How does Mr. Smith reach that conclusion? Most of the nation’s millionaires are that wealthy because they purchased houses 20+ years ago and they can sell them for over $1 Million now.
That said, the house I live in is not making me rich. If my landlord has a mortgage on it, my rent more than covers the repayments on it. If he bought it outright, then the rent I pay him is pure gravy. It’s contributing something to his revenue.
It’s not pure gravy. There’s an opportunity cost in having that money tied up in a house. Plus there are other obligations on a landlord beyond mortgage payments.
Most of the nation’s millionaires are that wealthy because they purchased houses 20+ years ago and they can sell them for over $1 Million now.
Sell and move where ? Sure, aome arbitrage if you move from Sydney to Grafton but selling and re buying in Sydney won’t make you “rich” Negative gearing (negative meaning they’re losing and offsetting that loss against other income and relyibg on a nice tax payer subsidy when they sell) housing is a tax payer subsidy, they’re getting rich on the back of the tax payer not from productive enterpise.
That asdie, what you’re describing is a ponzi scheme, as theres no productivity increase to account for the price increase above inflation.
As Warren Buffet etal has pointed out, housing is priced at whatever people can borrow. There are other ways of doing housing by treating housing as homes and not speculation, for example here
Wealth effect ? Sigh… More and more debt.
How does Mr. Smith reach that conclusion? Most of the nation’s millionaires are that wealthy because they purchased houses 20+ years ago and they can sell them for over $1 Million now.
That said, the house I live in is not making me rich. If my landlord has a mortgage on it, my rent more than covers the repayments on it. If he bought it outright, then the rent I pay him is pure gravy. It’s contributing something to his revenue.
It’s not pure gravy. There’s an opportunity cost in having that money tied up in a house. Plus there are other obligations on a landlord beyond mortgage payments.
Sell and move where ? Sure, aome arbitrage if you move from Sydney to Grafton but selling and re buying in Sydney won’t make you “rich” Negative gearing (negative meaning they’re losing and offsetting that loss against other income and relyibg on a nice tax payer subsidy when they sell) housing is a tax payer subsidy, they’re getting rich on the back of the tax payer not from productive enterpise.
That asdie, what you’re describing is a ponzi scheme, as theres no productivity increase to account for the price increase above inflation.
As Warren Buffet etal has pointed out, housing is priced at whatever people can borrow. There are other ways of doing housing by treating housing as homes and not speculation, for example here
https://www.abc.net.au/news/2023-08-04/vienna-s-social-housing-and-low-rent-strategy/102639674
We have vast amounts of resources diverted from productive enterprise etc to servicing loans for houses.