79% of Investors Would Abandon Property if Negative Gearing Scrapped

Your honesty is refreshing!

While there are investors who research and learn, there are plenty who just buy, hold and make money thanks to credit expansion.

It's really easy to attribute to skill what is due to the economic circumstances one is living in. Howard cutting the CGT certainly made a lot of people rich with no real effort.

 

An interest only loan? Why should it go down without the help of inflation?

 

Unfortunately that is the truth.

 

Half truth at best. Supply side factor needs the demand side to align as well to work. Like 2 hands in alignment, demand and supply work to clap for success.

 

Markets will always be driven by supply and demand. Many just never seem to get this and/or want to refuse to acknowledge the relationship of S/D with prices of assets rising.

 

What about the folks who started buying parcels of say; Coke shares 50 years ago, and simply sat on them?

That's what most Mum and Dad investors are doing with their IP's - buying, paying the loan, sitting on them until retirement and then ether live off the rent, or sell up and live off the cash.

 

Can't access the AFR link as it's subscriber only but were there any stats on the respondents? If 79% of them only owned one IP I'd assume quite a lot do so solely to minimize their tax. Take that away from them and of course they'd bail.

 

First sensible thing I've heard you say Barnes , Hence my preference for Property ....

The share market is time consuming and to be honest booooring .

Happy to sit back and do other things with my time than stare at stock market charts ....

Cliff

 

If mortgage rates will be 15% tomorrow I would like to see what will happen to demand. It will disappear the next moment. The real driver of property market is cheap credit. No cheap - no rising market.

 

Of course. If you don't know what to stare at - it's time consuming. If you know how to read the charts - it's 5 minutes a day at best.

 

Your implying that property is inherently riskier than other forms of investment because of 'cheap credit' and that a massive increase in IR will wipe everyone out.

But what about 80% of businesses going bankrupt in the first 5 years?

What about when stock markets crash? Stocks can easily go from $15 to almost zero.

The important thing is regardless if your a professional stock investor, business owner or property investor - the key is to understand your industry, your risks and rise above the pack to A) get a much better ROR when markets are good, B) have resilient risk mitigation measures and C) never over exposing yourself in one area.

Neither one is bad, whether its property, stocks or owning a business. The risk mostly comes down to the individual managing the investments.

 

It would depend on how you approach it . I've spent a lot of time studying the share market and came to the conclusion that I'd prefer to do other things with my time . The basic concepts are straight forward but being able to implement it successfully is a different ball game . If you can do that , consistently year in , year out , great , but very few can .... and I believe very little when it comes to share market success stories on the internet .

There's a successful trader called Tech A on aussie share forums who posted a ongoing blog of a very simple trend following system ( called tech trader , google it ) which ran for many years and was quite profitable . I met him at a met up . He still made most of his money from his business and his property portfolio

Property is much easier though it is boring . I do other things in my like that provide interest .

Cliff

 

I dont agree with that statement. Most property purchasers buy owner occupied property.
A rental shortage and escalating rents may attract retiree investors and cash rich investors as a alternative to lousy bank deposit rates.

I believe we could see a shift from neg gearing to neutrally geared just as SMSFs have been blamed. Most SMSF loans are neutral or +ve geared.

I would argue 79% of property investors with neg geared property wont sell them.
I will further predict +ve geared owners wont sell either.

 

I know this guy, not personally though. When I was doing share CFDs some 10 years ago, he used to buy shares in startups, wait till some of them got listed and than sold them later on. And yes he had a trend following strategy. With a trend following strategy it's pretty hard to be losing in the long run.
I don't do shares or CFD's anymore.

 

What about when stock markets crash? Stocks can easily go from $15 to almost zero.

That's the best times for any trader. You make a lot more money shorting than going long, that is not the case with property investing.
I have a question for you, do you know how to short the property market?

 

I doubt its the best time when a trader's stock goes from $15 to zero.

And you don't need to short the property market in order to mitigate risk/make profits.

Regardless, that's not important. Like I said in my original post, stocks, business or property, its the person managing the investment where the risk lies and not the investment its self per se.

I know very successful people in business, stocks and property. If you swap their vehicle of expertise among them then its likely that their risks will increase dramatically. Why? The investment vehicle hasn't changed overnight, its the person managing it who suddenly doesn't have the expertise/experience to keep the risk at the same level as the original manager.

If you don't get this point then there is nothing I can do.

 

You forgot to add:

What about every property bubble around the world that has burst?