What will you do when/if negative gearing goes?

The election was a close one, there was a serious scare campaign based on erroneous "facts" (like as is happening now...), and the gov caved and promised to allow negative gearing again to garner some votes.

i.e. NG was reintroduced for political reasons, and up until now, the pollies have been afraid to touch it again.
But that is all changing... as soon as they realize that reforming it is a vote winner, hold on to your hats.

 

Don't lie. It did.

 

Only in your deranged imagination. I swear I'm going to hide the crack pipe.

 

I was hoping to hear some actual strategies

Interesting that in another thread on this forum, an article stated that ~70% would stop investing in property if negative gearing were to be axed.

 

You are probably correct this will be grandfathered. But it's not guaranteed. It could be entirely overturned (in theory).

 

Their policy is very clear.

 

+0.5
The rent vs introduction of policy argument is shallow when supply factors, some demand factors and lag factors are ignored.

 

Like everything in this thread, who knows. It really will be a wait and see thing. There are so many other variables at play, such as APRA changes, oversupply of apartments, etc that it's hard to forecast. A very rational policy could cause an irrational market response.

I guess the key is to be flexible and agile enough to move quickly depending on circumstances. Maybe a bit hard to do with non-liquid assets.

 

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Yes it's a complicated subject with numerous factors at play, I would like to see a graph showing actual rents, I couldn't find one.

This was a period of relatively high inflation, to say rents didn't rise is suspect at best.
Real rents in a high inflation environment in all cities? No. What about actual rents?

 

Spend more time looking up the history and less time looking for insults.

 

As compared to calling me a liar in these forums. Pot, kettle, black. Get a grip.

 

You told a lie, doesn't make you a liar.

 

like the no carbon tax policy

Or Rudd to lead the party (not saying others are much better)

 

It doesnt really matter.... Bill isnt going to get in - probably . And whether he does or doesnt , rates may fall low enough by 2017 and stay there for a prolonged period , that the "costs" of neg gearing to Government, will reduce significantly anyway.

All I'm saying is... removing neg gearing is not an automatic guarantee that rents will surge, as the urban myth perpetuates. We have only one very brief example from 1985-1987, hardly enough of a sample to identify an absolute "trend", and the data suggests the opposite is true, so it really asks more questions than it answers....

 

I think your reasoning is good, political parties do things due to politics.

Also with out low inflation and basically no wage growth for lower income earners & more temp work, I cannot see any immediate effect, longer term there may be rises & the policies may cause compounding problems on top of what is already showing, that could cause a lack of investors offering housing, but that will pan out over time & they will by then be in repair mode trying to patch things up.

All governments are slow to act, then when they do, they way overshoot...

Look at the things lining up at the moment

NG change
CG changes
poor economy
cutting of lending to OS investors
state govt's whacking on extra fees (remember Bob Carr tried this when they could see it all dropping off)
new tax clearance for 2mil properties (which is not hard in a lot of sydney)
APRA changes
Banks could have a royal commission the outcome of which none of us know the effect.
Too many OTP units

We have talked of the perfect storm, when you add it all up, the rents may be the least of the problems.

 

Does anybody know what the Pirate Party's policies on NG and CG are?

 

But it's the only actual evidence we have.

 

Have to agree with @euro73 as there is another historical context which validates his statement.

TRA 1986, equivalents of NG and CGT exemption were removed by USA in similar conditions (apartment glut) as contemporary Australia https://www.bostonfed.org/economic/conf/conf36/conf36g.pdf. Impacts were

• Residential investment remained unchanged. In fact employment in building sector grew.
• Cost of capital for ownership for middle to high earners increased but the increase was insignificant.
• For low income earners cost of capital for ownership fell from 17% to 40% below the cost of rental from year 1980 to 1988.
  
• Vacancy rates for multi unit residential buildings increased by 50% resulting in collapse of rental returns.
  
• Passive loss rule stopped high leverage tax shelters in real estate.
• Passive loss rule caused dumping of property (housing, hotels, offices etc) onto market accompanied with fall in prices
• Financial Institutions: The reduced asset values weakened the balance sheets and in some extreme cases lending institutions were bailed out. In other cases the ability to lend was diminished

The difference in australia now and USA 1986 is the deflationary and inflationary macro-economic conditions respectively, which means that the interest rates were very high in USA 1986 and are at historical lows here and now.