Geelong Gent

If you live in the house it cannot be claimed or more precisely only the portion for which is used as a business.

ABCDiamond

and that portion claimed, also becomes taxable under Capital Gains when the property is sold.

sonlymewalter

Exactly. That's why I decided not to bother. Had I ever sold my house I would have had to pay 48% Tax on any profit made pro rata to the proportion claimed

Sod that for a game of soldiers

Wol

>>A house is only worth what someone will pay for it. And that is particularly true when there are more sellers than buyers. If you are buying right now remember that the asking price is usually 20% above what the owner thinks they'll get and what the owner thinks they'll get is 20% higher than what they'll have to drop to in order to offload the property.
<<

Well, yes - and no.

It's an old saying and very true if you're talking about cars, furniture etc. But most people have to borrow large sums to buy a house, so even if they are willing to pay say $500k for a particular one, but lenders won't advance more than $400k the "worth" of the property is more like the $400k than what the buyer is prepared to pay.

A large part of the current financial fallout lies in the way that lenders have been shovelling money out to people who have no realistic hope of paying it back if circumstances tighten, and are having to revise their lending criteria downwards.

ABCDiamond

Like the first home buyers in my area who have been buying the $600k properties !!

They should have started with the $290k ones, and not got into trouble !

Wol

Correct!

I know that each succeeding generation expects to have more than the last - and Boy, how is *that* going to change - but expectations have greatly outgrown the ability to pay for them.

The days of sitting on beanbags eating from a table, aka.old door on legs, before selecting a book from the plank-on-bricks bookcase seem to have been forgotten but IMO need to be reinvented.

ABCDiamond

Now you are reminding me of my youth

It just made me think, we had so far to go up from what we started with, and gradually got there.

What improvements to life will todays younger ones get ?

BadgeIsBack

At the risk of sounding like you two old farts ....you are 'SO' right (now I sound like a young-un!)

What gets me is that sometimes the reality of Australian suburban living knows nothing outside the confines of comsumerism and fantastic plastic and the kids have no - I don't know - character? Same for kids in the US, UK etc.

As for price falls, most people in the nearing distressed category will hold on to their properties with their fingernails so there will be less property on the market and not everyone will pick up a bargain.

IvanM

In the outer suburbs in Sydney (where 1st home buyers bought) there is a tonne of property on the market. People are desperate to get out. I am seeing the stagnation in the inner and middle suburbs where people do not think they will get a good price if they sell. Estate agents hate that type of market.

I am also starting to see higher end properties come down in value in areas such as in the Eastern Suburbs, Lower North Shore, Northern Beaches etc. No dramatic falls yet but those markets are illiquid at the best of times and stuff is selling 20% off the list price.

Whilst recalling times when you had to eat coal for dinner are amusing the answers are more straight forward.

Build enough housing and plan it with infrastructure and decent transport.

The other part of it is preventing banks from overlending to people. They have all our income and borrowing details so I can only guess that they over lend as it boosts their short term income. I am a strong believer in free markets but strong oversight is needed for the greater good.

Future generations can have more cake and eat it however they have to earn it. The current situation is due to people borrowing more than their earnings capacity can manage.

ABCDiamond

Exactly what the "older " generations did, but we had to earn it before we could have it

100% agreed, plus the Americans screwing it all up for everyone, with their ridiculous lending policies that allow borrowers to walk away without owing a cent.

That's been like that since 2003. We own property there, and like many people, have it on the market, but we will not sell until the prices come back up a bit again. $250k for a 3 bed house within 1 hour of Sydney is not a high price these days, when compared to other areas!

One of the problems is that everyone is talking about house prices dropping, then they expect outer Sydney to drop also, even though outer Sydney has already dropped.
Those owning the houses have accepted one big drop, whilst everywhere else has risen, but don't want to accept another drop.
Those considering buying, in those areas, may not even realise that prices have dropped, and therefore expect a drop. !!

Possums

Exactly

NKSK version 2

Obviously I'm biased but I think it's all over for the housing market in Australia.
(And I'm celebrating).

Just about everything that the real estate industry and other vested interest groups have used to try and persuade people that prices won't fall seems to have not come to fruition.

The Age today reports collapsing first home owner interest in spite of big cuts in rates and the FHB bonus.

The West talks about big problems in the affluent western suburbs as owners attempt to liquidate assets.

More poor news out of China at the weekend reporting that up to 40% of steel mills have closed or massively reduced production in key manufacturing areas meaning mining slow down

Vale (Brazilian and the world's second biggest iron ore producer) reports big slumps in Chinese demand.

Immigration quotas (another thing which will stop house prices falling apparently) might be cut.

Big drops in business confidence released today.

Part of me feels a bit guilty for hoping for a massive collapse but after witnessing the unmitigated greed in Perth from 2005 to 2007 - on this forum, in the street and in the media - I feel like skipping whenever I hear bad news.

Burbage

Yes, I was talking specifically about the current market, and of course what the buyer receives. If someone buys a house for 500k, it is still worth 500k to the seller, whether the bank values it at 400k or not.

The real question is what the lending stream is like. If everyone has to stump up 20% of the value as a deposit and can only have a mortgage value of 3x their after tax salary max, which is what should happen with responsible lenders, then house prices have to fall. Or else no first home buyer will be able to afford a house.

If the banks continue to lend like crazy then the house prices will go up.

Look at it another way. You can put the price of a tin of beans up as high as you like, but at some point everyone will stop buying them.

IvanM

I left uni at the end of a recession and worked hard in IT to get where I am, including through the dotcom bust. Our generation has seen final salary super disappear along with job security and redundancy rights. We have also seen average working hours go up so it makes me laugh seeing cashed up boomers telling us we have it easy when they will rely on us to pay their pensions.
Australia did not lend to the extreme as the US but the non bank sector here has lent irresponsibly and the stagnation witnessed in Western Sydney and elsewhere is a symptom of that. The non bank lending here is now a fraction of what it was. The bank sector is also guilty of over lending but not to the same extent. Maybe the realisation hit the sector a few years earlier and the come down less painful than elsewhere in the world.
Further falls depend on wages and employment in the area. Indicators there are negative. The other problem in the area is that few financers are willing to fund 100% mortgages in that area due to the risk of negative equity. Investors are nervous about capital returns.

Something few have discussed is what the now retiring baby boomers will do. How will they finance their life in the QLD sun and what will that do to city prices?

ABCDiamond

Cashed up Baby Boomers do not get the State pension if they are cashed up, therefore they will not rely on the younger ones to pay their pensions.

However, the Baby Boomer generation have already paid their taxes, part of it going towards the pensions for previous generations. Something it sounds like the current generation are not happy about having to do the same ?

You say "Our generation has seen final salary super disappear". The stock market is long term, and those funds will come back up again eventually.
However, it is the current retirees (the non cashed up ones), that are being hurt by this right NOW, as they need to draw on these super funds to survive at the moment.
The vast majority of these never had the benefit of the current compulsory super scheme, that the younger generation do have.

The current ASX200 value at Oct 31, 2008 is 4,018
In Oct 2002 it was 3,042

That is an average increase of 4.75% per year, not exactly great, but not dissapearing either.

When people talk of "final salary super disappearring", they are really talking about losing the massive growth of the last couple of years when the stock market went up 10 times as fast as inflation, and has now been almost wiped out.

The ASX200 Stock market movements for the last 4 years have been
18.04% Oct-05
20.73% Oct-06
25.44% Oct-07
-40.51% Oct-08



They talk about losing "job security and redundancy rights", yet the older generation never even had these to begin with, and I think that most employees still have redundancy rights in Australia.
Even job security is still pretty strong in most places, other than of course through some jobs dissapearing, which has always been the case.

Average working hours going up ? That must depend on individuals, but for the average....