I don't even know how we got here. Population growth has been below average for the last 3 years(no immigration). Housing/Apartment construction didn't slow down.

I just don't understand it. Mortgages are insane. If you're buying a rental property with a mortgage, you can't afford to not rent it out.

But home costs are up, rental costs are up, and properties are vacant. Do we really have so many people able to afford to sit on empty properties rather than lower rental price? It's also insane. Most rents are north of $600 around here, and a $10-a-week difference is $520 a year in rent. So if you raise rent by $50, that's $2600 a year extra(excluding taxes). but if the apartment stays empty for 6 weeks while you wait for someone willing to pay, that's likely to cost you > $3000. So that $50 increase has a 1 year payoff, assuming a long-term tenant.

The whole market is irrational. The greed of landlords these days is palpable.

I think we need a wealth tax on people who own more than 2 properties. Start making landlording infeasible and get people to instead invest their capital in productive assets.

> I don't even know how we got here.

From my perspective 2007 just destroyed the market. So many troubled assets and loose government money and no one putting any effort into helping the average citizen. A giant wealth and land transfer occurred. The second largest in recent memory.

> I think we need a wealth tax on people who own more than 2 properties.

All you will do is create a "straw purchase" market for homes.

> Start making landlording infeasible and get people to instead invest their capital in productive assets.

Temporary housing is a useful thing, though.

> From my perspective 2007 just destroyed the market.

2007 was the end of the destruction of the market (that time when housing prices doubled for no other reason than the money that left dotcom poured into housing.)

Fact is, after people are used to paying more, there's a new baseline and a new level of profit expected. Not even by the landlord, who overpaid for the property and needs you to pay an absurdly high rent or they'll get behind. It was just a phase change in how much people were expected to pay for housing, and that money ultimately went to the people who owned that real estate back in the 90s.

I met a guy who in 2005 sold a house in Los Vegas for $750K that he bought for $175K 5 years before. We're still paying him. Multiply that by orders of magnitude for real, wealthy property owners. Then to add insult to injury, when a bunch of leveraged people lost their shirts on property derivatives, we bailed them out, paying twice.

> 2007 was the end of the destruction of the market (that time when housing > prices doubled for no other reason than the money that left dotcom poured > into housing.)

Overall home ownership increased from 64.0% to 68.4% from 1990 to 2007. During that time the population also increased from 250m to 300m. Ostensibly, around 47m new home owners were added to the list during that time. Going from 160m owners to 205m owners, or adding a new 28%.

During the same period 27m new housing units were completed, with 21m being single family homes. I would assume this imbalance would impact pricing, and there were plenty of other ventures for bummed out dotcom money to pour into right around 2004.

Total ownership continued to fall until 2016. New single family home construction rate has only recovered to about 1995 levels. The current population is now 330m. I contend this suggests it's _still_ going.

> Fact is, after people are used to paying more, there's a new baseline and > a new level of profit expected

If you take the chart of average home sale prices over the past 45 years, you see mostly linear growth. 2007 was a bubble in pricing, seeing around an 18% higher price than this trend line. The prices stabilize back to the trend from 2010 until 2013 again, since then, prices have been about 10% above trend until 2021 where they rocketed back up to 18% above the half century trend.

There's been more than one mode impacting price, and whatever it is, it's happening again. Probably worse, because we don't have any corresponding movement in new home construction with this "bubble."

> Multiply that by orders of magnitude for real, wealthy property owners.

Then divide it by all the people who didn't do that, which I'm estimating to be of at least a similar if not slightly greater order of magnitude. I know quite a few of these people. Some who bought into the irrational exuberance as an opportunity to just remodel the home they've lived in for more than a decade. They don't live there now. The smart ones managed to just barely break even.

> Then to add insult to injury, when a bunch of leveraged people lost their > shirts on property derivatives, we bailed them out, paying twice.

Bailing the American people out is how it was sold. This is not a bad idea if that's what they actually did. It would probably have a little more sticking power if they bothered to put more than a token banker or two in jail for minor indiscretions during the first pump and dump of housing turned commodity.

>> I don't even know how we got here.

I presume you mean Australia. Here is how we got here:

The government pays money to property investors/landlords via negative gearing.

The government gives tax incentives to property investors/landlords.

Australia excludes real estate from money laundering - making it a prime destination for proceeds of crime from China, Russia and many other places, driving up prices. https://www.theguardian.com/australia-news/2021/nov/09/wides...

AirBNB has turned vast numbers of houses into hotels/short stay accommodation, pushing local ordinary people out of the local housing market, especially in popular tourist towns.

Australia sells its residential real estate to any buyer from anywhere around the world - which results in millions of empty houses, and locks Australian's out of owning houses.

Australian politicians have huge property portfolios, so they have incentive for all the above mechanisms to stay in place.

The Australian government does not build any substantial number of public houses any more.

Australia has a vast flow of foreign students into our universities and the unspoken transaction is that if you buy the education then you also get a permanent resident visa, putting pressure on housing.

The current Australian government - the ALP - has a "huge Australia" policy and is importing 715,000 migrants this year and next, with 1.5 million overall for the next five years - despite what the government says, these people need somewhere to live.

Much of that resembles the UK situation. I wish MPs received more scrutiny for their property purchases, the best we've had so far is when the open corruption of their expenses came out.

Negative gearing is made out to sound much worse than it is. If anything, it's a benefit to wage earners by allowing them to pay a business expense from their pay. It's just a standard deduction afforded to investors for business expenses.

IIRC it's actually quite difficult for foreign buyers to get into the market, and expensive as well.

The housing vacancy rate is lower than ever. There definitely aren't millions of empty houses.

Largely the issue is just going to be too many people and not enough houses where they are needed. The more liberal we are with permitting apartment and unit construction, the better things will be in the long term. I'm not sure restricting migration is the solution - but you can definitely argue that the rate is too high.

On this note, I find it increasingly infuriating to keep coming across people who blame all housing shortage issues on eeeeeevil investors and landlords, and spout a lot of bullshit about massive vacancy rates that don't exist, when the blatant root supply-and-demand cause is that there's just not enough physical housing in the places that people want to live.

You see exactly the same kind of stuff endlessly parroted in the US by people who somehow think that confiscating property from all landlords will make the millions [1] of needed housing units just manifest out of thin air.

[1]: https://www.cnn.com/2023/03/08/homes/housing-shortage/index....

>> when the blatant root supply-and-demand cause is that there's just not enough physical housing in the places that people want to live.

And the ALP government is adding 1.5 million people to the demand side of the equation.

In 2020 negative gearing was costing $13BN a year.

https://www.smh.com.au/politics/federal/negative-gearing-cos...

Tax concessions for housing investors to cost $20bn a year within a decade, analysis shows.

https://www.theguardian.com/australia-news/2022/nov/03/tax-c...

The Australian government should be spending $20BN a year building public housing, not giving money to property investors.

Had there not been the tax concessions, those property investors might've not invested in the first place, and thus, there would be an even lower baseline - the gov't's $20BN that they supposedly saved would not have made up for the shortfall either.

I rather the gov't give back the tax dollars in that case. And nothing stops an investor from making a company, and using that mechanism to negatively gear - unless somehow the proposal specifically targeted real estate.

People in australia complain about high property prices often think it's negative gearing causing it - but it's not. Australia is full of rich people, and high income earners. That's why property prices are high.

>> There definitely aren't millions of empty houses.

https://www.ahuri.edu.au/analysis/brief/are-there-1-million-...

The 2021 Census reveals that 10.1 per cent (1,043,776 homes) of Australia’s 10,318,997 private dwellings were unoccupied on the night of the Census. While this may seem that a very large proportion of Australia’s housing is unlived in, the reality is dwellings are identified as unoccupied for a number of reasons such as:

    homes are being renovated
    homes being sold as vacant possession
    newly built or bought homes where no one has moved in yet
    rental homes awaiting new tenants
    people living away temporarily from home during the census count (travelling or visiting other homes)
    homes are deemed unliveable
    subject to a probate application or other legal proceedings
    holiday homes
    homes owned by people currently living overseas
    homes being land banked, that is held vacant until the local area economics (or personal circumstances) make it more profitable to sell or redevelop the property.

> properties are vacant

I'm not sure about where you are, but in Perth properties aren't vacant. AFAICT availability of rental properties is at a historic low, and so is the availability of properties for sale.

So agents can pull tricks like giving a nod that overbidding is going to be required, and you'd better make that rental profile sparkle if you want a place, and be prepared to put up with rent rises at the first opportunity, because there are 30 other people looking at this house today so if you're not willing to do what it takes, buh-bye.

On the other hand ... to this Brit, mortgages are more easily available for very large sums and you get much more house for your money than you would in the UK. But maybe that's a west coast thing.

Negative Gearing and AirBnB are the big culprits people get tax incentives to buy properties and then make more off of short term leases through AirBnB then renting to long term tenants.

South Coast of NSW is particularly bad.

I’ve made the argument that owning multiple properties should basically be completely untenable or outright illegal for many years but every time I bring it up, even the poorest people in the conversation decide that’s a bridge too far, like someday they’re going to have a beach house in Laguna.

People in the US, at least, can’t stand the idea of not being allowed to own absolutely everything you want.

Population growth mainly comes from people having kids. Lots of kids. Too many kids.

> I don't even know how we got here.

The Reserve Bank just put out an honest ad to explain that a few days ago

https://www.youtube.com/watch?v=DNxXRigHri4

> Do we really have so many people able to afford to sit on empty properties rather than lower rental price?

If you're running it as a commercial operation, claim loss from vacancy for tax credit. That is how they all survive.

We have that test in America too, it’s just much simpler and based on your skin color.

Mass homelessness is new to Australia.

It's used to be a small number of people here and there.

The obsession with owning real estate has turned our society into landlords and renters, with renters paying the mortgages on their landlords investments - mortgages which are spiraling up due to interest rate rises.

Nearly all the members of parliament have extensive housing portfolios so they have disincentive to fix it. In fact recently house prices were going down, so the ALP government just fast tracked in 715,000 migrants, which has fixed that problem nicely.

Australia was already in the worst housing crisis ever in its history. When asked how the 715,000 migrants will impact the housing crisis, the ALP government simply says that migration does not impact housing, and that the housing crisis is not the fault of migrants.

The people at the bottom of society - who don't look great on a rental application form - what are they doing? I don't know what happens to them. It's awful and the ALP government really don't care.

I've come to deeply hate government in general. The ALP is meant to be the left wing party that looks after ordinary people. Instead it has turned out to be just another bunch of rich politicians feathering their own nests.

Yes, which is why more people need to vote minor parties and independents if there are good ones in their electorates. Basically our major parties are a bit like the US - the Liberal/National coalition, like the Republicans, govern for the rich at the expense of the poor, and the Labor party (like the Democrats) just maintain the status quo but put a progressive PR spin on it...

At least our voting system actually lets minor parties win seats, which is why I think our Government is at least a bit less crazy than the States.

I spent 1 month in Australia and my daughter 6. Hiring ads are on almost every shops or business activities, so - probably - those 715.000 workers are necessary.

Giving them a decent house for living is another problem

> so the ALP government just fast tracked in 715,000 migrants, which has fixed that problem nicely.

And now the ALP secured 715,000 additional ballots. Genius. Why try to improve the situation for the Australian people when you can literally "import" ballots?

From HN guidelines:

> Eschew flamebait. Avoid generic tangents. Omit internet tropes.

> Please don't use Hacker News for political or ideological battle. That tramples curiosity.

GP stated what is, broadly-speaking, a fact - an artifact of policies that were integral to the development of the modern American housing stock (and how families are able to access it) as we know it. It succinctly conveys the American side in a discussion comparing the relative state of housing in America and Australia. It's on-topic and, while blunt, only "political or ideological" in the sense that some people will always see the statement of uncomfortable truths as "political or ideological." Please don't wield the guidelines like a club, it's done so in bad faith.