Prestige Property to rise ?

I was talking to an agent this morning. He believes that as a result of recent NSW legislation, there are now many incentives to get out of property investment. As a result he expects people will sell their only existing IP and also PPOR in order to buy a prestige PPOR. This strategy will retain the similar leverage to property, but avoids the taxes.

Any comments ?

I've heard that comment before and it would make "sense" if you were going sell your IP's or choose not to buy an IP.

Had a chat to one of the local agents on Saturday. Out of a rent role of around 600 properties they were aware of 3-4 that were on the market because of the impending tax change

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Well if lots of first time investors sell two properties to buy one, that leaves a lot of spare properties on the market....

They'd have to be prepared for quite a long sale cycle.

Was this agent trying to sell you prestige property by any chance?

Cheers,

Aceyducey

Aceyducey said:

Was this agent trying to sell you prestige property by any chance?

Cheers,

Aceyducey

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Nope

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I think this is only one of many possibilities (i.e. decide to sell IP now and upgrade PPOR). However this would only be the case if that was the type of mindset you might have anyway. I think long term investors might instead choose to grin and bear it, whereas the agents comments seem more reflective of dabbling investors and indicate one of many potential reasons for withdrawl from a (more than likely) negatively geared property.

I think it is more likely that overall investment in NSW IP's will be slowed over the next few years because investors will be wanting reasonable returns and CG in what is already a recently boomed market. Ultimately this will impact on supply and demand for rentals may increase leading to improve returns and thus future increased demand. It might take seveal years for this to occur.

Timbo

Aceyducey said:

Was this agent trying to sell you prestige property by any chance?

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No, he has v. few prestige props on his site.

I was surprised by his view. I can't see a significant number of investors either thinking of that 'strategy' or actually implementing it.

keithj said:

No, he has v. few prestige props on his site.

I was surprised by his view. I can't see a significant number of investors either thinking of that 'strategy' or actually implementing it.

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I'd disagree with this comment.

For people who in the market of buying or upgrading a "prestige property" it seems an obvious option if they were concerned about the tax on selling Investment properties.

Taking the land tax off any PPOR would also removes a disincentive for holding properties with expensive land Values.

So there is a dual "incentive " for putting more money into upmarket PPOR's in NSW.


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Most people either get the tenant to help pay the IP off and or use neg gearing to help as well.
These benefits are generally not available on PPOR so it could be a struggle to pay the mortgage on a prestige property for most people.

Smile said:

Most people either get the tenant to help pay the IP off and or use neg gearing to help as well.
These benefits are generally not available on PPOR so it could be a struggle to pay the mortgage on a prestige property for most people.

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What I'm suggesting doesn't apply to most people. Most people don't have the funds to buy a prestige property.

There are a suprising number of people who do chose to buy Properties in the 1.5 mill plus bracket.

In quite a number of the Eastern and Northern suburbs of Sydney , the MEDIAN price is over 1 mill. Houses in the 1.5 - 3 mill price range are not uncommon at all.

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