Liberal or Labour?

I think a big impact is for my share investing. CGT discount significantly reduced.

I don't envisage buying more investment properties or have any thought of changing my PPOR ... so CGT and NG "benefits" are grandfathered ... although I may develop my IPs down the track (zoned for medium density).

I do think well-located properties suitable for infill development will become sought after. That's because under the Labor proposal negative gearing can be applied to new housing ( although still waiting for details of the proposed legislation changes if they win ).

 

I'll be manning the sausage sizzle at my kids' school. It is unAustralian to vote without getting a democracy sausage.

Cheers,
Inertia.

 

This is a very sensible comment - why are people so alarmist about this stuff? Anyone doing a decent job will adapt and over come.

Cheers,
Inertia.

 

Yep. OTP property will see a nice boost and they'll say how much these properties are going up, what great value they represent.

What they won't tell you is once you bought it, it's not new any more. When you sell, you'll sell to the general market, no gearing benefits, less demand, lower prices.

OTP property will be like a new car. On the day you settle, it'll be almost guaranteed to be worth less than you paid for it.

 

Alot of people say it doesn't affect existing property owners including Bill Shorten but the truth is I think it does. And does alot.

As a property investor, properties have 2 uses, to live in (shelter) AND tax benefits and capital growth.

By removing the second function the price of something will go down for sure.

Imagine you own a car originally it can drive all over town in sector A and sector B. Now a new rule comes out YOU can still drive all over town but when you go sell your car the new owner, they can only drive in sector A but not sector B. How will it impact your car's price... ? for sure it will be worth less or worthless. So a drop in the property prices is expected as everyone goes into a frenzy to sell off their property before everyone else? before the crash?

I hate how Bill Shorten say "hey don't worry it doesn't affect existing property investors..." "hey don't worry it doesn't take effect until many years later." doesn't make their actions more valid.

 

Such one dimensional thinking. Our government and its impact on our society is more than just how much money you can make for them.

 

So basically builders will have a license to build as many new apartments as possible and new home buyers will be able to buy them at 5% deposit.

Result: thousands of new dwellings with negative equity.

Meanwhile increase in capital gain taxes would mean little incentive for existing investors of freestanding houses to sell hence supply shortages.

Overall we will have an oversupply of apartments with owners slaved to their negative equity mortgages with little ability to ever upgrade to a house!!

 

What makes you think they will have negative equity? Maybe this will spur on competition and the won't pay overinflated prices and it will drive down house prices too. Sure it will hurt a few that though housing only goes up but as a society we'll be better off imo

 

One could argue Taxpayers should not be subsidising the rent of Renters.

At current low inflation, perhaps a little bit more rent won't hurt?

 

Nah. I agree with standtall. First home buyers always make poor choices when it comes to buying their first property and often go for "apartments" as they always want something that's "new".

I think they will get negative equality from the get go and pay above market price for these. They often get tricked by marketing. Apartment sellers often sell at a set price, that they set, not market price. Once first home buyers buy the property when they go to sell it at market value they will quickly realize they can't sell it for the value they think they will get. (One because their "new" apartment is no longer new" and two. Why buy this when somewhere else there's something else newer.) So basically what standtall described is a very probable outcome.

After reading everyone's thoughts I think: labours policy will hurt everyone investors, first home buyers, renters that don't want to buy anything and Australia as a whole. The only ones that benefit are maybe builders and developers.

 

Maybe there are more efficient ways for Australia to invest other than housing.

Investing in existing housing is not a productive means of investing for society at large.

Think of the supply chain that is bolstered by the construction industry and see how many businesses benefit from more new supply rather than the sale of existing properties.

Housing is a long game too, I'm sure first home owners who buy now will be better off in 30 years.

Maybe reduced incentives in housing will push people more to the sharemarket or to starting their own business. Both of those options create more value in society than investing in existing houses.

 

Too many people on this site see can’t see that because they are so blinded by having committed to a particular course of action.

 

Buying shares on the sharemarket does what to invest in businesses?

 

One viewpoint.

What is the point of the stock market? What is it for, and why might someone want to trade or invest?

There are many others depending on your bias.

 

Trading shares is a by products of capital given to a business to fund expansion
by trading shares you not really helping a business expand, it just a facility where funders and founders has a place to exit their investment, if you participate in capital raising or give business seed funding then it helping the business

Say I got a business X that required $1 million to expand to build new factories or open more store. I sell part of my business for 1 million, say issue 1 million share each worth $1 each, some one out there with the cash and said ok I support you and get $2000 shares another said ok I take $10,000 etc.. eventually the business get a million bucks and it goes on to expand.

These investors then get the chance to trade this stocks on the stock market if they want to exist their investment and there always buyers out there that said ok I can buy off you for 10% more or 10% less etc.. and this outstanding shares goes around indefinitely until the company buy back that out standing shares.

Multiple this by thousands of companies and you got the stock market, a way for business to raise capital and a way for people to exit their investment.

there are more intricate and many other things that ties to the stock market but that the basis of having a stock market.

 

So buying and selling existing shares is a by product of direct investment in companies.

So buying and selling existing property would be.......

 

Correct so by buying and selling existing properties is like trading shares it does nothing to the economy, it just filled brokers, agents pocket with fees.

So by giving incentives to building new building or creating new products is a better way to manage the capital.

and because we are in a free market, people free to do what they want to do
but you change people behavior with incentives, basic human behavior and taking away their benefits or making thing more expensive is a pretty sure way you make people change their behavior.

You can see the properties boom around the time they bring in CGT concession combine with negative gearing, people are more willing to take on that risk of losing money.

Taking that away people will less willing to do so and you can bet properties wont be the same going forward.

Understanding human money psychology is important it can significantly increase your rate of return as you can sort of see what is coming and get out.

Same goes to the stock market, there are regulations and incentives for business that alter people who willing to pay a high or low price for a stock.

"When the fact change I change my mind" is my go to quote with investment doesn't matter it properties, shares or business

 

The point is investment in business is a more productive use of capital for society. Whether via shares, initial funding or starting your own business these will generally have a higher economic impact than existing properties changing hands.

People are more comfortable with property investment though and the incentives there are longstanding so there is obviously a lot of pushback on these policies winding back incentives.

 

Except buying shares on the sharemarket is no more productive than buying existing property. And thats what people will do with their money if you drive them away from property.

 

LIBS doing much better than expected!

Fingers crossed!!!