REIA not alone in running out of ideas

Domain.com.au’s recent blog entry highlighted a trend amongst an industry and governments that have run out of ideas on how to make housing more affordable. REIA thinking goes that allowing first home buyers to dip into their super savings to purchase their first home will allow them to purchase their first home and relive some stress.

This does nothing to address affordability, all it does is allow people to purchase a home, which I suppose is REIA major reason for existence, more homes sold equals more happy agents, which is fair enough.

In my opinion the problem is much deeper than this and for every good reason the REIA can put up with this scheme, there are an equal amount of reasons why this doesn’t work or is detrimental to housing affordability. My advice to REIA is to just be honest and say we want more young people owning homes and we know it will may make homes cheaper.

There are many reasons why homes are unaffordable to the majority of young middle Australia, supply & demand, urban drift and personal debts are just a number of many.

The biggest issue to me is personal debt and as I have said in the past, an over-priced property market (sighs ensue) that does nothing to help agents. The higher the prices, the less buyers, mainly because of holding debts amongst the young and wages which have a long way to go to compete with these price rises.

So why the debt? Well today it is easy to get into debt, buy this car on credit, but this TV on credit, get an awesome mobile phone for 99 cents (on a plan) and the biggest one of all, education debt.

Since 1989 the Hawke-Keating Government introduced HECS and since then public education costs have sky-rocketed, but it is all ok, you can pay this back later. This scheme was met with student protests across Australia and the idea that the government could not afford public education anymore and the fact that both sides of government supported the idea made this an easy passage through parliament.

But think about this, what we now do is educate our kids early on that some debt is a good thing, these young adults then enter a workforce where renumeration have not even closely kept pace with inflation and property prices over the same period. The effect of this is threefold, fresh workforce members have little to no liquid income, have high debt and monthly costs and therefore cannot save nearly enough to afford a deposit on a home that 30 years ago got you a whole house and educational costs (because you pay it back later) just keep rising well above inflation.

Over the past decade I have seen every single dumb idea pass through the lips of many so called experts but literally no-one looks at the real problems, everything is a stop gap measure. “We need more land”, “we need more incentives”, “we need more high rise development”, “we need less taxes”, etc. Every one of these measures have made little to no real difference to the problems we face and unless we can finally have some guts and take a little medicine, nothing will change and it will only get worse for real estate agents. Institues have got to be honest instead of continuing to roll out the same old cliches and begin discussion with industry groups and governments to make real changes – some that will need some intestinal fortitude and will fly against conventional wisdom.

At some stage governments are also going to need to make big changes and negative gearing is just one issue amongst many that needs to be discussed openly and without scare tactics, free university education for your first degree must also come back onto the agenda and a massive investment in self sustainable kit homes that are pre-approved for addition to land in suburban outskirt areas and some investment in high speed rail also needs to be discussed, particularly in Melbourne and Sydney.

Personally, we will continue to just get the same old short term fixes, industry groups self promoting measures that will only aid in the short term and banks that will soon offer inter generational loans.

We deserve better, here endeth the rant!

Real Estate Institutes, reia

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About Peter J Ricci

Peter Ricci is the Director of Agentpoint.com.au, Business2.com.au, Ginga.com.au and ZooProperty.com and has been involved in designing and developing real estate systems and websites since 1997. In July 2001 Peter founded Business2.com.au to help real estate agents better understand the power of the Internet and the real estate landscape in Australia and New Zealand. Since then he has penned over 300 articles on a variety of subjects in the real estate technology industry. Business2.com.au is now the leading real estate technology site in Australasia.

57 Responses to REIA not alone in running out of ideas

  1. Bill December 30, 2011 at 10:42 am #

    Only one way governments can bring down the cost of housing, make sure vacant land exceeds demand. Putting more money in buyers pockets via grants and concessions will not make buying more affordable but it will drive up prices. It all starts with land. Whitlam proved that in the 70’s when they opened up Western Sydney and also boosted the ACT population. Buyers could walk into the lands office and buy land off the shelf at affordable prices. Supply ‘must’ exceed demand. Everything else will lead generally to heartbreak for the buyer.

  2. Dan December 30, 2011 at 10:50 am #

    Plenty of ways.
    Developer costs.
    Services connected.
    Gov dept bloat.

  3. Peter Ricci December 30, 2011 at 10:52 am #

    Hi Bill

    Thanks for the comment. This is about young people, and I think most young people do not want to live in outlying areas, they want inner city living, so land whilst a good idea, coupled with self sustained, pre council approved, ever decreasing pricing kit homes and high speed infrastructure would work.

  4. Brett December 30, 2011 at 10:59 am #

    There is enough inner city land to be developed in all capital cities. Most young educated people with inner city jobs, don’t want to live 1-2 hours from the city in a 3 bedroom dog box. If they move to any other international city for career, they will be renting and buying apartments/lofts/terraces. The other issue is the cost of developing is horrendous. I know you choose to not want to discuss tax as being the issue but – lands title fees, open space fee, local council development fees, cost of planning approvals, permits, fines, insurance, compliance and any other BS local,state and federal governments can extort. It is out of control. When 40% of any development goes to the government, its no wonder cost of housing is high.

  5. Brett December 30, 2011 at 11:02 am #

    I think its these points Bill that need to be addresses, however try getting a Kit Home approved by local council. They just don’t understand the concept. Kit Homes can be more affordable, have less waste, less damage to the site and generally cheaper to live in.

  6. Peter Ricci December 30, 2011 at 11:17 am #

    Hi Brett, yes tax is always an issue and I for a long time have been advocating governments at all levels getting out of the property game, taxes are usually % based, which means governments like price rises.

    There should be zero taxes on all forms of property purchases for peoples principal residence. I can also tell you that one of the reasons the USA is in a whole is that nearly every state in the US taxes people on their primary residence at around 2% per annum.

    You will no doubt guess that these were all introduced as temporary taxes and very minimal, now a 300,000 home gets slugged tax rent of around 6k per annum.

    My advice is that if governments in Australia ever tried to introduce, even the slightest fee per annum citizens should protest french style 🙂

  7. Bill December 30, 2011 at 12:23 pm #

    Here’s my point, I’ll assume I am a first homebuyer, with my deposit and loan I can purchase a home priced at $300,000 with all costs and duties included.

    Stamp duty amounts to $15,000

    If the government removes stamp duty then the same home should be priced at $285,000.

    Will I pay $285,000, well I suggest no because I can afford $300,000 and maybe 4 buyers are after the same property and all can afford to pay $300,000. Elimination of stamp duty would be irrelevant.

    Now if there were four properties and and one buyer, well that’s a better market for the buyer and watch the prices start to fall and become more affordable.

    It all starts with the supply of land, whether it be single dwellings, multi units etc. Peter I take your point about younger people wanting inner city living but a good debate could be based around what are the reasons that are driving that desire. I would suggest if affordable broad acre land was available in abundance the desire to live inner city would diminish.

    Obviously the issue arises of transport and infrastructure needs as cities spread. But why not take the jobs to the people rather than take the people to the jobs. Decentralisation was a buzz word in the sixties & seventies, now with internet I think a smart government should be putting it back on the table.

  8. Glenn Rogers December 30, 2011 at 12:56 pm #

    Rudd changed the FIRB laws to, in effect, remove restrictions on foreigners buying housing here, mainly Chinese, that led to an explosion in prices over the last 2 years or so.
    Many young hopefuls were wiped out at Auctions by foreigners who didn’t care about the price they just kept waving their arms in the air, they couldn’t believe how lucky they were.
    I thought that had died out but saw it happen again at an Auction recently.

  9. vic Del Vecchio December 30, 2011 at 1:12 pm #

    Peter,

    Great subject and one which has bent my mind for several decades.

    Certainly the spin and hype by the realestate industry adds absolutely nothing to the debate. I say this because the realities of the global economy and where it is going to, is never addressed in discussions of affordability. If the assumption of our economic future is rated in terms of the next interest movement, or the economic growth or the debt to GDP or any other financial/fiscal gobbledegook then we get nowhere. The issue then becomes one solely of the capitalist mantra of supply and demand, which is what Bill is on about.

    However, if you move the debate over to where the objectives of current world protests, Arab Springs, European, US Occupy movements etc it is clear that they will have an impact
    1. a reduction to consumption and
    2. wealth redistribution.

    I am definitely not anti capitalism, but I do fear that the from the middle class downwards we have been conned into consuming way beyond our means for the benefit of those that control the money flow. And now we all, Governments, Financiers and consumers have lost control.

  10. Marianne Robinson December 30, 2011 at 1:35 pm #

    It takes a change of mindset I think. The youngsters need to get over this belief that they cannot afford a home. This comes from my son who is one of the ‘youngsters’. He settled for a 3 * 1 up North at the end of the Mitchell @+-300K. They’ll be trains there soon.

    He’s single, under 25 and earns less than 60K a year currently as he’s still in a graduate program.

    The house is quite new and is far from being a dump. It’s not bad by any means. It’s on good size block with room to extend if need be.

    Now, if a young couple can raise just 40K each, I cant see how they can’t get into the market. Expectations are too high I suspect.

    http://www.facebook.com/MRobinson.RE

  11. Glenn Rogers December 30, 2011 at 2:01 pm #

    I agree there Vic, Rudd was telling everyone to “get into the market” get into what market ? the overinflated world of mid 6 figure mortgages ?
    There are plenty out there with mortgages that will crush them in seconds if the market shifts and/or if one partner loses their job.
    At the time I felt it was shameless hype.

  12. Bill December 30, 2011 at 2:30 pm #

    I sense a revolution stirring, I’ll put us up a Facebook page shall we call it the “Peoples Front Of Judea” or shall we call it the “Judean Peoples Front” I’m joking:)

  13. vic Del Vecchio December 30, 2011 at 2:52 pm #

    Bill, The revolution as you call it, is started by others- we are mere observers. At some point though we will have to take sides in it.

    Glenn, I agree with you on the FIRB issue. It allowed me to sell a property that I had on the market for 18 months at a price $300k above what the locals would pay… to a Yank- but the major issue goes back further.

    Prior to 1990 there were no Mortgage brokers in this country- then someone discovered that finance industries did not have fund their homes loans from their own depositors funds. Securitization and leveraging were born and the banks couldn’t get home lending out of their doors quickly enough. Brokers, mobile lenders, aggregators even the bank cleaners were writing loans to anyone and everyone that said- “I want to get into the home market”. The MacQuarie Bank and other like millionaire factories just sat back and added up the spoils.

    To open up more land or to fiddle with tax issue or monetary or fiscal manipulating won’t do anything to make it more affordable for the new age home user. Our collective social consciences need awakening first.

  14. Glenn Rogers December 30, 2011 at 3:06 pm #

    There is no easy way out of this, the only outcome will be an almighty crash, housing will become more affordable because those struggling now will have been wiped out.

  15. Bill December 30, 2011 at 3:40 pm #

    It’s a possible outcome but by no means the only one. If a crash does eventuate then the situation will be that supply of homes will outstrip those that can afford to buy and prices will tumble until they become affordable. There goes that supply and demand factor again.

  16. vic Del Vecchio December 30, 2011 at 3:50 pm #

    Bill,

    It happened that way in the States. But the buyers have not come back and houses are empty and rotting. Same in Northern Ireland. Saw somewhere that the median price in the States is now around $220,000.
    Still believe the root cause today is much more than supply and demand- and until the social and wealth distribution issues are addressed things will not sustainably improve JMHO

  17. Jeroen van de Peppel December 30, 2011 at 3:53 pm #

    Thanks for your rant Peter, I love the honest and genuine comments from readers so far.

    I clearly remember the day my parents got the keys to the new 4×2 they built here in WA. No carpets, no curtains, no painted walls, no gardens or lawn, a drive way only over the council cross over. Slowly but surely, hard work was put in to fitting out the house. It took years for everything to be completed. Reason being…..my Dad’s pay packet was a yellow envelope with cash. My parents could count the money they had, lived within their means and saved for the required projects.

    Fast forward 30 years. Cash is just small change for small transactions. How can a first home buyer get into a house when they are already paying of a car, some electronic goods and a credit card that is more often maxed out. How can anyone value money when every dollar earned is used to pay of debt. Now I am a (young) parent. I see it as mine and my wife’s responsibility to educate our kids about the value of money. They each have their chores and present us at the end of the week with their “invoices” 🙂 which we happily pay. They (3,7 & 9yo) count their cash and buy what they can afford. It’s small change but the foundations are their for them to manage their finances.

    Governments no longer talk about how much money is in the treasury, they talk about the debt they have accumulated and how they can bring this back to surplus. We try to lead by example, maybe governments should do the same.

    And that ends my rant 🙂

  18. vic Del Vecchio December 30, 2011 at 3:53 pm #

    Oh, and by the way, cost of living will only skyrocket through the increase ain world population and the lack of adequate food supplies. Sorry to be so pessimistic on this subject, but for too long we have been in denial of the worlds real issues. Affordability, not only in housing, but all consumer and essential goods and services is the BIG issue of the next decade.

  19. Bill December 30, 2011 at 3:58 pm #

    Vic,

    Same here it’s all opinion, I have no doubt if we could work it out we would be positioning ourselves to advantage. BTW do you have contact info of the Yank who paid you $300k over the odds. I have one on the market he may be interested in.

  20. Bill December 30, 2011 at 4:11 pm #

    I don’t think there’s a cause for pessimism, if as economist predict our economy continues to grow at around 3 – 4% per annum our population will double in 25 – 30 years. That means there will be demand for as many new dwellings to be supplied in that period than there was supplied in the previous 300 years. To me that sounds like a tremendous opportunity for those that cater for the growth. There will be big bumps and crashes along the way but non the less demand will be huge. Real Estate agents who survive and adjust to the information age will make a killing. People who manage their finances will be fine, those that realise job security is fading into history and adjust will be fine. Those that watch it all happen will find it tough going.

  21. Bill December 30, 2011 at 4:18 pm #

    The “Iron Lady” tried a version of that, it was called a “Poll Tax” I think she lasted about six months before her own party Rudded her.

  22. vic Del Vecchio December 30, 2011 at 4:29 pm #

    Bill,

    He’s bought a whole heap of vineyards and olive groves on the East Coast of Tassie that were on or near the water. Ours was by far the most expensive. He may have some mates to buy but I think he’s reached his maximum for time being.

    Suggest you advertise it on some of the sites in the US.

  23. Glenn Rogers December 30, 2011 at 4:57 pm #

    This sort of BS from the ABC web site just panics homebuyers to jump in.
    Funny how our prices are going up and everywhere else they’re not, I know that generally in Mewlbourne they have gone down markedly do who’s behind this “research” ? oh yeah RP Data….

    Interest rate cut boosts house prices
    Updated December 30, 2011 16:41:49

    House prices rose in Melbourne, Perth, and Canberra but were steady in Sydney in November. (Paul Miller: AAP) Map: Australia
    Australian house prices rose for the first time in 11 months following the Reserve Bank’s November interest rate cut, a key index shows.

    The monthly RP Data-Rismark home value index shows that in seasonally adjusted terms capital city house values rose by 0.1 per cent in November and the regions saw a gain of 0.3 per cent.

  24. Peter Ricci December 30, 2011 at 5:01 pm #

    Hi Vic

    There is always a danger for economies when wealth long term is not distributed well enough, historically when the top few % control all the wealth and when the majority of the middle class find themselves into the lower class you have what they sometimes call revolutions. We are a way off that in Australia but in the USA it is getting worse with each passing year and governments do not seem to be able to stop it – call it crony capitalism if you please.

    The problem is when revolutions happen, they usually end up going too far the other way and socialism ensues and we definitely do not want that . Although the far right wing in the USA pretty much calls Australia a socialist country anyway 🙂

  25. Peter Ricci December 30, 2011 at 5:04 pm #

    I tend not to take any notice of these stats. The real stat is real income rises in the middle class and it has pretty much been stagnant for 20 years (in real terms), when you consider this against cost of living and the last 4 governments have failed miserably.

  26. vic Del Vecchio December 30, 2011 at 5:55 pm #

    Bill,

    That is exactly the spin that I am talking about. The ecomomists are not relevant in their predictions if they have not factored in the social upheaval that I mentioned abovet. Economists are running scared at the moment. They know that their modelling does not take into account a depression and the affordability factor that that brings with it. They don’t know how to factor this in. They don’t know how to establish a predictive model beyond Keynsian or monetarist models.

    The economists you’re talking about are using the old model based on the fiscal and monetary policies that have gotten us into the shit we are in now.

    Our economy, or for that matter any Western world economy growing at 3-4% pa – that I’d like to see.

    Pessimists are informed optomists.

    The unsustainable prices combined with the reduced income streams will see lots of properties come on the market by necessity because peole cannot afford to continue to manage their debt. This will see the property rental market become stronger and this is where the opportunities lie.

  27. vic Del Vecchio December 30, 2011 at 6:28 pm #

    Peter, I agree on the current difference between US and ourselves. But switch off the China tap and we will move quickly to the US dilemna.

    Our great opportunity in this country is to become a model for alternative energy usage and to export the technology to the world. The sooner we start , whilst we have Chinese river of gold, the safer/more confident I will feel for our future.

  28. vic Del Vecchio December 30, 2011 at 6:33 pm #

    In the 1970’s unemployment rate was Zilch and the baby boomers were getting married and buying houses.

  29. Peter Ricci December 30, 2011 at 11:53 pm #

    I remember watching Q & A and they had an episode on property they had so many so called experts expressing their views one I think bought up negative gearing, the rest just talked about things that would incidentally aid their markets. The only way anything serious can happen is when the governments all get out of their interest in property price rises.

    1. Fees, Duties etc, are ALL taxes and they all must go. Governments of all levels must have no interest either way in property prices and then they can clear their minds.

    2. Property ownership must become something everyone can do on a median income and we must create an environment where they have a frame of mind where they want to secure their future.

    3. Governments then do not need to create incentives, they let the market dictate and stay out of the property market. The only incentives is to invest in infrastructure be it high speed travel, land development.

    4. Governments must give incentives to companies to move their personnel when not needed to be in major cities, to more rural suburban areas.

    5. Working with state governments and councils governments must create a national database of pre approved self sustained kit style homes – I know these have a budget style inference, but kit homes today are pretty incredible. This will allow home owners to quickly be able to choose available land and move in – in just a few weeks. This is not a drain on resources as developing the land becomes a lot less expensive.

    Then we can have a true discussion on how to fix these problems. Whilst all levels of government have an interest in property price rises (and in some cases a dependence) they can honestly approach problems.

  30. John f Sercombe December 31, 2011 at 9:19 am #

    You’re part way there Bill…

    Making sure that land supply is steady is a sound & basic observation, but should be encouraged by getting the monkey off the developers backs, The Greens have spent the last 30 years gradually placing their people throughout State Departments & Local Government authorities. This has led to increase after increase in the cost to produce a block of land until it has reached breaking point – ie, no longer viable to go through all the rubbish & expense to buy the englobo parcel & develop! Get rid of the socialistic bullshit & get back to creating good basic land for people to buy at a reasonable price!

  31. Bill December 31, 2011 at 10:24 am #

    I agree with all you put forward, especially point 4.

    “Then we can have a true discussion on how to fix these problems. Whilst all levels of government have an interest in property price rises (and in some cases a dependence) they can honestly approach problems.”

    This is the reason land supply will never exceed or meet demand, governments of “all” persuasions rely on taxing property sales in one form or another. Until it changes nothing will change.

  32. Bill December 31, 2011 at 10:38 am #

    SInce 1900 Australia’s population has doubled around every 30 years, It’s trending to do the same in the next 30 years.

    http://www.populstat.info/Oceania/australc.htm

    http://www.google.com.au/publicdata/explore?ds=d5bncppjof8f9_&met_y=sp_pop_grow&idim=country:AUS&dl=en&hl=en&q=population+growth+australia

    You are spot on about rentals being the opportunity and the majority of those rentals will be for the masses who will be renting “dog boxes” whether they be in the cities or rural centres.

    It will be most interesting to see how governments milk the rentals with taxes they haven’t even thought of yet.

  33. Glenn Rogers December 31, 2011 at 10:53 am #

    This is a no brainer but negative gearing on residential property must go.

    Home buyers have to compete with investors, it’s wrong..

    Govt’s are too scared to touch it, they are all driven by the money , no one has the guts to get in there and do what is right.

    Negative gearing on commercial industrial OK, that’s business, but young couples trying to buy a home ?
    That’s personal.

  34. Bill December 31, 2011 at 10:59 am #

    I believe the US is no longer a democracy but a plutocracy, it is governed by the wealthy for the wealthy. When corporations bankroll political candidates democracy dies. Easy fix, ban corporate donations and let candidates stand on policy not the propoganda their corporate masters espouse. If that is interpreted as socialism so be it, but I call it democracy driven by balance.

  35. Bill December 31, 2011 at 11:12 am #

    Mariane your son is an inspiration and you must be proud of him.

  36. vic Del Vecchio December 31, 2011 at 11:34 am #

    Well said Glenn !!

  37. Bill December 31, 2011 at 12:17 pm #

    Agreed and make sure there is plenty of it.

  38. George Rousos January 3, 2012 at 1:03 am #

    Going by this article, NSW alone made $3.9 billion from real estate stamp duties in the year 2011 to June, around one third of the national total. I agree with you Peter, abolishing stamp duty is critical to improving housing affordability in Australia. I concur with the comments made in this article, that any lost revenue could be paid for by increasing the goods and services tax by a quarter, from its current rate of 10 per cent to 12.5 per cent or implementing a broad-based land lax on the owner-occupied home.

    The Henry tax review reported that “ideally there is no place for stamp duty in a modern tax system”. It found they discourage property turnover and penalise property improvements…

    http://www.macrobusiness.com.au/2011/09/abolishing-stamp-duty/

    I think if the Ministerial Council of Consumer Affairs and the National Licensing Task Force fail to resolve the pending issues on National Licensing, like the harmonisation of real estate laws – including CPD and protecting consumers from conduct that is misleading and deceptive, then more than likely, further debate will arise about ASIC regulating the property market and the entire sector being controlled at the federal level. It has been widely publicised in the media and is common knowledge that ASIC’s chief economist Alex Erskine was quoted saying (not long after the financial crisis hit our shores) – that the next logical step for the Corporate Watchdog would be to regulate the housing market, since it played a role in the financial crisis and is seen as a trigger for a future GFC.

    I cannot see the states ever having the right level of funding and resources to regulate the property market, just like ASIC have done with the entire financial markets. These guys impose criminal penalities for misleading and deceptive conduct, where the state agencies for real estate at worst will disqualify someone from holding a licence. I’m also aware ASIC have issues with financial planners, mortgage brokers and fund managers edging their way into real estate services, and not meeting the legal requirements administered and set by the states. ASIC are powerless to do anything here, given they do not have any jurisdiction or control over the property market.

    I think the state fragmented model has had its day and there shoud be a wide spread push now to abolishing all state property taxes.

  39. Glenn Rogers January 3, 2012 at 9:28 am #

    Abolishing Land Tax altogether will just increase property prices more.
    Fine for developers with stock, no one else would win in the end.

  40. Glenn Rogers January 3, 2012 at 9:30 am #

    I meant Stamp Duty not Land Tax, Land Tax is just robbery for the sake of it.

    (We need an edit facility Peter)

  41. George Rousos January 3, 2012 at 11:21 am #

    Hi Glenn,

    You wouldn’t abolish any of the taxes unless you had a sound regulatory framework in place that prevents price inflation, hense why I mentioned ASIC as that regulator. They would employ market conduct regulators to raise transparency while reducing dramatic distortions in pricing for homes.

    Their chief economist has said the housing market should operate on principles similar to those of the stock exchange, which would also allow for the rise of products that allow consumers to hedge house price risk, as they can in equities and currency markets.

  42. Glenn Rogers January 3, 2012 at 2:18 pm #

    Well George there’s no hope of the Govt giving up that revenue, so it’s all in theory I guess.

    I wont be too popular for this but I think the whole industry in rorted to the max.

    $20,000 commission to sell a $1M house ? It’s harder to mow the lawns in the place than it is to sell it and the gardener gets 50 bucks.

    Then the Govt steps in with all their charges, the housing market is a cash cow for everyone but the buyer and seller.

    I still have my license though……………….just in case.

  43. PaulD January 3, 2012 at 3:06 pm #

    If it’s that easy, how come 10,000 agents have left the business in the last couple of years? Ever been in a middle of the market real office ? No, I didn’t think so.

  44. Bill January 3, 2012 at 3:08 pm #

    “I think the state fragmented model has had its day and there shoud be a wide spread push now to abolishing all state property taxes.”

    I don’t think too many would disagree, unfortunately I don’t think I’ll see it in my lifetime, come to think of It I don’t think I’ll see it whilst in the next one either. Barring a revolution to make it happen.

    Before any government would even think about it they would need control of the upper and lower houses in federal parliament and have their parties governing the states. Then it would still be a 1000/1 against.

  45. George Rousos January 3, 2012 at 3:31 pm #

    Yes Glenn, I have heard some people thinking that the property industry is far too corrupt and is part of a cartel with the govt, media and the banks.

    They will say how do you expect an “independent” agency to take on this kind of institutionalized rip-off machine??

    Well I guess that’s a question we should all put to COAG and ask how state taxes stimulate the housing economy. As soon as I get an answer I”ll let you know.

  46. Glenn Rogers January 3, 2012 at 3:46 pm #

    In real estate for 20 years Paul, but usually had to work for the comm, I’ve seen multimillion dollar houses go in the blink of an eye after $20k of the Vendors money has been spent on ads.

    I understand the dynamics mean that those comms are required to keep an office open but probably because there’s so much competition the money is thinly spread but on the face of it it looks grossly expensive to sell something that sells itself or has done for the past 15 years or more.

    10,000 agents have probably left the business because they were chasing the easy money and couldn’t compete with the thousands out there trying to do the same.

    In other words 10,000 too many.

  47. Glenn Rogers January 3, 2012 at 4:10 pm #

    I shouldn’t have got off topic so let’s forget about agents commissions and just keep it as it was before I rudely interrupted.

  48. Dave Platter January 3, 2012 at 11:07 pm #

    Peter, Great Post!

    It sure would be nice to replace stamp duty in come with an increase in the super-profits tax on big miners. They are digging up and exporting our resources, which can only be done once. And, they creating making it hard for businesses in other parts of the economy to stay in business by driving up input prices and wages. Taxing big miners a bit more would be a good thing, even if we weren’t going to use it to make housing more affordable.

  49. Peter Ricci January 8, 2012 at 5:55 am #

    Unless kids can live with their parents until they are 30, I do not see how anyone can save 40k in 5 years on a income of 60k less taxes etc

  50. Peter Ricci January 8, 2012 at 5:56 am #

    Hi Glenn

    We will look into a 30 minute edit window

  51. Peter Ricci January 8, 2012 at 5:57 am #

    True, the political and corporate argument over this issue was ridiculous, just goes to show how people cannot think for themselves and get easily led by ideology and motives.

  52. Peter Ricci January 8, 2012 at 5:59 am #

    All government taxes on properties should be abolished for principal residences, governments having a stake in property prices going up makes no sense and makes them party to the market.

  53. vic Del Vecchio January 8, 2012 at 7:42 am #

    Dave,

    Whilst I agree with you wholeheartedly that Big miners should be taxed more; unfortunately to do so now would be like shutting the gate after the cattle have escaped. Our mining boom is dependent on the ongoing fortunes of China and China is now showing all the signs of an economy in crisis. This slowdown/downturn will excacerbate the affordability issues here in Australia.
    For those that are not aware of why we are facing the affordability issues, that are kids are facing today, a good start would be to read the following http://www.en.wikipedia.org/australian_property_bubble

    For the REIA to even suggest that an answer to affordability is to free up super funds for deposits is at best ignorance on their part and at worst criminal deception. If the bubble bursts then everyone who has gone into debt as a consequence of such a stupid strategy will suffer financially in the way many working and middle class Americans are suffering now.

  54. Guy Robinson January 9, 2012 at 8:31 pm #

    Great article Peter, I am late to post here after the holiday break. There are some interesting points in this thread but none yet commenting on the relevance of REIA or the state REI bodies. I agree that they are struggling for relevance but would go further and suggest they have lost that relevance. They are supposed to just represent the interests of member agents, which I might add now includes buyers agents and of course commercial and industrial agents.

    Why any agent representative body would want to keep house prices “high” is odd. In fact REI bodies not only want to keep prices high, but also support inflating grants. They also hold a simultaneous position of no stamp duty, no land tax, retaining negative gearing, retaining capital gains concessions and keeping the family home a tax haven. This combination is of course a ludicrous position to have all at the same time, and for that reason alone their efforts as a lobbying force are far behind them, most government departments see them as a joke. As most of these positions are the polar opposite of what would be in the best interests of buyer agent members and the philosophies of many commercial and industrial agents also brings into question whether they are in fact truly representing their members interests. Seriously, who asked these guys to bark at anyone that suggests house prices might fall and to cheer when rents go up?

    In addition to their farcical policies I could more easily argue that keeping home prices high is far more likely to lead to lower sales volumes. Sales volume is how the whole industry gets paid. Sale volumes are at 11 to 17 year lows depending on where you are, and that is a recession/depression on any measure! Home prices are the least affordable they have been (some slight RBA relief late 2011 aside) and 10,000 agents have left the industry.

    So people cannot afford houses and that means lower sale volumes and that means less money for agents. Yet REIA want house prices to be inflated again by putting more money in the system. Anyone could be forgiven for thinking these bodies are run by vendor representative residential agents powered by greed, fear and ego.

  55. las artes January 11, 2012 at 9:58 pm #

    Uncertainty clouds start of spring auction season grabbed my attention when the Westpac – Melbourne Institute quarterly house price expectation index fell to 9 in October, from a reading of 15.3 in the three months to July. This was its lowest level since May 2009, with doubts about the housing market lingering. This is a national measure so with interest, I noted that 38.7 per cent see prices rising in the next twelve months and 31.5 per cent see them unchanged. Almost one – third (29.8 per cent) predicted falls over the next year, so 70.2 per cent see prices increasing or remaining steady over the next twelve months. Quite funny that real estate is a long term hold not a short term play which was recently evidenced with the reality price failures of The Block and The Renovators on television.

  56. vic Del Vecchio January 12, 2012 at 10:53 am #

    Agree Bill- Ron Paul seems to run by the proper democracy rules but unfortunately he will never get the Republican nomination for the very reasons you espouse. The armaments business does not like his attitude to “No wars- just defence”

  57. George Rousos March 4, 2012 at 11:10 am #

    Here is a copy of a paper prepared by ASIC’s chief Economist Alex Erskine- Rethinking Securities Regulation after the Crisis: An Economics Perspective.

    This paper was circulated around a number of security regulators globally and Mr Erskine’s opinion was endorsed by ASIC officials.

    http://www.asic.gov.au/ASIC/asic.nsf/byHeadline/Rethinking%20Securities%20Regulation%20after%20the%20Crisis%3A%20An%20Economics%20Perspective?opendocument.

    We received correspondence from NSW Fair Trading Minister Anthony Roberts that ASIC as the future National Regulator of real estate agents has been noted aswell – so watch this space !

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