Morning sermon

[notpom]

Was woken up this morning by unusual dawn - golden red, just like a dawn over Sodom.

Opened up news sites - here it is! How exciting - new clown rules in the circus, accusing the old clown in not following "liberal party economic policies".

 

Not sure why plural is used in this case - because Libs have only one policy - resolve all the problems of "big business" at the expense of ordinary people.

Not sure why it is better for the economy to try harder the thing that never works. Not sure why do we have a Government that does not understand elementary economic principles.

 

Here is the (oversimplified) example. To give "big business" a million dollars, you have to take $1000 from 1000 ordinary people. In this country for the last 15 years we have had income growth under the inflation? i.e real incomes were diminishing, i.e. "ordinary people" just making ends meet.

It means that if they had these $1000 each, they would spend the money buying things. That means that "big business" would be deprived of a $1M in revenue. Which is bad for business, which is bad for the economy.

 

What this post is doing in Real Estate section? Because change of clowns is directly and immediately reflected in Real Estate market.

First, new clown is going to sabotage the economy harder. Which means interest rates will go down even quicker.

Second, for some obscure reason "political uncertainty" weighs on any market. Now it has been removed, market will get back to normal.

Third, when trees start to bloom - markets follow. There is no rational explanation - but this is a fact of life. People can buy houses all year round - but for some reason they hibernate in winter. Whoever exits hibernation sooner - wins.

 

And here is the bedtime reading for you:

 

http://www.news.com.au/finance/real-estate/comparing-home-deals-in-2014-and-2015-shows-the-devastating-effect-sydneys-housing-boom-has-had-on-house-hunters-buying-power/story-fnd91nhy-1227523011545

 

http://www.domain.com.au/news/australias-rental-markets-getting-tougher-for-tenants-20150910-gjj8ht/

 

Just in case the reality evades you.

1. If you are envious that somebody's house earned $200K a year (more than a house owner in their day job) - you perhaps forget that capital growth in the house you live in is not taxed. In other words, to get even with their house owners need to earn close to $400K pa before tax.

2. It means that both tenants and buyers have a reason to worry. On the other hand - home owners can enjoy watching their money grow.

[Tamara (Homes Down Under)]

I have noticed that unfurnished rental prices seem to be on the rise?

 

Maybe the new clown will award the submarine contract to Adelaide...

 

The legislation dealing with urban sprawl is something to watch.

 

There's a house up the road from me that has just been sold for $400,000. They are going to knock it down and build 4 homes on the block!

[notpom]

I have noticed that unfurnished rental prices seem to be on the rise?

 

Maybe the new clown will award the submarine contract to Adelaide...

 

The legislation dealing with urban sprawl is something to watch.

 

There's a house up the road from me that has just been sold for $400,000. They are going to knock it down and build 4 homes on the block!

 

Not sure about submarines Tamara. Unfortunately politicians are surrounded by a team of psychologists/psychiatrists and these people ban politicians from disclosing to public that they are reincarnations of Hitler or Napoleon. We will see, but I can tell you for sure that people with enormous ego lack the trait of "statesman thinking". Simple - "ego" is worshiping your own reflection in the mirror, "statesman thinking" - caring about the good of others.

 

Glad you have "Policy area 40" at your place. You need to double check on council's website zoning map whether you are really in it. Because it can be that one side of the street is zoned medium density and the other is ordinary residential zone.

 

That makes the massive difference. In ordinary residential the minimum land size per dwelling is 300 sq m, in medium density (depending on the house type) it can be as little as 150 sq m (row houses).

 

It is also different in prescribed setbacks. Front setback for ordinary residential is 5.5 m, in medium density - 3 m. In addition to that you can stick out verandah/balcony further 2 m, which makes permissible front setback just 1 m. In medium density back setback and side ones can be 0.

 

Which effectively means that you can fit the same size of the building on a much smaller lot. More and more people are looking for zero maintenance houses. Less and less people look forward to spending their lives on mowing grass and fighting weeds on unusable patchy setbacks.

 

Medium density especially makes sense when you have waterviews, as in this case people look to entertain on the balcony and not to be confined to claustrophobic backyard.

 

Poor people who sold their place for $400K. Well, no wonder why they are poor. They just let the buyer to bend over and pick up from the ground at least half a million. This is in case if buyer develops and sells. If they develop and rent out, they would also get future capital growth. Although I do not remember the case when taking half a million dollars sent anyone broke.