Submitted by The Idiot Tax
Beauty is clearly in the eye of the beholder. On Saturday, up a rapey alleyway, in the inner-city Sydney suburb of Surrey Hills, first home buyer, Doi, with mother Gina by his side (and a little of Gina’s money in his pocket), duked it out with six others at an auction to secure his first home. Doi said of his purchase “it’s a beautiful little house.” And more on that later. Sadly, like many first home buyers in Australia though, Doi won’t be living in his first home. He’ll be renovating it before renting it out.
The reason Doi won’t suffer the indignity of opening his front door to the sounds of late night alleyway hand jobs is because he, like most first home buyers, likely can’t afford to. Something sick and twisted has happened in major Australian cities – first home buyers have no incentive to live in their first home any longer. Because of incentives like negative gearing, an investor will likely put zero down, take an interest only mortgage because the rent still won’t cover the costs and claim a tax deduction on the loss at the end of the financial year – the hope is the capital gains will eventually make up for the rental losses.
First home buyers have little chance to compete with this madness. So their response is join the party. Buy something, rent it out and stay at home with the folks. If that’s not sick and twisted enough, Doi paid $840,000, $140,000 over the reserve, for his first home (the sick) and it looks like this (the twisted).
A beautiful little house, ain’t it? Even a new coat of bright yellow paint to cover up the rust stains.
This post was published at Zero Hedge on 03/15/2015.
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