House prices
I dont think its always a "best school possible thing", my sister sends her kids to a private school and her motivation is she doesn't want her kids indoctrinated with some of the ideologies that are getting into the education system these days.
I think a lot of people are worried about this aspect, it concerns me to some degree but my kids are only in primary school and i think our primary schools are pretty good small very community minded schools, plus im not keen on sending my kids to a religious school which has the same issues of indoctrination just another kind. (plus im a tight arse)
If i lived in Melbourne or Sydney though, no way id send my kid to a public school the indoctrination aspect would be way worse, and also just the larger city schools have so many negative aspects in regard to kids they are mixing with and just the lack of control and discipline teachers have over the students.
Its was terrible in my day in the 80s very early 90s but would be even worse now.
flollo I think you may be right, the deus ex-machina of bailout has appeared:
https://www.macrobusiness.com.au/2023/02/extend-and-pretend-mortgages-la...
first up, the best comment, shoutout to Steven:
"Dear god. Another societal disaster in the making. As if so many didn’t have it bad enough already – they will now competing against idiots taking out lifetime loans for shelter."
so what might it look like?
"Extending a 25-year loan to 40 years saves $481 in monthly repayments on a $500,000 mortgage. Therefore, it dramatically increases borrowing capacity.
However, would also cost $336,018 more in interest over the loan term, meaning more people would enter retirement with housing debts.
Canstar’s Steve Mickenbecker said extending mortgage terms would “supercharge” monthly savings for borrowers.
“This is an enticing prospect for borrowers caught out by the rapid increase in rates [as] extending the loan term drives down the monthly repayment”, he said.
“But [it comes] at a cost of still having a loan at an older age than originally anticipated [and] the borrower will, of course, be paying a considerably higher amount of interest”."
Imagine the extra 336K... bank shareholders would enjoy that.
Another smart cookie in the comments compares the announcement of 40 year mortgages in Ireland in 2007/8 - and what happened next.
Other commentators speculate that super will be used to pay out the loans once people near retirement and the loans are still open. Hmmm, plausible.
Flollo you are right that opportunities will present and driven individuals can completely outperform in this kind of environment. For eg, we have noticed something about the 20 year plan for the town and passed the knowledge on to our apprentice, if you know what's coming you can set up to gain from it..
Wow! I wasn’t aware that this is being considered. Like I said, there are dozens of levers they can pull but this one sounds quite crazy considering the times. If they put 10% of this whole effort into social housing we wouldn’t have to have these discussions.
Government spending component of the GDP was never higher at ~35%. It’s forecasted to go even higher then this in the next few years.
https://tradingeconomics.com/australia/government-spending-to-gdp
Where is all this money going? Think about it, our GDP is now well over $2 trillion AUD. And government spending is 35% of that? If you take 2023, 2024 and 2025 there will be more of less $2 trillion of government spending. That’s a huge amount of money to fix many issues in this country in the following 3 years. So money can’t be an issue, I just don’t accept that. They could easily provide more social housing and help many people. What’s the real problem here, the whole situation really stinks.
velocityjohnno wrote:flollo I think you may be right, the deus ex-machina of bailout has appeared:
https://www.macrobusiness.com.au/2023/02/extend-and-pretend-mortgages-la...
first up, the best comment, shoutout to Steven:
"Dear god. Another societal disaster in the making. As if so many didn’t have it bad enough already – they will now competing against idiots taking out lifetime loans for shelter."
so what might it look like?
"Extending a 25-year loan to 40 years saves $481 in monthly repayments on a $500,000 mortgage. Therefore, it dramatically increases borrowing capacity.
However, would also cost $336,018 more in interest over the loan term, meaning more people would enter retirement with housing …
…. Aaaand once again demonstrates that higher interest rates was just another beneficial factor for the generation of the 80s early 90s who lived a lord of flies like existence that helped pay down their minuscule mortgages in rapid time vs the low interest rate large interest fee money for nothing lazy no respect smashed avocado generation we live with today. Fkn leaners
Checked out 1brm 1bth listings around parts of Geelong yesterday, 300-330k asks, fckin joke. 168sqm blocks (no room to swing pussy as dear old mum says) in new estate, 200s to 250... other new estatelets opening up along the highway it's about 100K per 100sqm on those blocks and that's before you add (higher) build costs, there is no bottom end, bad joke.
flollo wrote:Wow! I wasn’t aware that this is being considered. Like I said, there are dozens of levers they can pull but this one sounds quite crazy considering the times. If they put 10% of this whole effort into social housing we wouldn’t have to have these discussions.
Government spending component of the GDP was never higher at ~35%. It’s forecasted to go even higher then this in the next few years.
https://tradingeconomics.com/australia/government-spending-to-gdp
Where is all this money going? Think about it, our GDP is now well over $2 trillion AUD. And government spending is 35% of that? If you take 2023, 2024 and 2025 there will be more of less $2 trillion of government spending. That’s a huge amount of money to fix many issues in this country in the following 3 years. So money can’t be an issue, I just don’t accept that. They could easily provide more social housing and help many people. What’s the real problem here, the whole situation really stinks.
+1 for "quite crazy"
Even if the money was provided for a big social housing build, the constraints will be tradies and materials being sourced, and costed. Especially if we're rebuilding the grid and completely changing how our society powers itself at the same time. Throw in fixed build prices and inflationary materials costs and that may send more builders bust, actually reducing the amount of houses that could be built.
What about going back to more humble dwelling sizes? 2x1 with a little bit of land, 3x1? I don't think buyers are keen on that.
indo-dreaming wrote:I dont think its always a "best school possible thing", my sister sends her kids to a private school and her motivation is she doesn't want her kids indoctrinated with some of the ideologies that are getting into the education system these days.
…
If i lived in Melbourne or Sydney though, no way id send my kid to a public school the indoctrination aspect would be way worse, and also just the larger city schools have so many negative aspects in regard to kids they are mixing with and just the lack of control and discipline teachers have over the students.
Wow, that’s an Easter show bag full of cliches and ridiculous suburban myths. I have to assume that it is a heartfelt concern which just leaves me going ‘wow’!
The things people think!
batfink wrote:indo-dreaming wrote:I dont think its always a "best school possible thing", my sister sends her kids to a private school and her motivation is she doesn't want her kids indoctrinated with some of the ideologies that are getting into the education system these days.
…
If i lived in Melbourne or Sydney though, no way id send my kid to a public school the indoctrination aspect would be way worse, and also just the larger city schools have so many negative aspects in regard to kids they are mixing with and just the lack of control and discipline teachers have over the students.
Wow, that’s an Easter show bag full of cliches and ridiculous suburban myths. I have to assume that it is a heartfelt concern which just leaves me going ‘wow’!
The things people think!
Tell me whats not true?
Just comparing the large working class big town schools i went too compared to my kids schools is chalk and cheese, my kids schools are far far better in regard to having smaller class sizes far less issues and when there is they are dealt with and much much more of a community spirit, even kids of different year levels know each other and even look out for each other.
My schools weren't rough compared to working class low social economic schools in Melb or Sydney but we still had fights break out pretty much every day and theft of bikes etc and whole range of issues and you were more likely to get hassled by older kids.
Only downside ive found of the smaller schools is they dont have as much opportunity in regard to things like art.
Bigger schools with bigger class sizes are always going to harder to control and then children in cities and suburbs are generally going to be exposed to all kinds of things possibly earlier or at a greater rate than regional areas especially in low social economic areas.
In regard to indoctrination aspect im seeing aspects of this even in my kids school, ive only seen and heard its worse in city schools from friends and online reports, and can only imagine its true as i doubt teachers are less woke in city or suburbs.
If you compared Australia to USA etc then things are going to on another level again, in USA which is also well documented.
article seems measured to me:
https://www.abc.net.au/news/2023-02-20/philip-lowe-rba-fall-from-grace-i...
As crazy as it might sound we are probably looking at the period in which RBA is still increasing the rates while the fiscal policy (state and federal government) is encouraging people to get into it. Makes no sense but I guess we’ll learn a lot this year.
makes a lot of sense i reckon. pretty much sums up all along in this thread I've been dismissive of predictions of any crash. I have no economic training to back that up. it's purely based on observations of government and central bank (in)action and scepticism of any real attempt to foster housing affordability and address inequality.
share house cops $1400/m rent increase:
https://www.news.com.au/finance/real-estate/renting/sydney-renter-devast...
Vic businesses cop huginormous land tax increases:
https://www.3aw.com.au/victorians-left-stunned-by-staggering-land-tax-in...
"Kay told Neil Mitchell the land tax for her business in Melbourne’s west has more than tripled from $24,000 to $80,000."
inflationary
bonza wrote:article seems measured to me:
https://www.abc.net.au/news/2023-02-20/philip-lowe-rba-fall-from-grace-i...
RBA is like a weather forecaster who
- can predict likely expected average temperatures quite well but can't predict cold fronts until the rain starts or cyclones until the wind begins to howl and,
- as a matter of policy predicts the weather will be sunnier and warmer than they know it will be even when storm clouds are brewing because they want everyone to be happy and to go outside and play.
Western central banks follow US Fed Reserve policy, rarely do they go it alone its just the timing in the end. NZ is called out as a canary in the coal mine as they change their rates first. The FED set the interest rates for most of the world by virtue of the USD being the Global reserve currency - like it or not. If we didnt follow the FED our currency would crash and we'd have to raise interest rates very quickly to defend it....been there when the UK did that in the 80s, not pleasant.
That’s a pretty simple sweet gig isn’t it. Fed raise rate. Follow suit here. Collect $1M. You CAN pass go.
Whats the point of the RBA? A useful well remunerated idiot?
bonza wrote:That’s a pretty simple sweet gig isn’t it. Fed raise rate. Follow suit here. Collect $1M. You CAN pass go.
Whats the point of the RBA? A useful well remunerated idiot?
There are plenty of pointless, well renumerated idiots around.
The RBA governs the payments system in Australia and they do a pretty good job. They also set monetary policy independent (if anything truly is) of Canberra thank god because otherwise our governments would just tax and spend, tax and spend...oh wait.....
There are lots of smart people at the RBA. Renumeration is no guide to how smart someone is.
that's true monkeyboy. a flippant comment by me
well, the main reason why monetary policy/interest rates are relatively coordinated globally, at least between developed economies, is that economies and financial systems are so open and integrated.
The RBA has been getting slammed for not raising interest rates soon or quick enough in 2021, and even now. But arguably the main reason why is that the US did a lot of the initial “heavy lifting” by raising rates so soon and by so much, as well as by engaging in fairly aggressive quantitative tightening.
Interesting that the RBA is also getting absolutely slammed for raising interest rates too fast and by too much…
What a pathetic joke…
Actually it’s more than a pathetic joke.
It’s a national disgrace and global embarrassment that the Australian public and media has had a massive dummy spit, sook and chucks a huge tantrum and then turns and sets upon a central, foundational institution of our society and economy with a barrage of attacks and abuse when we enter into a high inflation environment and the RBA just does its job as per its function, role and mandate.
Australia should be ashamed.
Definitely, gsco.
It begs the question - what if the RBA did eventually raise rates next year as they anticipated? Was anyone actually preparing for that? Or would they have thrown the toys out of the cot anyway?
Amazing that anyone signing up for a 30 year loan starting with the lowest rates in history legitimately expected those rates to stay the same.
It’s the result of an entire generation who had only ever seen rate decreases.
Place around the corner from me that went on the market (2019- no sale) for $850000, just sold for 1.3 million.
3 bed brick and tile.
it's more a result of being stuck between a rock and a hard place and taking a leap of faith based on Phil Lowe's message that rates would not increase until 2024. that helped spur the frenzy on. People may have factored it in but i reckon many would not have thought that far (2024) as the FOMO was of epic proportion and many just wanted a roof over their head and stability. One can argue that these are dumb things to do given the likelihood of rates rising again. Yet despite the pain out there for the bottom feeders property affordability and availability are worse now vs pre pandemic. Punters watched Gov and Banks intervene at the start of the pandemic to prevent house price crashes and people losing their homes. It's not unreasonable for those who bought when prices went boom shortly after to expect that government would help again.
Inflation is the quiet thief in the night that steals from us all and must be tackled. Current interest rates are simply normal - not high - so criticism of the RBA for current actions is misplaced.
RBA's mistakes, however, were in the past:
1. Holding rates ridiculously low for too long distorting markets and financial decision making.
2. Giving such firm sounding "forward guidance" (in effect close to a promise in order to maximise the psychological manipulative effect of these statements) that led too many people to make decisions on interest rates staying very low for the near term.
3. Destroying their balance sheet through QE for little benefit (estimated to have reduced interest rates by less than 1%) and proven over decade in the US to be an ineffective tool - done pretty much to appear to be doing something rather than for sound proven benefits.
Plus they can't forecast recessions or the impacts of unusual events such as supply shocks.
Other than that they are doing a great job.
... a bit of soul searching in the offices of the RBA ivory tower is a good thing
kaiser wrote:Definitely, gsco.
It begs the question - what if the RBA did eventually raise rates next year as they anticipated? Was anyone actually preparing for that? Or would they have thrown the toys out of the cot anyway?
Amazing that anyone signing up for a 30 year loan starting with the lowest rates in history legitimately expected those rates to stay the same.
It’s the result of an entire generation who had only ever seen rate decreases.
Yeh I think the argument on the 'no rate rise until 2024' claim was that people were using the next 2 years to get ahead/build buffers, but how much of that buffer building was actually going on is hard to know. Other argument is from those who didn't fix and stayed variable, they feel misled as the reason they probably didn't fix was they didn't think they needed to, as rates would stay low anyway until 2024.
I'm fairly happy I managed to lock in under 2% fixed until late 2025, currently 3 and a bit years ahead with cash in the bank, hoping to get that closer to 5-6 years ahead by the time I roll off the fixed rate, so I can try weather the rates I roll off to.
We sold and re-bought in FY22, in an adjacent market, and paid a shitload more than we wanted. But this place is meant to be our home for the next 20 years. We want our family to grow up and leave THIS nest. I don't even remember hearing the line about 2024. We based our forecasting on an 8% interest rate being the threshold whereby we'd probably need to go cap in hand to our folks (which I am very loathe to do) or sell off some of the stock portfolio we've (mainly me hahaha) flogged ourselves to build during the time we had our previous, less-than-desirable property (sold in late 2021).
I'm not angry at the RBA really. I'm really angry at the structural issues that fuel and support a buy-in price that is a multiple of income so much greater than that faced by those calling the shorts on how that system is structured.
I'm talking all these things that worsen wealth inequality such as negative gearing (or at least, limited to low-mid income and only 1 property), CGT exemptions, no land tax, and State planning policies that do not drive densification of existing urban settings and result in further destruction of the commons (environment), while hamstringing local governments to block the explosion in short-term tourist accom that's had such an enormous impact not just on regional RE values but societally as well.
I'm talking about a system that both artificially inflates prices (via a lack of a land tax to dissuade land banking) and a tax system that didn't just turn the idea of a home into an income-generating asset, but fucking turbo-charged it in a way that takes from "the youth" (you know, the same ones being told to have kids but also that they'll have to pay more in tax to support the pensions of the largest wave of retirees ever and the same folks that fucked them hahahahahhaahahahahah....what a fucken stitch up) and gives to members of a cohort that have had an opportunity to ride a fucking phenomenal wave of economic opportunity (Gen X have also had the opp to ride that wave but they seem to just be content with that and not get on their high horse about it) due to globalisation, unpegging of the dollar, dropping interest rates and a tax system that's highly favourable to "the already haves".
And then some members of that generation have the gall to think (of course, a natural bias we're all prone to) of simulatenously thinking that they're fucking economic/financial experts that only got to where they are through "hard work, hustle, grind, despite a single 3 month period of 17% interest rates and the difficultly of getting a job on a reference alone really" and that Gen Y are just a bunch of lazy, good for nothing whingers that only need a Bachelors or Masters + 5 years minimum experience 1 month after finishing uni just to get an interview, have only had to face the worst global economic crisis since the 1920s right as they entered the workforce, have had to deal with the worst global pandemic since the 1910s, and are looking at being handed the steering wheel right as the global biophysical system-shit-show hits the fan thanks to the never ending degradation of the biosphere + rapid anthropogenically-induced climate change.
So year, gsco is right, everyone's slinging mud at the RBA but a lot of it probably comes from "a different place" if you get my meaning.
But anyone that thinks that things will get more accessible is dreaming. The amount of interest in keeping the music going is off the charts, both at the individual level but also the macro-economic scale (just look at bank lending % to resi mortgages and then connect the dots between where super funds are invested and you'll see what I mean).
Good post mate.
And as we all know, one of the main aspects of keeping the music going is huge, sustained population growth.
All those who thought Labor were different in this regard, that they were less than a neoliberal party, are dead wrong.
mowgli wrote:We sold and re-bought in FY22, in an adjacent market, and paid a shitload more than we wanted. But this place is meant to be our home for the next 20 years. We want our family to grow up and leave THIS nest. I don't even remember hearing the line about 2024. We based our forecasting on an 8% interest rate being the threshold whereby we'd probably need to go cap in hand to our folks (which I am very loathe to do) or sell off some of the stock portfolio we've (mainly me hahaha) flogged ourselves to build during the time we had our previous, less-than-desirable property (sold in late 2021).
I'm not angry at the RBA really. I'm really angry at the structural issues that fuel and support a buy-in price that is a multiple of income so much greater than that faced by those calling the shorts on how that system is structured.
I'm talking all these things that worsen wealth inequality such as negative gearing (or at least, limited to low-mid income and only 1 property), CGT exemptions, no land tax, and State planning policies that do not drive densification of existing urban settings and result in further destruction of the commons (environment), while hamstringing local governments to block the explosion in short-term tourist accom that's had such an enormous impact not just on regional RE values but societally as well.
I'm talking about a system that both artificially inflates prices (via a lack of a land tax to dissuade land banking) and a tax system that didn't just turn the idea of a home into an income-generating asset, but fucking turbo-charged it in a way that takes from "the youth" (you know, the same ones being told to have kids but also that they'll have to pay more in tax to support the pensions of the largest wave of retirees ever and the same folks that fucked them hahahahahhaahahahahah....what a fucken stitch up) and gives to members of a cohort that have had an opportunity to ride a fucking phenomenal wave of economic opportunity (Gen X have also had the opp to ride that wave but they seem to just be content with that and not get on their high horse about it) due to globalisation, unpegging of the dollar, dropping interest rates and a tax system that's highly favourable to "the already haves".
And then some members of that generation have the gall to think (of course, a natural bias we're all prone to) of simulatenously thinking that they're fucking economic/financial experts that only got to where they are through "hard work, hustle, grind, despite a single 3 month period of 17% interest rates and the difficultly of getting a job on a reference alone really" and that Gen Y are just a bunch of lazy, good for nothing whingers that only need a Bachelors or Masters + 5 years minimum experience 1 month after finishing uni just to get an interview, have only had to face the worst global economic crisis since the 1920s right as they entered the workforce, have had to deal with the worst global pandemic since the 1910s, and are looking at being handed the steering wheel right as the global biophysical system-shit-show hits the fan thanks to the never ending degradation of the biosphere + rapid anthropogenically-induced climate change.
So year, gsco is right, everyone's slinging mud at the RBA but a lot of it probably comes from "a different place" if you get my meaning.
But anyone that thinks that things will get more accessible is dreaming. The amount of interest in keeping the music going is off the charts, both at the individual level but also the macro-economic scale (just look at bank lending % to resi mortgages and then connect the dots between where super funds are invested and you'll see what I mean).
Well said....!
If Australia had not used sustained high levels of immigration as its main economic economic policy tool, houses would be cheap, rental properties easy to find and with low rents. It would be like the 70s.
Houses would be for living in, not as investments.
But, we would have had multiple recessions or perhaos almost a permanent recession except when commodity prices were high.
Japan shows this scenario well.
Immigration is the easy option economic "get out of jail card" every government gets shown once they get in office (they mostly know already).
Treasury bureaucrat to fresh new government " you can try all your clever sounding economic and industry policies and some may work a bit. They will be a hard slog and many will fail. Or you can boost immigration on the quiet and do a first home buyer grant to further stimulate the housing market and sit back and relax. Add by the way, i suggest you buy some investment properties first up"
Mmmmm... "tough decision" thinks pollie.
Someone asked about government spending. Well, I look into it and there's about $96bn every year being pissed away on BS tax breaks and rent-seeking entities.
Behold...
INCOME TAX:
We're foregoing up to $50bn per year in corproate tax and personal income tax revenue via loopholes that legalise tax minimisation and tax avoidance. Call it the median of $20bn. https://www.etax.com.au/corporate-tax-avoidance-2018/
PRIVATE HEALTHCARE:
We subsidise it to tune of $7bn per year. That's enough to build and operate two new public on the scale of the awesome new Sunshine Coast University Hospital per year. Do one per year (rest for OpEx) and in ten years we've got more hospitals than we need. Fuck, we could even repatriate our brothers and sisters across the south pacific who need big ticket healthcare.
MEDICARE LEVY:
Switching to a more progressive levy approach would increase the funds raised by $2.5bn to around $13bn per year, and mean those who can afford to pay more, do, and vice versa. As someone in the top 10% of income earners in this country, I'd happily pay more in medicare so that we have the fucking Gold/Platinum/Duck'sNuts global leader in public healthcare that's available to every person who needs it, including no doubt me and mine one day, than pay money into supporting a for-profit private system that's used to pay dividends to shareholders and subsidise fucking BS optional procedures (that excl. procedures post-mastectomy, burns, etc.).
https://australiainstitute.org.au/wp-content/uploads/2020/12/A-Progressi...
CARBON:
Our current emissions are about 530 megatonnes. If we had a levy of $25/tonne, that would raise $13.25bn. About 13M people pay tax in Aust, so perhaps we do the inverse of what's happening now and support the bottom Quintile of earners (about 2.6M people). If they each received $5000 to use for a solar+battery system (remembering they'd also get about $3k in STC rebate, funded by the top two quintiles), then they'd only need to tip in maybe another $3k-$4k to buy a system and be totally/very close to totally grid-free. That means the system would pay for itself within 2-3.5 years depending on their current costs. Now, this presupposes the cost of the systems doesn't come down at all (which it would via economies of scale). The Govt could buy the solar/batt systems in bulk using it's special credit rating, cover the warranties, and then sub-contract to have them installed at a discounted rate. That's all with just a SINGLE year of carbon levy revenue. The levy would need to go up periodically and the subsequent monies could then be used to move the rest of the pop onto solar+battery or subside EVs etc, restore our fucked environment, support actually-sustainable agriculture, etc. etc.
Get rid of any subsidies or rebates associated with fossil fuels. The diesel rebate alone is $7.8bn. That money should instead be spent on providing electric vehicles or clean energy infra subsidies (or interest free loans) to big energy users, farmers etc. It looks like about another $5bn is spent on other subsidies for the fossil fuel sector. In total we're talking about $12bn.
There's so much money being used to cover what's called in business management textbooks "the cost of doing business"(FML). There is actual socialised cost of carbon to the community is about $65/tCO2e, so emitters should be thankful that the carbon levy under President Mowgli is much less.
EDUCATION:
FFS... Private schools are getting at least $11bn per year in subsidies. This is stupid. We don't subsidise private transport (e.g. taxis), so why subsidise private schools? If you want that extra then you should pay for it. Simple. One of the biggest stitch ups.
And then there's....
NOT-FOR-PROFITS but mainly RELIGIOUS GROUPS:
Dunno what the figures are, but their tax breaks should only be for deducting expenditure on essential community services, instead of current approach of being able to exempt all income as a charity! That's outrageous. There are big church groups that through the magic of income shifting, run big profit making businesses that pay very little tax. Same goes for all the private philanthropic foundations that are partially to minimise tax liabilities (but also partially to be able to put money to things without the govt taken a slice).
Fucking blows my mind that the Australian Democrats (yes, they're still around and are basically The Greens but way, way less "wokey") have been unable to come roaring back to claim some seats that in my view are there for the taking for a party that comes out with some no BS real talk and policies that are actually for the greater good/the masses.
"RBA's mistakes, however, were in the past:
1. Holding rates ridiculously low for too long distorting markets and financial decision making."
I think this is where a lot of the 'anger' comes from...
the world's little flutter with MMT
a couple of years ago a heap of reasonable, conservative by nature economists even started getting on board... as inflation hadn't spiked, and japan started being touted as 'the model'...
meanwhile, critics kept pointig out that MMT would eventually just lead to inflation, asset price bubbles, and deflated currency rates...
the real irresponsibility was driving interest rates so low that they had no buffer. where did they honestly think they had to go? when interest rates were increnented towards 0% over a decade or more...
those in the know were experiencing disbelief more than anger
those not so in the know, just went direct to anger, when rates rose so abruptly as a result of a decade of irrationality and irresponsibility...
(I know it technically may not have been MMT, but the 'logic' and pure blind faith that developed was the same)
Indeed Frog.
And it's probably one of the most important conversations we'll never have as a society - what constitutes quality of life?
If I've got three cars, three houses, a DVD player and a microwave, but I'm living in a crowded place with no intact natural environment, does that constitute a high quality of life?
Exactly. All the psychological research concerning wellbeing/mental health says...it does not.
Nor does being really poor, living on the street, being economically insecure.
As usual, the best answer lies in the middle.
Re. interest rates, Lyn Alden's latest post provides some additional context for those claim that all this inflation came from years and years of low rates. In a nutshell, she's saying not really. The low rates mainly just inflated asset prices. Things went awry when money was put directly into hands of the person on the street at the same time as supply constraints (not because of, though) and then the Ukraine war (energy crisis) threw fuel on what was looking like a genuine transitory little bonfire into a big conflagration.
I’ve got a mate that bought in late 2017 (peak of market at that time), sold early 2020 and broke even after stamp duty factored in, then re-bought in similar area and similar house early 2022, paying $500k more than what he sold for. Feel for him.
chicken, egg... omlette... scrambled...
the real issue is assett prices, people secure in homes are practically immune to the current inflation... especially so if you're not a tradesman etc. doing 100kms a week...
a large problem is how non-keysenian their little sojourn into keysenian economics was... ie. just pumping money in for years and years that went straight to the top - the stock market and other assets... rather than demoratically agreed on projects of mutual benefit and infrastructure for the future...
"socialism for wall street and capitalism for plebs"
the corona cash went to man in street, which reignited primed coals...
now biden and co. have been dragged, belatedly, and most reluctantly, kicking and screaming, to a more america first agenda... which has also fuelled the raging bushfire...
I don't know if it's irony or tragedy... but governments' new found love for infrastructure and an energy transition has come at the worst possible time...
ie. low unemployment, supply side inflation, and skills shortages = more inflation
if CB's and those in power had even a scherik of vision and initiative... we would have been doing this the last few decades - instead of just printing mountains of cash...
Agree with most of what is posted above. One point for Mowgli, the worst financial conditions in Australia since the 1920's (commodity bust) were not suffered by Gen Y at GFC - they were suffered by Gen X in about 1992-3. Jobs were unobtanium. When the GFC hit I expected similar, but it was nowhere near as bad as they stimulated, then China stimulated, then demand roared back. And the decade 2000-7 had been an absolute bonanza for young people, high school leavers on triple figures on the mines as TA's for example. Being in a trade helped! It wasn't like a lost decade of career like the 90's were. We were called lazy and slackers, too; and our uni outcomes, were, um, interesting.
Agree that much of Gen X is coasting along with it (there's a divide between those that took the property plunge and those that didn't, but in numbers there's not enough of us to really determine trends on our own) but hopefully I can rage against all the insane policy enough to tip the scales in the favour of my Gen Z kids. Don't like my chances though, they just won't let this puppy mark-to-market.
frog wrote:If Australia had not used sustained high levels of immigration as its main economic economic policy tool, houses would be cheap, rental properties easy to find and with low rents. It would be like the 70s.
Houses would be for living in, not as investments.
But, we would have had multiple recessions or perhaos almost a permanent recession except when commodity prices were high.
Japan shows this scenario well.
Immigration is the easy option economic "get out of jail card" every government gets shown once they get in office (they mostly know already).
Treasury bureaucrat to fresh new government " you can try all your clever sounding economic and industry policies and some may work a bit. They will be a hard slog and many will fail. Or you can boost immigration on the quiet and do a first home buyer grant to further stimulate the housing market and sit back and relax. Add by the way, i suggest you buy some investment properties first up"
Mmmmm... "tough decision" thinks pollie.
I think your fatally flawed here, given the greatest rise in house property history occurred during the pandemic when immigration levels were zero.
BTW, aren't we all immigrants apart from the indigenous?
House prices have gone gang busters for two main reasons......essentially massive tax incentives for investors compared to other forms of investment and secondly and more recently, money WAS essentially free.
frog wrote:If Australia had not used sustained high levels of immigration as its main economic economic policy tool, houses would be cheap, rental properties easy to find and with low rents. It would be like the 70s.
Houses would be for living in, not as investments.
But, we would have had multiple recessions or perhaos almost a permanent recession except when commodity prices were high.
Japan shows this scenario well.
Immigration is the easy option economic "get out of jail card" every government gets shown once they get in office (they mostly know already).
Treasury bureaucrat to fresh new government " you can try all your clever sounding economic and industry policies and some may work a bit. They will be a hard slog and many will fail. Or you can boost immigration on the quiet and do a first home buyer grant to further stimulate the housing market and sit back and relax. Add by the way, i suggest you buy some investment properties first up"
Mmmmm... "tough decision" thinks pollie.
Good post.
To take the medicine of a recession seems infinitely preferable looking at the shitstorm that has accumulated with kicking the can. It wasn't all bad, music was good, fun times were had, and you learned to be frugal and to rely upon yourself. We're now on the highest diving board, however, so the fall will be chaotic from here. Shall we climb higher?
mowgli wrote:Exactly. All the psychological research concerning wellbeing/mental health says...it does not.
Nor does being really poor, living on the street, being economically insecure.
As usual, the best answer lies in the middle.
Re. interest rates, Lyn Alden's latest post provides some additional context for those claim that all this inflation came from years and years of low rates. In a nutshell, she's saying not really. The low rates mainly just inflated asset prices. Things went awry when money was put directly into hands of the person on the street at the same time as supply constraints (not because of, though) and then the Ukraine war (energy crisis) threw fuel on what was looking like a genuine transitory little bonfire into a big conflagration.
Everyone keeps throwing "fuel prices" into the inflation mix, but seriously look at the crude oil charts, we're currently not that far off the Oct 2018 prices, in fact we're all but 12% off these, so on average, that would place CPI on fuel at under 3% price rise per year. Hardly exorbitant or rampant inflation on current fuel prices. begs the question why the fck we're currently paying over $2 a litre at the bowser then doesn't it!!! Someone's making record profits!!!
Oh and fuel prices in Australia in Oct 2018 were under $1.70 a litre at their max cycle, under $1.45 on their low cycle.
velocityjohnno wrote:frog wrote:If Australia had not used sustained high levels of immigration as its main economic economic policy tool, houses would be cheap, rental properties easy to find and with low rents. It would be like the 70s.
Houses would be for living in, not as investments.
But, we would have had multiple recessions or perhaos almost a permanent recession except when commodity prices were high.
Japan shows this scenario well.
Immigration is the easy option economic "get out of jail card" every government gets shown once they get in office (they mostly know already).
Treasury bureaucrat to fresh new government " you can try all your clever sounding economic and industry policies and some may work a bit. They will be a hard slog and many will fail. Or you can boost immigration on the quiet and do a first home buyer grant to further stimulate the housing market and sit back and relax. Add by the way, i suggest you buy some investment properties first up"
Mmmmm... "tough decision" thinks pollie.
Good post.
To take the medicine of a recession seems infinitely preferable looking at the shitstorm that has accumulated with kicking the can. It wasn't all bad, music was good, fun times were had, and you learned to be frugal and to rely upon yourself. We're now on the highest diving board, however, so the fall will be chaotic from here. Shall we climb higher?
I'm not buying that. Especially the part where we are on the highest diving board. Plenty of places that are way worse than us.
bonza wrote:People may have factored it in but i reckon many would not have thought that far (2024) as the FOMO was of epic proportion...
FOMO is a scary powerful thing, I've seen younger mates in genuine anxiety when they see on social that another coast is pumping that day and they can't be there.
At the same time, we'd seen interest rates in Canada at 0.1% for bank savings in 2011 (and laughed) and were quite disturbed this was happening here. We knew it would revert to mean when the negative rates seemed to fail in Euroland, the question was when.
So you don't mind the increasing imbalances flollo? It's not where is worse than us, it's whether we are out of balance, artificially propped up and causing harm.
From what I read above you prefer recession over this. I don’t. Recessions are not fun and neither is a depressed property market. The last thing I want is seeing abandoned buildings around our cities, a sight so common in many other countries.
There’s obviously need for balance as things can go too far either way. Timing is critical. For example, there’s time to increase the taxes and there’s time to lower them. We need agile decision makers who are not driven by ideology but by determination to make right choices based on the context that’s surrounding them at any given time. So yeah, now is the time to balance things back to some sort of ‘normality’. I’m not sure what will happen though, I guess we’re learning every day.
I prefer JOMO.
Joy Of Missing Out.
donweather wrote:mowgli wrote:Exactly. All the psychological research concerning wellbeing/mental health says...it does not.
Nor does being really poor, living on the street, being economically insecure.
As usual, the best answer lies in the middle.
Re. interest rates, Lyn Alden's latest post provides some additional context for those claim that all this inflation came from years and years of low rates. In a nutshell, she's saying not really. The low rates mainly just inflated asset prices. Things went awry when money was put directly into hands of the person on the street at the same time as supply constraints (not because of, though) and then the Ukraine war (energy crisis) threw fuel on what was looking like a genuine transitory little bonfire into a big conflagration.
Everyone keeps throwing "fuel prices" into the inflation mix, but seriously look at the crude oil charts, we're currently not that far off the Oct 2018 prices, in fact we're all but 12% off these, so on average, that would place CPI on fuel at under 3% price rise per year. Hardly exorbitant or rampant inflation on current fuel prices. begs the question why the fck we're currently paying over $2 a litre at the bowser then doesn't it!!! Someone's making record profits!!!
Oh and fuel prices in Australia in Oct 2018 were under $1.70 a litre at their max cycle, under $1.45 on their low cycle.
Well that's because they're factored into inflation as a good/service. Though my point wasn't where oil prices are now, but rather where they were 6-12 months and that it was that which lit the inflation conflagration (a lot of flack is being levelled at Biden's/Dem's infra omnibus but I'm yet to see anyone clearly state how much of that has actually flowed down to ground level or whether it's used as red herring). Where they are now suggests, and is backed up by lead indicator figures across a number of metrics including oil, suggests to inflation falling. The issue appears to be that prices paid at the register haven't yet and those are also factored into the RBA's calcs. And unfortunately, as the ABC finally pointed out (for only the second time I've seen) this week that it's big business that hasn't passed on the cost input decreases into RRPs. That plus the "interest rate cliff" make me wonder why the RBA is still so aggressive in it's rhetoric. If gsco is right and Lowe et al. truly are big brained, objective-minded boffins with big fancy models just following the law (i.e., their legislated remit), then one can only conclude that the aggressive rhetoric is just that; rhetoric, designed to trigger behaviours akin to more rate rises without actually raising rates.
What's interesting about this and is lost in all the convo re. the RBA (offensive, defensive, etc.) is that compared to decades gone by, the general public, with perhaps some payments for subscriptions, can access quite a lot of the same data the RBA does and thus develop their own, at least somewhat, reasonably-informed conclusion. Keeping in mind the RBA deals in macro-economics... known as "the terrible science" i think? Or as Nassim Taleb calls it "macro bullshit".
very good.
agree on that Mowgli, all eyes on services and if inflation becomes sticky there
I'm genuinely interested in the "which generation had it better conversation (no emotion). I think every generation can probably find points to express they are/were hard done by and have been ripped off but in the end I think time is what matters.
The silent generation went through 2 world wars, 2 pandemics, cold war, cuban missile crisis, vietnam, korea, Iraq, Iraq again, Black Friday, 70s oil crises and stagflation and the resulting interest rates of the early 80's. The 90's recession we had to have, Twin Towers, GFC, Housing bust associated with GFC...but they also went through the roaring 20s, the population and economic boom post WWII, Glass Steagal and fractional banking - the credit boom, the 80's Greed is Good boom, the dot com boom, the post GFC interest rate repression boom, the post covid even bigger interest rate repression (TINA) boom and here we are......
The thing is, this is only 100 years of time. In my generation and your generation - we will benefit too, you have to believe that; no one really wants anyone to fail financially although it may feel like that sometimes.
If you are in your 30s then you missed the dot com boom - I did too and I was financially capable of taking part but my home loan was so fucking huge (700k) and my interest rate was 7% so I didnt. But then the boom came and between 2003 and 2007 there was this golden opportunity - you could have made out there like a bandit no ? Then came the GFC - if you sold (many did and ended up living in Caravan parks some) you lost, if you didnt and ignored the noise......along came the next boom, the mother of all booms - interrupted by our response to Covid but that was no reason to sell.
So anyone over the age of 18 has been in several booms and benefitted from low interest rates, I cant see why people are complainining - your choices are your choices, the opportunities have been there; just hang in there.
The opportunity of a lifetime comes at least once a year.
You can't see why people are complaining? i thought mowgli laid it out:
inequality. its worsening.
low interest rates mean bugger all if you can't front up the entry ticket.
Gold Coast Home mortgages are loaned at 20-30 years (Recent talk of upping that from 25-40 yrs)
Gold Coast Weekly Rent typically aligns to paying weekly rent for shortest loan terms of 20 years.
Represents fairest rent payment window for both renter & Landlord.
Simply what the Bank needs in shortest contracted time...
No one ever told tbb this...just a life hack that Goldie Hodads can work out.
Example...$200wk Rent for $200,000 Home/loan > $500wk Rent for $500,000 home/loan.
tbb is happy to share Home truths if it helps the crew...but also coz of recent wild price variations!
Living smack bang centre of fastest growing city centring Oz East Coast.
Pink FJ bottlenecks the whole of Oz here each M1 peak morning & arvo commute.
World comes to a standstill at Reedy Creek for half an hour twice a day...(3 Schools / Station)
2007 tbb purchased the lowest price range SEQ townhouse $235,000
Not for price but for 1km walk to intercity Train Station...prefer to catch train to Bne.
Surrounded by 3 Churches & Christian schools but sent Kids to 5km afar state schools.
tbb had renters until their lease expired & Rent was set at $240 wk (See above / below formula)
The neighbours rented their Townhouse on 6 monthly leases...(More new neighbours over time!)
Meaning each renting neighbour could not afford next increase each rise in affordable neighbourhood!
The rent always rationed the current price on 20 year loan repayment but was harder to meet each rise.
Each neighbour spent less time from 3yrs > 2yrs > 1yr > 6mths > 6mths > 6 mths > 3mths...
Eventually the owner moved in then sold to another current owner...all tbb's friendly neighbours!
2007 = 13/15 were rentals > 2023 = 1/15 is a rental in a once low cost affordable rental Complex.
Similar pattern throughout other stages.
Owners wall up, shutter up & spend up on security & seldom associate with neighbours...
tbb knew most now only on a need to know or a few at the pool!
Once visited several homes often thru the week now very few dare risk saying hello!
Still wave at most, just to pretend to be neighbourly...that's still allowed!
Here's the price scale for a taste Utopia.
Year > Rent wk > Sale Price
2007 $240 wk = $235,000
2010 $300 wk = $300,000
2014 $400 wk = $400,000
2017 $500 wk = $500,000
2021 $600 wk = $600,000
2022 $630 wk = $630,000 [SOLD] By nearby neighbour this Month
Recap : These were once amongst the cheapest 3b Town Houses in SEQ
tbb could now sell his 30y/o Townhouse & buy 2x new 3b Brisbane Townhouses
That's not the half of it! (All Pay $5,000 yr / Body Corp)
Our complex has 3b Town Houses > 4b Duplexes > Road side Houses > Tri level Terrace Houses
$630 Town Houses > $850,000 Tri Level Houses (Most are sold refurbished)
tbb's is lower end (Not refurbished) Preferring to get ahead on Mortgage!
Xmas 2020 Tri Level House [SOLD] for a record $600,000 (All were amazed!)
Xmas 2022 Tri Level House [SOLD] for a record $850,000 (The very same house > No extra cushions)
Again...that's nothin...check this...(All of these price ramps are in tbb's complex!)
Just this week tbb lost some good Kiwi neighbours that rented a Duplex.
Their rent just ramped from $480 wk > $840 wk...(Reflecting above Max $840 Complex Home Price)
Kiwis left & immediately applied for a home loan & now live in Coomera, New Zealand.
NZ is a suburb on the Northern Gold Coast...just in case yer wondering.
So what can we learn here...
We can value above Duplex rent $750 wk = $750,000 ($840wk = $850,000 Tri Level Terrace Houses)
So why the blatant $100 Peak Value add for the Duplex Rent?
tbb must answer that with long term local knowledge
Qld renters (tbb) copped similar near double ramped Rental increases at certain times in history.
Bne Com Games > Bne Expo > GC Com Games > Brisbane Olympics (Biggest & right Now)
However! Recall tbb said he could sell his unit & buy 2 elsewhere in SEQ (So not yet really that!)
Here's another curved ball that is smashing thru Religious Neighbourhoods & few will pick this...
Goes against everything each Govt has taught us...Public schools are actually losing students..
Aging parents generally have less healthy offspring so altogether isolate leading to bullying.
Now a ten year gap for today's parents than previous generation.
Older parents are wealthier and can afford to cotton wool their offspring in expensive private schools.
Private schools can isolate offender & Wealthy parent can withhold fees until Bully is disposed of!
Wealthy older parents will buy within a skip to school to bypass Bus Stop Bullies.
tbb can vouch their is an increase of Parents walking their child to school...just in case!
Local Real estate agents confirm that Walking distance to Private schools is the #1 drawcard.
tbb lives within walking distance of 3 > Grade 1-12 Private Colleges...perfect for aged wealthy parents.
A sea of Wealthy aging Parents will pay anything to escort their precious Cotton wool kid to school.
Also perfect for mass influx of teachers & cleaners of these schools...meet our new neighbours.
Add 10-20m onto traffic freeze as Reedy Creek private schools are growing faster than the kids!
Ya see that crew...not even on the radar but tbb lives in such a weird Cotton Wool world.
Even the town talk is of Bully Headmaster vs Bully parents...all of that is our community.
Custom Parental delay is the #1 real estate rising above previous healthier younger faster wage rate!
Wealthier aging parents are bankrolling school communities to comfort increasingly fragile offspring.
There is no limit to what they'll fork out...likely about 10x what newlyweds can afford their offspring!
We are living thru the greatest medically assisted price disparity ever in Oz history.
This 10 year generational shift in Parenthood is falsely ramping real estate in posh school communities.
tbb has no doubt that this same demographic is bossing behaviour & access policy for sports & Arts etc.
These same Senior Parents also have financial clout on school boards + the time to run & rule them.
Think of it as the next Power Shift demographic hovering beneath Boomer chairmen privilege!
Just saying we'll be paying for that just as before!
Wow TBB, super interesting.
House prices - going to go up , down or sideways ?
Opinions and anecdotal stories if you could.
Cheers