Welcome to our blog discussions,
Dear readers, in
this article we are going to discuss the housing problem in Australia, hoping
that one day our views will be considered seriously. In the past we have
already written several other articles about housing and rentals, so, we know
that there are problems in housing affordability, both to own a property, to
run a property as a landlord, or to rent a property to live in. So, if you have
read some previous articles, you may already know some of our views, about this
subject.
Anyhow, in this
article we will try to explain what we think is causing this housing shortage,
and what could be done to improve the situation. I know that this is not going
to be easy to do, because if it was easy they would have done it, but they have
not, because it seems to me that they do not know what to do, they are trying
to do many things, but up to know, it is not working, so, I better write my own
views of what could be done that could solve this housing crisis.
Now, let me explain
my views. In Australia the country is run with the capitalist system, so,
everybody is free to contribute to the economy, and when everything runs the way,
it is supposed to run, everybody is happy, since the capitalist system becomes
self-regulated from supply and demand, of whatever your business is. So, this
system should not fail and would not fail, unless something prevents it to run
freely. But today in Australia the rental market is not working properly, since
there are not enough rental accommodations available, so, we must ask
ourselves, what has caused this shortage? And then; what we need to do to
overcome this problem?
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What is causing Australia
rental shortage.
We must assume that
the capitalist system, cannot fail and will not fail, if there is enough money
to run any business, up to the point of breaking even, and the rental market is
just the same. You see, we must understand that the property owners, run a
business that can be called a service to the community, and everybody that runs
a service, is supposed to earn some money.
Because, when the
people run a business and they start losing money, then those businesses will
start closing, and if there is no correction coming up, they may even disappear.
I believe that this is where we stand now with the rental market, and it would
be helpful if some corrections are made, to make it worth while for the small
investors to continue to stay on the rental market. Because, if nothing is
done, they will slowly sell out and go, what else can they do.
So, let us see what
is the main cause that has caused this rental problem, and then suggest what
could be done. Today we know that there are not enough rental properties
available, this can mean only one thing, there is not enough money in owning
and renting these sorts of properties, because if there was enough money, the
capitalist system would not have failed to supply them. We can also say that
whatever has caused the system to fail, has been there for several years, but
people have ignored it, because it was convenient to ignore it, but today we
cannot ignore it anymore, because it is hurting many people, so, something
needs to be done. Most people believe that this rental problem can be solved,
if the government builds lots of affordable rental properties, but I do not
believe that the government can solve this problem by itself, they need the
private sector to run most of the rental properties. Because it will take a lot
of money and time to build, several hundred thousand affordable rental
accommodation, and that is all taxpayer money. So, it would be better if the
private sector continues to help in the rental market.
Who are the rental
owners leaving the market.
Now let us see who
are those rental owners, that have been renting affordable rental properties in
the past, and today they are forced to sell out, because they are sick and
tired to lose money, and at the same time be abused from the tenants and the
government authorities, as if it is their fault, when the fault is the
government fault that is taking away their earning, left right and centre,
through charging so many levies, that make it impossible to run rental
properties at a worthwhile profit.
But that is not
all, because the most unjust and even ridiculous and out of touch with realty
are: the assets test and the gain tax.
For people that
rely on the government pension, whether they are elderly people or disabled
people, they will lose 3 dollars a fortnight per thousand above the threshold,
when their property may make only one dollar per thousand per fortnight. So,
they are losing a lot of money, and they would have been better off money wise,
if they had no rental property at all. That is the reason they must sell.
Some people might
say that they still earn money, because the price of their property goes up
with the passing of time. But that is debatable. You see, if you sell one
property, that you have had for say twenty years, three times as much as when
you bought it the first time, you will lose about one quarter of that money, to
pay the gain tax. That money is lost for ever, you see, if you buy another
property, of about the same value, you must pay the difference from your own
pocket. I hope you see what I mean. So, there is no gain at all if you want to
own another property, you only lose the tax money.
My view on this
rental affordability is, that if the government wants to improve rental
availability, they must make it easier for the rental owners to keep their
properties running at an affordable cost. To do that they must charge less
levies, they must set the assets test on rental properties, at about the same
level that they can earn, and they must look at the gain tax on affordable
rental properties.
If nothing is done,
then the rental problem will not go away.
To see more clik on this link, Australia Housing Shortage Causes..
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