Greens to curb negative gearing

Discussion in 'Property Market Economics' started by Ghoti, 30th Jul, 2017.

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  1. Hedgy

    Hedgy Well-Known Member

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    Sign me up....now all I have to do is cross my fingers and hope labor or the greens get elected so they can tax the rich even more and shut down all incentives to invest so as to pay for all this.
     
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  2. Ted Varrick

    Ted Varrick Well-Known Member

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    Don't you worry about that @Hedgy , they'll just keep borrowing more to cover the deficits and/or, and I know this is going to hurt, also consider increasing the luxury car tax to 66%, and other such lunacy.

    Why not introduce a GST uplift of 10% on takeaway coffee?

    Deficit will be severely depleted...
     
  3. kierank

    kierank Well-Known Member

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    One would assume that none of these changes would be retrospective.

    It is more than ironic that politicians can't follow the rules that were written for them over 116 years ago (the Constitution)

    BUT

    they expect us to follow the rules as they are today and are likely to change some time in the future (even though we don't know what those changes are).
     
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  4. pwnitat0r

    pwnitat0r Well-Known Member

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    So if there is no incentive for investors, does this mean they will sell? They can only sell if renters become home owners based on your assumption.

    Until investors sell, the properties are still available for rent.

    Once investors sell to home owners, the supply drops as does the pool of renters.
     
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  5. wategos

    wategos Well-Known Member

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    Ultimately the removal of negative gearing would be good for investors. At the moment it is encouraging speculation (absorbing a loss in hope of capital gain). Its removal would result in lower prices but would generally not affect rents, so yields would rise for the long term buy and hold investment buyers.

    So some short term pain on your existing holdings but cheaper entry prices and higher yields in the future.

    The only scenario I think negative gearing would be justified is for new builds, which account for less than 10% of investment purchases. Losses on one property should still be able to be offset on other property investments however, but not wage income.
     
  6. sanj

    sanj Well-Known Member Premium Member

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    Sorry wasn't the nicest post. The fact is that point is often brought up but it doesn't serve any purpose because what you're asking for has already been implemented. Fwiw I happen to agree the privileges were too much and im glad they were cut back but the fact remains that now redundant privileges have zero to do with the topic being discussed.
     
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  7. Ghoti

    Ghoti Well-Known Member

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    For renters to suddenly become owners, prices would need to fall (or they'd already be owners, right?). So the policy implementation would need to aggressively drive offloading to make prices "affordable". Sure to be popular with current owner occupiers :rolleyes:.

    If the intent is to moderate price growth, the changes could be grandfathered but any change in "affordability" will be both a long way off and dependent on wages growth...another issue which is difficult to address without re-igniting inflation.

    I guess its never good when governments meddle in markets. I'd support a longer term move to less intervention, but such a move would need to be gradual in order to avoid creating further issues.
     
  8. MTR

    MTR Well-Known Member

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    Why would removal of negative gearing not impact on rents? and yields would rise?

    All property investors are speculators?
     
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  9. Bayview

    Bayview Well-Known Member

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    Yep.

    For future investors; unless they are extremely high disposable income PAYE or Business Owners; they simply can't carry the burden of Neg Cashflow IP's without the help from NG and Depreciation etc.

    The result is the many thousands of average earning (or lower) Mum and Dad investors who own one or maybe two IP's - it will cut them out of the market until such time as their disposable income increases enough to allow them to play....the result would probably be a shortage of rentals, forcing the rents up.

    I think the percent of "speculators" is small, and at the higher-risk end of the investing population - where most folks aren't game enough to play.

    The vast majority are playing for the longer term, for safety and security - these are investors.

    When I hear folks referring to investors ans "specultors" it tells me they are generally against investors - gets used on ABC a lot.
     
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  10. MTR

    MTR Well-Known Member

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    I consider all investors are speculators because we can not predict the outcome, we speculate that interest rates will stay the same, we speculate that because we buy in a suburb with good infrastructure growth will follow, we speculate rents will continue to rise etc etc etc.

    Sure some strategies will be higher risk, but we are all still speculators.
     
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  11. Sackie

    Sackie Well-Known Member

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    Speculate. Dictionary:
    "Assumption of unusual business risk in hopes of obtaining commensurate gain. Investing in stocks, property, or other ventures in the hope of gain but with the risk of loss."

    Its all speculation. Nothing is ever 100% certain.
     
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  12. MTR

    MTR Well-Known Member

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    Exactly, this is why I find it interesting when investors assume that the buy and hold strategy is low risk? They ignore the reality that property markets don't continue to rise, they can fall and not to mention other risks ie interest rate rises, fall in rental income etc etc etc
     
    Last edited: 31st Jul, 2017
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  13. Sackie

    Sackie Well-Known Member

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    I have a portion of my portfolio that are very long term Buy and Hold because I believe they will hold their value and grow in the future. But I acknowledge its all speculating. Anything can happen. Some world event or extreme left/ socialist gov could get into power and kill markets. Anything is possible.
     
  14. kierank

    kierank Well-Known Member

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    So investing is like marriage as one can not predict its outcome ... :) :)
     
  15. MTR

    MTR Well-Known Member

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    Absolutely, you hope for the best, but sometimes it does not fulfil expectations.

    I have been very lucky, I had one lemon in my investing career and I flicked it after 12 months. Still made a minor profit of $12K, but lots of sweat and tears... The suburb Nerang, QLD, more about buying the wrong product, which was the issue..... Not enough homework on my part
     
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  16. Sackie

    Sackie Well-Known Member

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    In a sense, life is one big speculation. :) Much more true than untrue if you think about it.
     
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  17. kierank

    kierank Well-Known Member

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    I always thought a bad marriage is more detrimental to one's Net Worth aspirations than a bad property.

    It never ceases to amaze me that some people put more effort into buying a property than they do for a life partner :) :).
     
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  18. Archaon

    Archaon Well-Known Member

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    What about housing shortage, migration, immigration, rising populations.

    Sure your scenario works for a static population, but Australia's population is set to grow.
     
  19. Bayview

    Bayview Well-Known Member

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    Fair enough....

    I therefore declare that from this moment forth; we are all speculators and the word "investor" and "investment" be struck from the Dictionary and the English language....

    Tomorrow, I am going into the Bank to ask to speak to my Manager about a Speculation Loan for another Speculation Property! :p
     
  20. Guest

    Guest Guest

    'Unusual' & 'commensurate' are key words in the definition that you seem to have overlooked.

    I don't agree that someone making a calculated decision to purchase a property outright, with view to hold long term and draw an income from rent, is a speculator (at least not for that particular transaction). At the other end of the scale, someone putting down a 5% deposit for a property that will necessitate hundreds of dollars per week in out of pocket expenses, while hoping capital gains outweigh present losses, probably is.

    There is no doubt a lot of grey areas and some may have differing opinions on where the line is crossed, but in my view there is absolutely a difference between investing & speculating.
     
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