Negative Gearing abolishment side effects ?

Rentals skyrocketed in Sydney when negative gearing was abolished as it coincided with the development projects for the Sydney Olympics which involved demolishment of old housing stock.
Other states were much less affected. It was all a matter of timing.
Marg
 
Rentals skyrocketed in Sydney when negative gearing was abolished as it coincided with the development projects for the Sydney Olympics which involved demolishment of old housing stock.
Other states were much less affected. It was all a matter of timing.
Marg

I didnt know Sydney had the Olympics in the mid 80's :confused:

2000 was the Olympics.

Rents increased due to the private sector supply decreasing as investors sold up & bailed out.
 
Think of how many people buy negatively geared properties to save tax. Now take that incentive away. Why would those people buy?? if they are not going to save money on their tax (by losing money on their investment).

So many furute investors didn't buy and existing ones sold as they could no longer claim part of their loss. That increases your loss by at least 30%.

Look at all the NRAS adds. It only works because you have negative gearing to save your out of pocket expenses.

Less properties to rent = higher demand = higher rent.
 
I didnt know Sydney had the Olympics in the mid 80's :confused:

2000 was the Olympics.

Rents increased due to the private sector supply decreasing as investors sold up & bailed out.

Wasn't the quarantine based only on new purchases, not current investor holdings?

In saying that, over the two years rents rose 25%.

I personally think quarantining losses to the investment is a wise move needed for the market in the long term.
 
I personally think quarantining losses to the investment is a wise move needed for the market in the long term.

people 'should' purchase for yield not tax deductions but it should also be a personal choice - to isolate one specific asset class seems discriminatory
 
A bit away from the point about rentals, with the reserve bank looking to boost housing in the wake of a declining mining sector I'd 'bet the house' negative gearing is 'as safe as houses'... :p

Further imho, a coalition government will never abolish negative gearing so the question of side effects is academic at best. I don't know the stats but I think it's safe to assume the fallout from such a move would make it political and economic suicide if there wasn't significant measures to offset.

Talk of abolishing negative gearing can be grouped with talk of abolishing the CGT concessions. It's white noise and most often say more about the author's foibles than it does about the facts. In that it's as useful as Steve Keen and his latest missive.
 
A bit away from the point about rentals, with the reserve bank looking to boost housing in the wake of a declining mining sector I'd 'bet the house' negative gearing is 'as safe as houses'... :p

Further imho, a coalition government will never abolish negative gearing so the question of side effects is academic at best. I don't know the stats but I think it's safe to assume the fallout from such a move would make it political and economic suicide if there wasn't significant measures to offset.

Talk of abolishing negative gearing can be grouped with talk of abolishing the CGT concessions. It's white noise and most often say more about the author's foibles than it does about the facts. In that it's as useful as Steve Keen and his latest missive.

Yes, hopefully the current government should not drive the rental price higher or most importantly should not drive the property price up too fast, because that is scary the property bubble could pop which can cause catasthropic effects for the big 4 banks.
 
people 'should' purchase for yield not tax deductions but it should also be a personal choice - to isolate one specific asset class seems discriminatory

They can do the same with equities. Treat it the same as a business, then we can take away in the inequalities of the market and rely on the underlying values.

Just makes it harder for spruikers to turn a buck.
 
A bigger factor in rising housing costs is lack of supply.
If you are talking new builds, it's the fees and charges, costs of permits, drawings, insurance etc, and GST on the build materials etc.

Let us never forget the ever-disgraceful reality of Stamp Duty either.

I look at our last exercise of building our current PPoR as a shocking example....the GST on the total project was $80k approx.

Land was bought separate some years before this, and had it's own set of charges.
 
Further imho, a coalition government will never abolish negative gearing so the question of side effects is academic at best. I don't know the stats but I think it's safe to assume the fallout from such a move would make it political and economic suicide if there wasn't significant measures to offset.

Maybe they could make abolishing negative gearing dependant on the states abolishing stamp duty
 
Maybe they could make abolishing negative gearing dependant on the states abolishing stamp duty

Hm, I think that effects would be disastrous, because the State Govt. income is also heavily subsidized by the Stamp Duty. in NSW they call it OSR (Office of State Revenue).
 
Hm, I think that effects would be disastrous, because the State Govt. income is also heavily subsidized by the Stamp Duty. in NSW they call it OSR (Office of State Revenue).

disastrous to who? Nice little boost to the economy and less government spending (assuming they can balance the budget)
 
I'm not sure it would have much/any affect as supply and demand are still the same, same number of people and same number of houses. It might shift investors away from property and without looking at the other side of it, could appear that rents would increase. However investors have to be selling to someone and if it's not to investors then it would be to homebuyers. Those homebuyers are being removed from the rental market so I would think it would all balance out.
 
Back
Top