Every thing you said here I could turn back to you and say the same to you.
Anyhoo, I'm struggling to respond to all the responses and clearly upsetting people so I might sneak out the back door lol
But I don't think getting rid of negative gearing would affect prices all that much and they will still be unaffordable.
I think there needs to be a different solution... Not sure what though!!
Even if prices drop say even 20 or 30% ( they won't) the average mortgage in Sydney will still be around $1000 per week which is still unattainable for a lot of families
Anyway that's all.
Last edited by BigRedV; 10-05-2016 at 10:46.
All those new apartments are doing is taking some rental stress away as in a few years there will be an abundance of units for rent , it's a quick fix solution the state government bought in ( about 20 years too late) to over rule the local councils , thankfully ( like your DH) it's creating a huge boom in the building industry which is great but families still want houses so in areas like ours it won't decrease demand
Yes, some people still want a backyard and a house in the 'burbs but there are an ever increasing amount of people who wish to live near a train station close to the city in low maintenance properties.
In Sydney metro area, the median house price is $1.2m - $1.6m .. Let's say an average of $1.4m .. This is if you're looking at living anywhere between Hornsby and kogarah, as an example.
To buy a house in this area (and I'm being generous here with estimates because there really aren't many houses you can buy within 30mins of the CBD for less than $1.6m) you would need a deposit of $280,000 plus around $73,000 stamp duty. Assuming that getting rid of negative gearing reduces Housing prices by even 20% (this is unlikely and extreme, but bare with me..), you would still need 20% of $1.12m ($224,000) and $47,000 stamp duty.. Plus conveyancing costs and other due diligence .. Ok so tell me.. A 20% reduction in housing prices, would this help you be able to afford a house if you're the average Joe trying to buy a house to live in? Probably not. In addition, if you are trying to upsize, sell an existing property to accommodate a growing family or relocate for work, you're going to be screwed. Because you now have a loan on your home that hasn't reduced by 20%, but your equity has..
The only people who would benefit would be investors who can now buy even cheaper properties and still charge high rents, even higher than before.
You stated that investors will stop buying additional properties. Why do you think that? As a property investor, the first thing I would do is buy more properties if prices went down. Believe it or not, negative gearing is not the reason people buy investment properties. It's a sweetener, sure, the icing on the cake.. But there are far greater benefits to gearing than getting a tax benefit. I won't bore you with the finance of it all, but as someone who went from being in a large amount of personal debt to having substantial equity in a short time, all without getting any tax benefit, I can tell you that property investment, especially when using debt, is a great way to build wealth, especially for the average person who doesn't have access to other forms of wealth creation and can't afford taking on huge amounts of risk.
Also, in response to another comment above, about accountants advising their clients to get rid of positively geared properties, as a professional tax accountant myself, I have to disagree with this statement. An accountant who gives that advice is short sighted, inexperienced and has no creativity.
I don't have a 'right' to negatively gear an investment property, I don't have a right to a CGD, I see myself as being lucky and that it is a priveledge that I am in the position I can own an investment property (which I actually don't at present). Trust me I count my blessings every single day!
This is why I get so peeved at the attitude that all investors are super rich greedy bast*r#s who think they're doing a community service.
It's a fact of the world, there are owner occupiers, investors and renters the world over, not just in Australia because of NG and the CGD.
And if you've actually paid attention to anything I have said, I have said there needs to be caps on the amount of NG and CGD people are entitled to, not just to protect my own interests but because there are so many positive roll on effects o those things being in place.
The investment property I once had, when you add up all of the NG tax I got back compared to the amount of tax I paid in capital gains and stamp duty, the government has actually MADE money off me. And it is often the case with many other investors.
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