how is negative gearing going to bring down house prices? So the average house is around a million in Sydney. That's not even a fancy area. If negative gearing was removed that means that houses would fall right? To an affordable level which is supposed to be 3-4 times a families income. So let's say a two income house hold earns $130k a year combined. 130k x 4 equals 520k. So the million dollar home is now going to be worth 520k? You know to make if "affordable".
I have some doubts.
People forget that most investment properties these days are positively geared - rental prices are much higher than interest payments. If anything, it should be cheaper to buy than to rent at the moment. Yes, house prices are up but so is the price of everything in this country.
I think it's illogical to blame "negative gearing" on houses not being affordable and being the sole reason for pushing home buyers out of the market. Not least because most investment properties are apartments, which typically are not large enough to accommodate families. But also because as I said before, investment properties have always been around, negative gearing has not. And prices still went up. The most attractive thing by FAR about investment properties is the capital gain. The potential for wealth creation, is incomparable against other asset classes. Particularly given that most people using debt to finance the purchase so their initial investment is relatively small compared to the gain over time.
Maybe you want to blame investors in general, weather they get a tax deduction or not.. But that's just an "us" and "them" mentality which doesn't do anyone any good.
When we had the burst of first home buyers buying up everything to take advantage of the grant a few years back they all bought units and the majority of them rented them out anyway!
And with cheaper housing stock in other cities the prices would not drop enough for someone who can't afford to buy now to get into the market. It's not like house prices will drop $150 k on a $500k house.
So if for example there are 100 properties. 60 were owned by owner occupiers and 40 were owned by investors. If say all of those investors left the market because of the changes proposed, their 40 houses would be available for sale, so those 40 houses would then be available to the 40 renters. So supply stays the same and demand stays the same = no change in prices.
Governments need to focus on increasing supply. Councils need to allow more subdivision. Apartments shouldn't only be built in inner city suburbs / the CBD.
People need to embrace tiny house living (or at least living smaller), we should be creating more granny flats / income suites so that renters pay less rent so they can save for deposits. Governments could sell Crowne Land to create more supply.
Both labour and liberal need to get real. Malcolm - Prices won't drop dramatically and Bill - young people won't all of a sudden be able to afford a house and to everyone who can't read past the media reports (not saying anyone in this thread) NG and the CGT discount benefit all kinds of people, not just those on huge wages with 3, 5, 10, 15 + properties. Don't punish everyone for trying to get ahead in life and to be independent from the government (pension, welfare etc). I'm not saying everyone who is on the pension or welfare aren't trying to get ahead in life, I just mean some of us are lucky and price ledges enough to own a home and an investment - there's a lot of tall poppy syndrome going on.
Last edited by A-Squared; 26-02-2016 at 22:08.
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