Turnbull Govt - reportedly drops Negative Gearing Model

Spot on Peter. Where's the political mileage in that though ?

 

There has been too much political capital invested into the housing debate by all sides for it to just disappear.
The LNP can't ignore the massive amount of spending directed towards negative gearing i.e. gambler's welfare, when they have been spitting out the narrative that the budget needs to be balanced.

 

Gamblers welfare.. I like that , how true.
After the GFC and the damage many countries suffered from real estate busts most countries have implemented measures to dampen speculation.. but not the case much so far in Australia with tax payer subsidies to speculators continuing... just drive that truck into the wall with no brakes as long as there are some votes in it.

 

Agree. Banks should get mortgage rates higher and prices will automatically drop. But rates shouldn't be higher for 0,5% they should be higher for 5% from the current level. I still remember the times when rates were about 17-19%, and I remember where were the prices. Those were nice times.

 

You are correct. It happened in a lot of countries in the world and is happening now. The faster it happens here the less problems real estate market will have in the future. You cannot have a boiling kettle forever, it'll explode.

 

That would definitely put the brakes on Australia's housing market. But these are some of the other effects if i'm not mistaken. Money would flow in from overseas chasing better returns on savings as the interest rate on savings would be higher. Business investing would come nearly to a standstill.

The inflow of money from overseas would lead to a higher AUD, and more people would buy foreign goods rather than Australian as they become cheaper. So anybody who sells Australian goods suffers.
It will be cheaper to travel overseas and foreigners would spend less time and money in Australia as it becomes comparatively more expensive so the tourism and education sectors suffer yet again.

Does that sound right and do you want to go there again?
Unfortunately most of the rest of the world is locked in a climate of low interest rates.

 

Just an observation (not a reply to any previous comments in this thread), isn't it funny that in the past on PC and Somersoft there have been so many users who've said it would be 'political suicide' for a party to end/change negative gearing and yet here is Labor pushing for major reforms to it and they seem to be winning the public vote. Whether you support either party, you'd have to admit the Liberals are flopping around like a fish out of water on this thing... and the polls suggest they are losing favour quickly.

 

Perhaps what's different this time, it that Labor's position is supported (in principle, if not in detail) by the overwhelming majority of non property-aligned economists and so Liberals kneejerk responses don't hit home - though they may get the desired reaction from undecided voters, another case of politics making good government impossible.

When MT was shown on 'Insiders' as saying [if Labor's NG policy took effect] "All investors will be gone, and when I say 'all investors' I mean all investors", my reaction is that he's an idiot, no different to his predecessors. There may be fewer investors, but their investment decisions will be sounder.

 

My feeling is since the boom is on its way out by the time the election comes it just won't be a strong enough campaign point. It's not emotive enough. Boat people have been the centerpiece of the last 3-4 elections so I have no doubt immigration / refugees will be the real talking point when the time comes. Gotta marginalize dem foreigners.

 

I'm not talking about raising rates by RBA, so it'll not affect the AUD value. Banks can raise rates individually by themselves, like they did it last time. They should do it more aggressive, because the credit is too cheap. In USA the reserve bank is keeping it's rate at 0,5% but it's hard to get a loan cheaper than 5-5,5%. Here the rate is 2%, but loans are at 4%. So leave the RBA rates at 2% but let the banks charge 9% and you will NEVER have a housing bubble again.

 

It is somewhat unfortunate that I am more and more agreeing with statements and policies coming from the Lib Dems. I don't really align with libertarianism, but NSW (and Federal as well) is turning into such a nanny state that it needs a party like this to bring some sanity back. I can't believe I just said that.

Cheers,
Inertia.

 

To get re-elected.

 

So just like the Libs response to NBN... If the Libs were actually being fiscally conservative, their response to Labs NBN would have been to do nothing. The fiction they sold on their version being cheaper and rolled out faster helped get them first across the line though.

I am incredibly disillusioned with politics at the moment. I'd like for once to vote FOR something, instead of voting AGAINST something. It seems to make no real difference voting Libs or Labsm and the smaller parties are spineless and ineffective...

*sigh*
Inertia.

 

The past state and federal elections I voted for policies:
Federal - Changes to parental leave as starting a family.
State - East/West link

One party won and the other lost. The result regardless of win or lose was the same. It never happened.

 

You have to wonder how much the money side of being in politics plays into the decisions, rather than the whole serving the nation thing

 

If anyone on opposing sides were offered 2 mil to forever vote for the opposing party and no one would ever find out, I reckon the amount of politicians who would do it, would be staggering.

No politician (if any certainly very, very few) really care about us. We have the biggest influence over our own futures. Most just fail to come to that realisation.

 

I don't know about that. Take the USA for example, the most powerful nation on earth with the most influential military and economy and look who is running for president. Can you tell me that out of the most powerful nation on earth that those candidates are the best there is too offer. There is so much that goes on behind the scenes with big companies throwing money around that I don't feel that the average Joe is represented much at all.

Ok, yes we could protest and sign petitions, but really that takes so much effort that it is not really feasible. Compared to what big business can do with a few lunch meetings and some money thrown at some government project or 2. Call me cynical but that's just how I see it.

 

@Northy85 absolutely agree with you, The point i'm trying to make is that the average Joe doesn't have to be represtend one way or another for them to be successful.

It's in our hands. For example, some prefer to write endless posts on NG, politics at play etc etc.

Imagine if all that time, energy and passion was spent learning about property investing (or any investing), strategies, ideas, networking with other successful people to learn how to execute successful plans etc.

That is what will make all the difference.

Especially in Australia where opportunity is overflowing. Just many are wearing the wrong thinking cap.

Just my opinion of course.

 

@Leo2413 ah yes 100% agree, I thought you meant something different. Everyone can make their position better in Australia as there is so many opportunities. Mindset is the most important thing as the solutions will come when you want to, and believe you can change things.

 

I am sorry but life isn't fair and never will be.

You can never make it fair for a FHOB to own a property compared to an investor.

Even if you remove EVERY benefit the investor gets (NG, Depreciation - or allowed the FHOB to claim these) the investor will still earn rent (or more rent if the OO rents out a room in the house). This means the investor has better serviceability so can then borrow more (no fair).

Also typically the investor will have a larger security as it is in most cases not their first home (as people generally buy PPOR first then IP).

What I don't understand is everything the investor has at their disposal is what the FHOB can use if they become the investor. There isn't a secret hand shake to get this stuff or some secret society where you learn this (well maybe PC is ).

The only way to make it 'fair' for the FHOB to buy is make is so investors cannot draw equity against their place, cannot claim NG, cannot claim depreciation, cannot claim expenses etc etc and also cannot charge rent! Then guess what there is no investor :O