that reflect whatever big business say they would like.

Nah, Treasury get pretty much ignored when it comes the big economic decisions like spending $10 billion on the Murray Darling.

greedy home owners who want as many properties as possible just because they can, not because they actually NEED a second, third…or eightieth house.

Otherwise known as landlords – something we were a bit short of recently.

re – Treasury – I had heard that these days all they do is ‘consult’ with big business, and then implement laws that reflect whatever big business say they would like.

But if Capital growth is decent, then even owning half the property will get you enough to buy it out from the govt. Or sell it back to them and move onwards and upwards.

Nyssa, meet capitalism.

Why the hell not nyssa? Souldn’tr what people are prepared to pay be exactly what people pay – and not a cent more?

People pay the exhorbitant prices they do because there is no other option if you want to buy a house. You can sit and wait 10 years for the bust but the fact of the matter is, first home buyers are being screwed over buy greedy Govts and greedy home owners who want as many properties as possible just because they can, not because they actually NEED a second, third…or eightieth house.

Careful people. With talk like this we’ll flush out “Ralph” and we all know how stupid we are when “Ralph” is around …

I guess its the electorate responding to the fact that if you cry wolf often enough the electorate will kind of expect to see a wolf after a while … except what we end up with is Howard (rhymes with spastic coward) and Costello (accepted amongst the majority of right leaning Treasury policy types as the laziest motherfark Treasurer since the Whitlam Government) … OH BUT WAIT PEOPLE THE WORLD IS GOING TO END IF RUDD IS VOTED IN … gee I’m just shitting myself!

Cant help thinking that if Howard concentrated a little bit more on being a good conservative liberal rather than being a god-damn cok suking wanker he might have actually built himself a legacy to be proud of instead of a the joke he’ll be remembered for.

Que “Ralph” to rabbit on about whatever meaningless crap he’s got from the “We Love America” website he needs to prop him self up with (it’ll happen when you don’t have a spine).

“How can a possible re-election of the Coalition be linked with another 6 rate rises? I think you’ll find that the Reserve Bank is independent and they are the ones who call the shots. Why blame the Coalition? Is it their fault that everyone is spending? I think you’ll find that rates will be a hell of a lot higher under any Labour government, as they have been in the past.How can a possible re-election of the Coalition be linked with another 6 rate rises? I think you’ll find that the Reserve Bank is independent and they are the ones who call the shots. Why blame the Coalition? Is it their fault that everyone is spending? I think you’ll find that rates will be a hell of a lot higher under any Labour government, as they have been in the past.”

That is the funniest thing I have ever heard. In one breath you say that the reserve bank is independent and not blame the Government, yet in the very next breath say they will be higher under labour as they have been in the past. That sounds like the kinda rot you would get from Horard and Costello.

The bottom line is it is complex. It is true government policy has an effect, so yes little Johnny can be blamed as much as Keating all those years ago. But we have to remember in a world wide economy that external factors also have an effect, in fact more so.

govt going halves with people in home ownerships

Basically it would create housing poverty traps. If the govt has half the equity, it also has half the capital gains. The person would never get ahead enough to be able to buy a property outright.

Costello is the laziest treasurer in the last 30+ years – doesn’t read briefings, barely interacts with the dept on policy, just swans around the country talking up the coalition’s great work with the economy.

So that’s the secret of their success – just leaving it to the experts in Treasury.

I thought the idea of the govt going halves with people in home ownerships was a good one. It would let people get a foot in the door, with ownership and security of tenure, and the govt would own half an asset. What happened to that?

maybe we’re better off voting for the “party party party” party?

The word from old-timers at Treasury is that Costello is the laziest treasurer in the last 30+ years – doesn’t read briefings, barely interacts with the dept on policy, just swans around the country talking up the coalition’s great work with the economy.

If the Libs aren’t to blame for current interest rate rises, Labor isn’t to blame for previous ones. You can’t have it both ways.

As long as the Swan doesn’t turn out to be a Goose.

Yes it does undermine your argument.

Your assertion was that interest rates “will be a hell of a lot higher under any Labour (sic) government, as they have been in the past”.

In fact, interest rates when Howard was the treasurer in the 70s went as high as 22% (in addition 5 out of the 6 budgets he delivered resulted in a deficit, but that’s beside the point). This is higher than any government since WWII.

Therefore, it is incorrect to say that interest rates have always been higher under Labor governments then they have under Coalition governments.

But to answer your question, yes I believe Swan will be a competent Treasurer.

Of course it doesn’t. The Coalition have a competent treasurer. Can Labor state the same?

Yes, but it undermines your argument that interest rates will always be higher under Labor.

But Howard’s not the treasurer is he?

Like 22% when Howard was treasurer, the highest rates since WWII?

How can a possible re-election of the Coalition be linked with another 6 rate rises? I think you’ll find that the Reserve Bank is independent and they are the ones who call the shots. Why blame the Coalition? Is it their fault that everyone is spending? I think you’ll find that rates will be a hell of a lot higher under any Labour government, as they have been in the past.

True true. Unless the long heralded socialist revolution those dirty hippies have been waiting for all these years finally comes about, the best response is to maximise your economic value, retrain, move into a higher paying profession, invest wisely, yada, yada, yada.

despite much discussion by pollies and the media, housing supply problems still have not been fixed.

That’s because any ‘fixes’ would hurt many, many more people (current homeowners) than it will help (first home buyers). Anything that causes the price of housing to fall will cause a larger, much more serious problem than the current one with housing affordability.

Property prices operate according to market forces of supply and demand. Fair, unfortunately, doesn’t come into it.

Why the hell not nyssa? Souldn’tr what people are prepared to pay be exactly what people pay – and not a cent more?

The fact is, no one should have to pay $350,000+ for a piece of dirt and some bricks and mortar.

I’d be very surprised if we get a genuine bust. I base this opinion on the fact that , despite much discussion by pollies and the media, housing supply problems still have not been fixed. Of course, higher interest rates will impact housing costs out in the mortgage belts. Those people who bought recently and are hocked to the eyeballs will experience some pain, but people who have owned for a while (and are smart enough not to borrow against their house for items and services that lose value), or borrowed sensibly, will have no real problem. The fact that luxury good spending is at an all time high is a clue here.

I still plan on buying additional investment properties in good suburbs close to the city over the next few years.

Aint a 4 br house a pretty ambitious starting point? Maybe stick the kids in a bunk bed in the garage of a 1 br studio? :-p

I hope it goes bust too, so I can actually buy a house instead of saving for a larger deposit every time the damn rates go up.

Oh and I just want a 4br (girl, boy, girl) house without mod-cons. Nothing flash, just a home of my own. I don’t want a McMansion.

22% is the Howard standard apparently, so there might be some forward movement there Igb.

I suspect that things would have to get pretty pear-shaped for there to be a considerable downward swing. Even if mortgage rates go up a few percent and mortgagees that have over-stretched are forced to sell there’ll still be a bunch of cashed up investors looking to snap up a ‘bargain’ so first home buyers will still be in a pretty competetive market.

That said it would only take the relection of the Coalition and, based on their past performance, you could pretty much factor in anoth six rate rises so “really pear-shaped” isn’t that much of a stretch of the imagination.

Being a first home buyer on a single income, I have no hope in hell of buying a home at the moment.. I can’t settle for a unit as I have a family.

So yeah I hope it does go bust.