Tiguboff: Parents should mortgage for kids

ScreenHunter_19 May. 16 15.12

By Leith van Onselen

From one of Australia’s biggest property rentiers, Harry Triguboff, comes more twisted logic, with Triguboff appearing before the House of Representatives inquiry into foreign ownership to on the one hand admit that housing affordability has gotten so bad that parents need to help their children enter the property market:

Parents should understand they need to mortgage their homes to help their children get into the property market, Harry Triguboff says.

…young buyers should ask their parents to help them finance property purchases.

While on the other, arguing that foreign property purchases helps those priced-out of buying property:

…but offshore buying activity works in favour of local residents by boosting housing supply, Mr Triguboff said.

“When foreigners invest here, then maybe some people are priced out, correct. But people are given places they can rent, so even though foreigners don’t live here . . . it’s a big advantage we get from having them buy.”

To his credit, Triguboff did at least mention that “inefficient planning laws, voluntary planning agreements and local council-enforced bank guarantees” were factors helping to push up house prices, which is correct.

But of course, he failed to mention the impact of Australia’s perverse tax concessions (e.g. negative gearing and capital gains tax discounts), as well as our high tax rates on savings, which have encouraged too much local investment into housing, pricing-out first home buyers in combination with soaring foreign demand.

Nor has Triguboff mentioned that land bankers and property barons are getting an easy ride in Australia, enjoying mammoth capital gains but paying very little tax:

Apartment billionaire Harry Triguboff was surprisingly candid at a lunch held by the American Chamber of Commerce last October.

He told the audience he was able to pay “very little tax”.

“I keep a lot of my properties. And if you keep them and there’s capital gain it’s beautiful,” he says “You don’t pay tax. I don’t lease them so I don’t pay tax on the rent, but I get depreciation.”

He paid tax on apartment sales but that’s where the land banking came in.

“You have to buy lots of empty land,” he said. “You keep the land and it brings you no income, so you claim it against your tax.”

Australia’s inflated housing costs and affordability issues will not be fixed by parents helping their children purchase property. This would only add further demand fuel to the housing bonfire.

Rather, a combination of actions are required to reverse policies that have conspired to pump demand and choke supply. These include addressing the myriad of supply-side constraints preventing affordable development, along with the removal of distorting tax concessions preferably in concert with the implementation of a broad-based land tax, as well as the effective monitoring and enforcement of rules precluding foreign citizens from purchasing pre-existing Australian property.

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116 Responses to “ “Tiguboff: Parents should mortgage for kids”

  1. Jason says:

    What a scumbag, has he no shame at all?

    • doctorX says:

      why would he be ashamed?
      It’s the government that should feel shame when somebody says stuff like this.

      • disco stu says:

        I’m with you DrX, they guy is operating in the economic reality that our politicians and boomer overlords have created for us. They’re the ones who should definitely be hanging their heads in shame.

        There will always be greedy corporate psychopaths out their arguing for their self interest over everyone else’s, Trig being a prime example.

        It use to be the job of the Govt and the dominant cohort to make sure such behaviours were kept in check, instead we’ve had 40 years of the ME generation lapping it up, and celebrating every dollar of rent they’ve extracted from future generations, as though it were a result of their hard work and awesome financial genius.

      • Jason says:

        People who refuse to question the fairness of the status quo because it benefits them financially are morally ambiguous at best.

      • disco stu says:

        Same can be said for pretty much the entire generation ahead of us.

      • Bluebird says:

        +1. What a maggot.

        But the media should be jumping down his throat. But instead we get Tom Carney drinking his wee.

        And now the left’s pet enemy is IT nerds and companies like Google. I mean fair enough they should pay their taxes but how about Trig does too?

        We’re a nation of deranged scum.

      • md says:

        Absolutely correct, doctorX and disco stu. Hire-Rise Harry is just calling it as it is. No matter who’s in government, they are happy for the bubble to continue inflating and in fact the whole housing bubble is due to government policies anyway.

      • notsofast says:

        Jason is right.

        But then again the name also applies to people who run our big banks.

        This is all going to end in tears for people who are locking themselves into long term mortgages based on these inflated real estate prices.

        At some point your house is going to be worth 60% (+- 15%) of what it is now.

      • permacuppa says:

        +1 well said, disco stu. The arrogance and hubris from the rentier generation is unbearable

    • SurfGrunge says:

      this is nonsenscial – rental income yields are about 4-5% on capital, in essence to make these investments viable, rents need to go UP, not down, even when each new apartment block build adds to the total supply stock.

      this does defy normal investment logic, but the chinese building apartments as hedge safeharbour for their RMB, and Gen X negative gearers are outbidding eachother as investor/speculators on capital gains, while baby boomers simply put, being in debt when your human capital is at its end, just means you are risking your retirement.

      All this is because YIELD is not important, if it was rents would go up, as 4.5% is just slightly better than risk free term deposits. As such the argument that investing in new or existing property will improve housing condition is ludircus, the PRICES are what is causing high rents which to be viable investments and positively geared, should go UP.

      All being said, its simply about capital gains, as long as speculators keep leveraging up, prices will be maintained, in hope that the trajectory is onwards up upwards, but this is another ludicrus notion, but as crazy as it seems, 1.5million investors are betting on infinitely increase property prices to enternity!

      • notsofast says:

        Rents can’t go up substantially because people can’t afford to pay them. And with Tony putting the brakes on Government spending people are going to be increasingly stressed just paying what they already do in rent.

        Prices can’t go up for ever. When they start to go down they are likely to very quickly unravel.

      • SurfGrunge says:

        this is the social conundrum. The average person is the bystander victim in all this. But wages will always underpin rents, and rents underpin yield. Real estate was a no brainer, but in todays bubble scenario with excessive liquidity, the yield is not important, nor the rent, nor people in general. Hence this is a much a economic as a social problem, and to be honest, there is nothing anyone, not even the govt can do to resolve it, it will just have to run its course.

        But my point being, talking about affordability of owning or renting property today is pointless, because 1- owning is defined by capital gains vs. owning / consuming the asset 2- yield and rent to the investor is a non issue as long as there is negative gearing and capital gains.

        But rents will be high and difficulty to stop renting and owning extremely difficult, unless you want to settle for dog boxes or raising kids in apartments.

      • Escobar says:

        Surf
        Rents don’t “have” to go up.

        You’re assuming a hell of a lot of leverage on what you’re saying.

  2. “You have to buy lots of empty land,” he said. “You keep the land and it brings you no income, so you claim it against your tax.”

    Not always that simple:

    http://somersoft.com/forums/showthread.php?t=71439

    • jimbo says:

      Thanks for the link.

      I noticed this – ‘Endeavours need to continually be made towards the income producing objective otherwise the interest may not be deductible’.

      I wonder whether Triguboff puts extraordinary prices/rents on his properties to keep them as he seems to prefer them – empty, until such time as the market works in his favour? All the while he claims his deductions.

    • Jason says:

      I highly doubt the ATO would look that closely into Harry’s affairs, let a lone try to take him to task if he has in face crossed the line. It’s a lot cheaper and low risk to go after small business owners than it is to land big fish.

      A middle manager in the ATO that spends tens of millions on a court case trying to take on one of the BRW Rich list certainly doesn’t look very good to his superiors in this austere climate.

  3. Hugh Pavletich says:

    A politically driven Bankers Welfare Scheme.

    It is remarkable how people so willingly make unnecessary donations to their Banks.

    In normal and affordable markets, housing costs 3.0 and below times annual household income, requiring mortgage loads of about 2.5 times … refer Demographia Survey http://www.demographia.com .

    Combining interest and principal, people should calculate the amount they are donating to the Bank with the excessive Loan To Income (LTI) ratios.

    • tmarsh says:

      It’s not a case of willing.

      Some people here live in the hope housing will crash and say “wait, wait”.

      In the meantime
      - housing keeps going up
      - people need a place to live.

      I’ve love to pay 3x earnings or whatever but it sadly doesn’t look like happening.

      Do we rent forever?

      • PhilBest says:

        You need cojones of steel, but renting will cost you less and a crash WILL come.

        I am staking my reputation on it being between 2024 and 2028 if it has not happened sooner. The problem is that by then, most people will have stopped listening to the bears, so when the crash does come it will catch the absolute maximum possible number of victims.

      • tmarsh says:

        Phil
        I remember not buying a 240k 2 BR unit on Beach Rd Sandringham precisely due to calls like this….and watched it be worth north of 400k 5 years later. Still waiting for that crash.

        Renting is all well and good, but it doesn’t suit everyone

        We bought 10 acres and run a hobby farm and still work and have an LVR circa 85% so I am comfortable with a crash in 2028. I’ll be at 60% LVR by then. Excluding any value increase.

      • Escobar says:

        PhilBest

        With the utmost respect….

        Are you seriously telling people not to buy a well priced house in 2014 because a crash of say 10-20% may or may not happen between 2024 and 2028.

        If you’re right about timing…. Hell, I’ll buy a well priced, well researched, well located property today!

      • PhilBest says:

        I would say the crash, if it takes as long as 2021-2024 to come, will be a bloodbath, not a 10% blip down.

        And I would say that the total outlay on a rent between now and then will be quite a lot less than on a mortgage for the same home.

        I agree with someone like Shamubeel Eaqub, NZ economist who deliberately rents, and invests money elsewhere than property.

        I also doubt that there is much more capital gains to be had – can median multiples already at 8 – 9 go to 11 – 12 ? If you have the cojones, and if the cycle theorists are correct about the timing, you might be able to make some money meanwhile, but cashing out in 2020 would be obligatory.

        But I do not yet trust the cycle theorists enough to believe that it can’t blow sooner. Nice theories CAN be wrong eventually even if past experience all fits it nicely. But my point now is that there IS a plausible theory that says that gravity can be defied until 2021-2024 in our bubble – so it will be very sad if the bears have all lost all credibility by then. This will result in maximum casualties when it does go.

      • tmarsh says:

        Phil
        You assume a few things
        1) I want capital gains (nice to have, not need to have in the next 40 years), I plan on leaving the place when I am physically incapable of letting the chooks out and driving the tractor down to find golf balls and riding the mountainbike around. Or there are too many brown snakes. Whichever comes first.

        2) Land itself will become less valuable. I disagree fundamentally this can happen long term. I live on prime agricultural land in a high growth coastal area.

      • SurfGrunge says:

        if you dont mind me saying, your logic here is not quite corrrect, the crash will come, but its when, just like all speculating (its not investing btw).

        if you bought that sandringham apartment, which you should have, you would need to flip it at some time….maybe not now, not in 5yeears, but at some time, like any stock you should sell, just like the all stocks and commodities, they all crash, its a matter of WHEN.

        Im not one of those property bears, im saying, in the current property bubble you should borrow up if you are into speculating, and time your time to sell well, but this liquidity bubble will pop, thats when the smart guys end up rich, and some people remain poor….this is how its always been in any market, anytime, any where….

        cheers.

      • notsofast says:

        tmarsh,

        Housing prices can’t go much higher without blowing the whole system up. So in general if you buy now, even with the best possible outcome, you won’t be making any money.

        The only way to make money on real estate now is to utilise existing land (and buildings) and build (or renovate) into the bubble value of the area that you hold. And even better if you can get the government to improve the value of your land holding by announcing that the government are building a nice wide new road or railway line nearby.

        The advice to make money now is build/renovate and sell before the bubble bursts. If you want to make money don’t buy a new or existing property.

      • tmarsh says:

        At notsofast etc

        “If you want to make money ”

        Exactly. House over my head.

        @SurfGrunge
        My logic, for my circumstances, is completely correct.
        No doubt I should have. Hindsight’s a wonderful thing.

      • Escobar says:

        Phil
        I’m not talking about “making (outrageous) money”

        What if housing went up 2-3% here on out.

        A crash I’m 2024+ would be minimal.

        On that basis how can we be worried. As you can see many aren’t worried and housing continues to tick over.

        It takes many to make a market. Our views should be different….

      • migtronix says:

        You’d definitely make money buying in Sandy, but then you’d be stuck in Sandy with the old farts!

        The bay is a piece of sh!t, I’d rather travel the extra 1.5 hours to Portsea…

    • tbanerjee says:

      I think we blame the bankers too much. End of the day, our progressive politics and welfare state did this. If real production was falling, and people wanted to keep their standard of living, the only way out was a loosening of credit standards.

      Sure the bankers benefitted, but so did everyone else… If you want a scapegoat to be angry at, sure, but lets not get too excited and cast this as a giant conspiracy by those, those horrible, ‘banksters’.

      Everyone else benefitted from the welfare state also, just not as much. Also, i don’t think bankers ever suggested they were the right moral force to be making decisions for all our collective benefit, the democracy was supposed to do that…

      • migtronix says:

        What garbage, when the crash came bankers were made whole, no one else was.

        Everyone responsible needed to take a hit, what occurred was the exact opposite! The ones who could not possibly have been responsible, the young, are the ones being asked to carry the can.

        But don’t worry I still have plenty of hatred for the likes of you left after the bankers are dealt with…

      • Jason says:

        The democracy is rotten to the core. There are so many tax loopholes these days you could move a 250,000 tonne iron bulk carrier through them. Just look at the joke that was the MRRT.

        Who do these loopholes benefit? Certainly not you and I, but the wealthy benefactors of our political oligarchy of Labor and Liberal. Hell, the subject of this article, High Rise Harry, donated several hundred thousand to the LNP only last year. Harry isn’t afraid of lawmakers, enforcers or even the public. He openly brags about exploiting all the tax minimisation schemes that his donations have helped to create.

        Our politicians are much, much cheaper to buy than they are in the US.

      • aj. says:

        + trillions mig. The rich boomers saved the bankers to save their speculative asset values. Pretty simple.

        We could have voted for change but we didn’t. Pretty stupid.

    • notsofast says:

      Hugh,

      “In normal and affordable markets, housing costs 3.0 and below times annual household income, requiring mortgage loads of about 2.5 times … refer Demographia Survey”

      The point I like to make is that Australia and Australians need to continually increase their debt levels and/or sell assets to continually poor money into this gapping hole between our current off the scale housing cost to household income ratio and a more normal ratio you refer too. Once this gapping hole is created it needs to be continually topped up to be sustained, let alone grow it, as money is leaked away offshore in cheap overseas holidays and even cheaper foreign made goods we often don’t need. And if you make this gapping hole even bigger by increasing housing prices further then in future even more money needs to be found just to sustain it and stop it all unwinding uncontrollably.

      The second point I like to make is where is this money going to come from to sustain this housing bubble. Under the Howard years when the housing bubble was built, household debt went from 70% of household income to 150% of household income. By the time Labor came to office household debt was maxed out, it couldn’t go any higher. The only leaver Labor had available to sustain (not grow) the housing bubble was increase government debt, which they did, about half a trillion (including state debt) in about 5 years.

      • notsofast says:

        The question people need to be asking themselves, if they are buying a property, needs to be where will this money come from to sustain the housing bubble come from if the government debt tap is going to be turned off?

        In addition people who are investing in property to make money, need be asking themselves, where will even more money come from , to grow the houseing bubble so I can make some money.

      • migtronix says:

        The Chinese apparently NSF, though if we see crude breakout one wonders.

  4. Schadenfreude says:

    I saw his comment on the news the other day.

    I have an extra sharp pitchfork for this b**tard!

  5. Crocodile Chuck says:

    “I don’t lease them so I don’t pay tax on the rent, but I get depreciation.”

    Any Meriton apt. is ‘fully depreciated’ after a decade. Bathrooms, kitchens must be renovated and new fixtures installed.

    Aside from his role as one of AUS’s biggest rentiers, his company builds schite housing.

    Rhetorical q: Between the States, Trubigoff and the ‘Big Four’, is there any hope for young people in this country?

    • doctorX says:

      so after 10 years he can build new units using only money he saved on tax, once he sells these units he will not need to pay tax …

      he builds for free, sells for huge profit and pays no tax …

      sounds like perpetual money machine

  6. ceteris paribus says:

    So Harry is a family counsellor, with benefits.

  7. countach says:

    Someone tell me why negative gearing is “perverse”. If I’m a company making widgets, and for whatever reason I decided to diversify my company into real estate, and borrowed money to buy apartments, nobody would even question my company’s ability to tax deduct my company’s real estate investments against its widget profits.

    But because I’m not a company, I’m an individual, suddenly it’s “perverse”.

    Of course we don’t try and micro-manage companies that way because who is going to draw the line between different corporate activities, on which are related to which other ones, and how closely they are related and so forth. That would be a regulatory nightmare.

    But why is the individual always criticised for doing what a company does? Why are companies taxed at 30 odd %, but individuals go up to 45%? THAT’s perverse.

    Negative gearing may or may not be good policy, but there is nothing odd or perverse about it. If it was eliminated, that would be a rather odd and perverse distortion that you could make money on one investment, lose the same amount on a different one, and so make no net money, yet still pay tax. Sounds perverse to me.

    I would agree the capital gains thing is a perversity though. Never could understand why they did that. As if the old system of calculating CPI indexes was so hard.

    • The Claw says:

      Someone tell me why negative gearing is “perverse”.

      A population who borrows huge sums of money from overseas to buy their own land of each other at higher and higher prices while claiming losses and reducing income tax is perverse.

      • countach says:

        Lots of things people do in the name of making money is perverse. Opening the 500th coffee shop in the CBD (probably with overseas money) is also perverse in my mind, but blaming it on negative gearing is not rational.

        If you want to say the government should ban foreign loans, I’d be interested in that viewpoint.

      • PhilBest says:

        Many of the policies we now regard as toxic, are only so in combination with distortions to process of the supply of land for urban growth. The many US cities with elastic housing supply, due to an absence of a quota mechanism in the land supply, do not experience negative unintended consequences from basically well-meaning policies like stimulatory low interest rates, the subsidy of first home buyers, tax write-offs of rental property operating losses, the welcoming of good quality immigrants, and the absence of a CGT on housing.

        When new house prices are anchored in market freedoms in the same way as the prices of cars and TV’s are, low interest rates actually do stimulate the real economy; first home buyer subsidies actually do benefit first home buyers and increase home ownership; tax write-offs of rental property operating losses actually do encourage the supply of rental housing and enhance rental affordability; the need of increased supply of homes and infrastructure for population growth merely feeds economies of scale; and property capital gains in the long term are unjust due to inflation being the main cause for the “gains” taxed, and in so far as they are due to productivity improvements, they act as a disincentive to productivity improvements.

        One of Soos and Egan’s recommendation in their monster paper a few days ago, was abolition of the ability to write off rental property losses against other income, and imposition of rent controls to ensure that this loss of write-off ability does not result in rents increasing. This is a classic example of “the king, the mice and the cheese” effect in regulations – a regulatory distortion requires another regulation to fix it, which introduces another distortion, which requires another regulation, and so on ad infinitum. At root in this case, is the distortions in the urban land market from a racket being run in land for urban growth.

    • jimbo says:

      I’d take a closer look at the provisions relating to CGT concessions for small businesses, company tax rates, administrative requirements etc etc, before going down that path. If you want to suddenly turn every mum and dad investor into a business entity to justify their rent seeking you might just be selling them a pup with that argument.

      • countach says:

        I’m not quite sure what you’re saying. Are you saying individuals will love to pay extortionate tax compared to companies because of the administrative requirements? I administer a company and do it all myself, and it isn’t a big deal. No more a big deal than doing my personal affairs.

      • jimbo says:

        I’m saying you can’t have your cake and eat it too. You want to consider property investors as businesses to justify their tax offsets? Fine. Have them submit business activity statements for every reporting period, potentially limit their ability for 50% CGT concessions and have them pay a flat business tax rate of 30%, which given the profile of the average property investor (<$80K p.a., current tax rate max 21%) might actually cost them more! I don't think its the strongest argument.

      • Mav says:

        +10 Jimbo… and let them pay business loan interest rates :)

    • migtronix says:

      Agreed the company vs individual income tax rate is perverse but that doesn’t make claiming loses on asset B against income produced by asset A any less perverse!

      If they don’t want to lose money don’t get into f#cking business…

      • countach says:

        “that doesn’t make claiming loses on asset B against income produced by asset A any less perverse!”

        But that’s standard procedure for making money. You pump money into a new expansion of your business, you lose money in the early years and make it back later. Whether it is Apple expanding out of the computer business into the Phone business or the local coffee shop opening a second outlet, or whatever, this is how business ALWAYS works. You lose money now, you make it back later. If you want to suggest a business framework where every single transaction has to be justified against every single dollar you are making now, then that would be fair, albeit damned impossible to regulate. You seemingly are a shill for the corporate establishment whereby only those with companies get to work that system, and the salaried worker is always screwed.

      • migtronix says:

        You seemingly are a shill for the corporate establishment whereby only those with companies get to work that system, and the salaried worker is always screwed.

        Hardly!! I want individuals to pay 0 income tax and corporation to pay a lot more, but YOU want wealthy salaried workers to cream on CG taking that money right out of the pockets of much poorer salaried workers pockets!!!

    • Jason says:

      Countach, 2/3 of property investors are negatively geared. Over 90% of investor transactions are for pre-existing properties. Swapping unproductive assets for higher and higher prices using borrowed money and claiming a tax break is perverse in the extreme. Meanwhile we’re told that Australia is uncompetitive because the average worker is lazy, which couldn’t be further from the truth – how could a lazy worker afford a house over 6x their income? Meanwhile the real culprit (exponential increase in land price) is swept under the rug.

      Australia is one of the few countries that allow you to do it. That should tell you something right there.

      • Escobar says:

        Jason

        It’s mostly perverse given the times we’re in.

        Doing it 10 – 25 years ago would be a prudent thing to do, given governments inflationary policies….
        CGT, low IR, negative gearing, middle class welfare, FHOG, immigration, foreign investors etc etc we’ve been over these before.

        Not protecting one’s self in light of these things is perverse.

        Of course we could protect our selves by instilling govts that aren’t that perverse… but what’s the chance of that?

        Back yourself. Don’t rely on govt.

      • countach says:

        “Over 90% of investor transactions are for pre-existing properties.”

        So what? Probably 99% of properties are pre-existing, so that’s to be expected. If a full 10% of investor transactions are new property that means there is an amazing amount of new properties being built purely for investors. To try and differentiate new with existing properties in the tax system would be a severe market distortion, leading to new properties being overpriced purely for the tax break, and devaluing existing properties, causing a distortion whereby you HAVE to hold a property whether you want to or not, which is the last thing you want in a property market.

        Who’s to say houses are “unproductive assets”? How are you going to define what is productive and non-productive? The most basic need of humanity is accommodation, so it’s the ultimate in being a productive asset. Who is to say we need to put more money into making widgets that nobody wants, or the market is saturated with? Or opening yet another coffee shop or fashion shop which the market is also saturated with? Property is the one good or service the market is not saturated with.

        The reason we are swapping them for higher and higher prices is precisely because they ARE productive. That may not be healthy, but the fault is on the supply side, not with the idea that houses are somehow unproductive.

        I guess you’d be happy with Soviet Russia where accommodation was considered unproductive for the soviet state, so people lived in shoebox sized concrete monstrosities. The trouble is, the state didn’t understand what productive meant.

        Ignore the folks saying Australia is unproductive. That’s irrelevant. BTW, if Australia is so damned productive, why do we need to sink more money into supposed “productive” assets, when we are very productive already?

        “Australia is one of the few countries that allow you to do it. That should tell you something right there.”

        That tells me nothing at all. Modelling your system on the illogic of other countries is crazy, and we all know the insanity that lies in the financial systems of other countries.

      • migtronix says:

        @Contach

        Property is the one good or service the market is not saturated with

        NO SH!T!! And there's a very good reason, it's called rent seeking.

      • Jason says:

        Countach, I am not going to break down and address your comment on every point, mainly because the quotation system breaks at more than one quote per comment. But two points:

        “To try and differentiate new with existing properties in the tax system would be a severe market distortion”

        The tax system ALREADY DOES differentiate between pre-existing and improved land development property.

        “Who’s to say houses are “unproductive assets”? How are you going to define what is productive and non-productive? ”

        The definition of ‘productive’ is pretty well established in the English language and the field of economics. Building a house is productive, trading an existing one at a price higher than the attendant accumulative costs since previous purchase and the original price is unproductive and rent-seeking. Capital is diverted away from productive industries in order to engage in speculation on rising house prices.

        “The reason we are swapping them for higher and higher prices is precisely because they ARE productive.”

        No, the reason they’re being swapped at ever rising prices is because there is restricted supply, high demand (foreign and domestic driven by low interest rates) and a tax system that specifically incentivises speculation on property.

      • PhilBest says:

        Adam Smith had it worked out in 1776 (“The Wealth of Nations”). Houses are NOT “wealth”, PRODUCTIVE CAPITAL IS WEALTH. “Dwelling places” are merely a necessary expense like clothing – they just take longer to wear out than clothing.

        Full quote from Adam Smith on the subject HERE:

        http://www.macrobusiness.com.au/2012/04/melbournes-enormous-property-over-supply/#comment-142944

    • Neville Gearless says:

      “Someone tell me why negative gearing is “perverse”.”

      Because you can’t do this with any other business. That is, get a day job then claim losses from your business from your salary. For some reason only landlords (and share market investors) can do this. There’s no logic to it. It has the side effect of creating a huge class of CG speculator who, because of negative gearing, can out bid genuine home buyers, sending housing prices into orbit.
      NG and CGT discount are perverse and since so little new housing is built in this country it is a failure too.

      • countach says:

        “Because you can’t do this with any other business. That is, get a day job then claim losses from your business from your salary. ”

        Absolute nonsense. I can start any business and claim it as a deductible. I can start a coffee shop, lose money, and deduct it against my income. What the self-styled anti-property folks here want is a departure from the norm that property is a special case.

      • jim from qld says:

        countach,

        Sole trader losses in an individual’s name are carried forward and can only be applied against future income from the same business. Quarantining.

        “Individuals, both those in business (sole traders and partners) and those not in business, can generally carry forward a tax loss indefinitely, but must utilise a tax loss at the first opportunity. Individuals may have to treat losses from non-business activities (such as investments) and business activities separately.”

      • Jason says:

        Wow countach I hope you don’t do your own taxes. There are some very strict conditions around owning a business and deducting the business’ losses against your personal income tax. You should talk to an accountant.

      • Neville Gearless says:

        Actually, I want property to be a normal case. Only losses brought forward deducted from future profits of that property, like any business.
        To NG a business is a very special circumstance (arts business or farming, and must have produced a profit in 3 of the past 5 years etc. etc. and income less than $40,000 etc etc)

        Coffee shop, no go. Must be a myth you guys make up.

        You Capital Gains speculators want to keep the free ride you are getting on the tax payers’ back. Understandable, its a great racket.
        Also only 5% of investors build anything BTW, mostly off the plan apartments. Explains everything…

        Furthermore, flipping existing housing is unproductive (and price inflating), it doesn’t employ anywhere the number of workers compared to actually building one.

      • StatSailor says:

        You guys remind of the scene in ‘Frozen’ where the ice salesman wants to tell the talking summer loving snowman that summer is actually a bad time to be a snowman.

      • Slambo says:

        Without singling out countach, his/her argument on deductibility is typical of the quality and accuracy of debate you get from property investing enthusiasts all over. I’m not sure if they actually believe it and just don’t know better, or they just lie to further their own interests and muddy the waters.

        The attitude is frightening, and with so many non community minded individuals in this country, it reinforces why wage and salary earners are retained as the only surefire tax milking cows.

      • jimbo says:

        True Slambo, but he’s driving a Lambo as poor old me sits in a 2004 Corolla……..and perhaps I could, but it says a lot about the cult. Gotta run, Mr Jones is at the door…………………..

  8. waddsm says:

    I guess you don’t get to be a billionaire without pushing your vested interests at every opportunity (& a bit of tyrant by some accounts)…

  9. StatSailor says:

    Triguboff is suggesting that where the income of one person used to be needed to buy a house, it’s now at three to four people at least, possibly six (two workers and their four parents), and implicitly he expects house prices to continue to rise faster than incomes. What’s his endgame – 10 people getting together to buy a house for two of them to live in? 20 people? What happens to the property market when only the wealthiest 1% can afford to buy starter houses in the fringe areas?

    • migtronix says:

      Well he is Jewish and that is how they roll, its like on giant Kibbutz…

      • Bluebird says:

        This is why I don’t care much for PC. Because it’s ok to be racist towards Jews, and the Welsh. :D

      • migtronix says:

        Well I’m with Austin Power’s father on this:

        “There’s only 2 things I hate in this world, people who are intolerant of other cultures….. and the dutch!”

        My point re: Jewish communities is that when Trig says parents should help their children get a house he’s not saying anything that community hasn’t been practicing for centuries.

        In fact, its as you often say though are too dumb to correlate, the tyrannical levels of PC are ONLY brought against the majority white culture, it must be smashed and deracinated, and it must steal from its future.

      • PhilBest says:

        Off topic but you are SO right, Mig.

        “…..the tyrannical levels of PC are ONLY brought against the majority white culture….”

        That is what makes PC absolutely riddled with contradictions and hypocrisies. I posted a long rant on the subject here, and ended up having an interesting dialogue with a like minded guy who turns out to be a 26 year old Polynesian conservative Christian living in Portland.

        http://www.newgeography.com/content/003665-class-warfare-republicans#comment-16854

      • migtronix says:

        @Phil don’t get me wrong I’m not saying anything terribly profound, it’s just their preferred method of playing divided and conquer in a predominantly white culture.

        In Asian cultures they use their work ethic against them, in Arab cultures they use their religion against them, in Black cultures they use their tribalism/politics against them, and in white cultures they use our tolerance against us.

        It works too! I despise those stuck up self important lefties like drsmithy

      • Bluebird says:

        I wasn’t sure what you meant Mig, ie whether PC or the white man should be discarded.

        I don’t particularly want to go back to calling people racist names, but then again PC is still being used as an “i win” button by scum when talking about Chinese investors, or when talking about wanting to reduce immigration.

        So being able to say that people selling out to the Chinese are the lowest of the low could have gone a long way to defeating the specufestors, and if we could have had a normal discussion about immigration then the bubble probably wouldn’t have even happened in the first place.

        This is why I hate the left, they get in the way of progress but yet think they’re the bastions of it.

        But yet you side with the left. Make up your mind idiot!

      • drsmithy says:

        That is what makes PC absolutely riddled with contradictions and hypocrisies. I posted a long rant on the subject here, and ended up having an interesting dialogue with a like minded guy who turns out to be a 26 year old Polynesian conservative Christian living in Portland.

        I am impressed, Phil, that in that lengthy fallacy-heavy and evidence-light rant about how the dominant (and morally superior, naturally) Christian culture of the west is being oppressed by , you managed to slip in a segue about house prices. Bravo !

  10. PhilBest says:

    Shows just how shameless and explicit the great property gouge has become. Not content with cleaning out the younger generation, now getting something out of the parents as well is part of the play.

    I regret that in the absence of reform, the possibility that this cycle could run to 2024-2028 before crashing means that this gouge will probably be sickeningly successful.

  11. spleenblatt says:

    Come now, children – join hands with your folks, take them by the Zimmer frame, form a circle, and dance merrily along while Harry intones the amelodic melancholy sound of your country being sold out from beneath you, in his ripe and discordant baritone. Blur your eyes and behold the promised land of affordable home ownership. Rejoice, rejoice !

    • jimbo says:

      It’s amazing what can be achieved when you’re happy to pay for the privilege. Judging by official documents it doesn’t cost him much by way of political donations. He’s clearly had some projects that have been real winners, but they all pale into insignificance when compared to the returns from such donations.

      • Bluebird says:

        +1. It’s only tens of thousands as far as I know.

        Maybe the people could start crowd sourcing donations. I’m sure out of 10million voters, or even out of just 2-5 million who want a housing crash, we could lob in $1 each and give it to Lib or Lab and say crash it bitch.

        But surely politicians are getting money under the table. I mean Juliar goes from a shitbox in Altona to a $2m house somewhere. But I suppose she might be using her never ending $300k a year or whatever it is to fund a mortgage.

      • migtronix says:

        give it to Lib or Lab and say crash it bitch.

        You’re an idiot

      • Bluebird says:

        Just thinking out loud. At least I actively try to do something about it. Like physical real world reality. Unlike yourself.

        But you have to admit. Crowd sourcing where people only pay $1 each to lob some ads on TV to sway the bogans is a f#cken good idea. Handing it to Lib or Lab, not so much.

      • migtronix says:

        Handing to Lib Lab not so much

        And it was my only criticism…

  12. doctorX says:

    sounds like 100 year Japanese mortgages from 1980s

    • PhilBest says:

      And no-one saw that crash coming either, even when one block in the middle of Tokyo was said to be “worth more than the State of California”.

  13. HealthyInvestor says:

    He’s not so bad. Don’t hate the player hate the game. It’s rigged for anyone over 40 to pretty much sit on cruise control and reap the rewards.

    Australia is isolated. Has easy credit. Has a stable population that can’t ‘up and leave’ like the US states and Europe. The worst is a japanese meltdown in Australia. Even if that happens all the land owners get another 20 years of tax write downs and they still win.

    Australia’s future is already written by those in the past. It’s human nature.

    I wouldn’t expect any great losses in Australia they will do anything and everything to protect property. Especially when 95% of all finance goes to support it. Yer it’s insane but it’s made the baby boomers rich and they will never ever ever let go. Ever. By the time they did gen Y will be 50-60 so they just spent their working lives servicing boomers obscene debt as assets deflate slowly.

    I feel so bad for gen Y. Slaves for the next 30-40 years paying for baby boomers retirement. Messed up country but what are you going to do…

    You gonna move to America where a house sells for 50k instead of 500k? Nope. You going to just toil away at your boring job managing an officeworks for 40 years. Awesome. When your parents die and give you their money it’s going to be deflated to enough to buy a car. That’s about all.

    It’s 300k to stick them in a retirement home atm. And there will be two of them. You’ll be forking out 50-100k a year for the last 5-10 years. Good luck claiming inheritance ha. And that’s not including inflation. It’s most likely going to be a hell of a lot more.

    Gen Y get to aspire to be slaves and robots and be bankrupt at the end if it all. Staying in Australia is a death sentence, only it’s one of depression and underachievement and a 9-5 in retail or service. Zero job creation and manufacturing. Have fun with that Gen Y. Enjoy being a slave with glass walls.

    Glad I moved to the US

    • Uranium Geo says:

      Yup I think Australia will see an exodus of young well educated people and potentially a lot of capital flight.

      I am seeing it amongst my cohort and I will be doing the same when I have completed my intentions here. It’s sad to see and a horrible feeling.

      The worst could still be yet to come with a disaffected youth. I am seeing adds for more prison guards etc. here in VIC maybe the state government is somewhat reading the writing on the wall.

      Australia will be a banana republic but not for the reasons Keating first postulated.

      • doctorX says:

        “Yup I think Australia will see an exodus of young well educated people and potentially a lot of capital flight.”

        Australia will see an exodus of old rent seeking population once the scheme collapses.

      • StatSailor says:

        “Yup I think Australia will see an exodus of young well educated people and potentially a lot of capital flight.”

        Australia will see an exodus of old rent seeking population once the
        scheme collapses.

        So that’s basically everyone. Last one left in Oz turn off the telly.

      • migtronix says:

        No stat we should leave Rupert on as ghostly reminder of everything that went wrong. Kinda like those films about planetary colonisations that get wiped out, someone lands there centuries after last contact and there’s just a propaganda loop running on all the screens…

      • StatSailor says:

        +1 Mig.

        (previously with wry comment but blocked by spam filter)

      • PhilBest says:

        The USA should create an immigration category for young Australians. They’d generally do pretty well out of getting the ones with the brains and the initiative to move there. I confess to being a persistent Green Card lottery entrant.

    • permacuppa says:

      A lot of Gen Y’s feel something’s not right with the system, but haven’t been shown the way. That’s why MB is so necessary in the sea of MSM idiocy.

      USA sounds like a good move, I hear Germany is hiring too.

    • Jason says:

      Has a stable population that can’t ‘up and leave’ like the US states and Europe.

      You just watch me.

  14. Jackson says:

    “but I get depreciation”… A story from last week. I’m walking to my office, and pass a car with advertising painted all over it selling “Depreciation Expertise” for mum and dad investors and their NG properties.

    Made my blood boil. I’m flogging my guts out in a productive enterprise, and we have whole sub-industries built around thin air. Infuriating.

    • athalone says:

      “. I’m flogging my guts out in a productive enterprise, and we have whole sub-industries built around thin air.”

      —Jackson

      Yeah, why not…that’s where the money comes from.

  15. saintmatthew says:

    little wonder then that the Baby Bonus was scrapped

  16. athalone says:

    Little bit worried that people here are going to give up just when the US Federal Reserve is getting desperate and showing signs of folding.

    Ever since the Fed started to ‘taper’, the tiny country of Belgium 11 million people and $430Bn GDP has become the 3rd largest foreign holder of US treasuries and bonds after China and Japan.

    They were found out last month because people couldn’t understand how the heavily indebted Belgium could increase its US$ foreign exchange from $166Bn in Aug 2013 to $ 381Bn by March 2014 (remembering that Australia has only $31Bn).

    Today the April figure for Belgium has come down to $366Bn.
    The US Fed must now be buying there QE through some other country now, perhaps Japan.

    The point is that practically all recent purchases of US Treasury debt is through the Fed when they actually say they are tapering.

    Markets as always will start crashing when the US does, and when the Fed has to depend on desperado confidence trickery, that time must be getting closer.

    There is no truth in markets…so please don’t give up… Hold on.

    http://www.treasury.gov/ticdata/Publish/mfh.txt

  17. notsofast says:

    What Harry should be talking to parents about is how they can invest their superannuation and wealth so their children will have the high technology, high value jobs that will be able to help sustain the current extremely over valued real estate prices at their current levels.

    Come on Harry, how about it!!!

  18. aj. says:

    Seriously. How much is enough for these guys? How can you be so rich, so old and still so greedy? Death must enjoy knocking on the door of such twisted souls.

    You get the feeling these old oligarchs would eat the hearts of children if it meant their wrinkled old carcasses, wheezing lungs and cadaverous fingers could grasp more gold.

  19. Wing Nut says:

    What a grub. If I were PM, Mr Burns would be deemed person non gratia and have 72 hrs to leave the country. The political class who’ve done fuck all about the situation that allows such blatantly repugnant statements to be made will have 36.

  20. Bubbley says:

    An incoherant meanderings of vested interests trying to justify unjustifiable behaviour.

  21. Slambo says:

    When Trig dies, as he eventually must, leaving behind all of his precious riches, our fine leaders will no doubt shower praise upon this paragon of Aussie business people.

    In truth he has done nothing that others wouldn’t have done in his place, though most likely with less scale and rapaciousness.

    Being given free advice by this sorry individual is as insulting as it comes.

    • migtronix says:

      I find the media that parades him more insulting, without them he’d have to say that to my face to get the message out, but it would be the last thing his rewired jaw would be able to ever say…

  22. migtronix says:

    If we had a kickstarter campaign to create a media team that impersonates other media with a view to interviewing someone *cough* Trig *cough*cough and when everything is ready for the interview the team steps out and accidentally releases 10 rabid monkeys with clubs that have been starved for a week, can anyone get into trouble?

  23. dumpling says:

    Of course, “parents should mortgage for kids”! I mean, where else can the extra credit come from that can keep inflating the bubble?

    BTW, the likes of 99 year loans or multi-generation loans are standard symptoms of a bubble.

  24. harry petropoulos says:

    Quite sad that our children cannot afford to buy a home.We all know that the current property prices are grossly overvalued,even a 20% correction in the foreseeable future doesn’t resolve the problem……….we have all become slaves to the banks because they keep lending up to 90-95% of the value of the home………bring it back to 80% and perhaps we can start saving again and realise what it means to be responsible