They go broke because of fixed price contracts Ie they quote...

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blueballs

18,293 Posts.

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18/12/23

09:29

Post #: 71499988
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Originally posted by valen1828 ↑

What i find alarming is builders going broke while real estate prices are booming. Something is wrong with the cost equations of our country . To much money out there with no place to invest it perhaps ?

I mean look at say the ability to invest superannuation into real estate ? Perhaps their is no where is to invest it securely with a long term time frame in mind and simply the amount of money looking for investment is to high in Australia .

Because we have been supporting investment rather than perhaps letting it crash the market is distorted to its normal machinations of boom bust which keeps prices real .

I don't know clearly but if you subsidise things the price seems just go up by the subsidy amount as it creates a demand that wasn't there before .

Negative gearing ive never understood why its allowed on properties that are not new only .

Taking in mind the value of the property say to the how many times the property can be negative geared .Their is nothing stopping a property being geared numerous times through its life cycle .

Anyway has been enjoyable read through the thread .

It comes back to economics in supply and demand perhaps .

You cant keep creating a demand without the supply being effected .

You need cheap land and lower costs for builders somehow .

Perhaps we sold off what kept our country with lower costs .ie the income generating industries the governments owned. The means of commerce the country used . ports rail electricity airlines banks insurance companies all which the government owned back in the day gone for ever .

Things were better before the gst was bought in perhaps .

No tax on building back then .

The state guvnuts reneged on the stamp duties that were supposed to be dropped with the introduction of the gst for one step in lowering costs .

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They go broke because of fixed price contracts

Ie they quote 300k to build a house and make 80k margin but materials and wages costs go up 100k so by the time they build or finish the build there is no profit and possible a loss

Yes the spike in building also happened at the time gst was bought in, howard then brought in fhog and halved cgt to compensate
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