Hopefully the Liberal Democrat Party if you're serious about small government and cuts to spending. Liberal is just as big a spender as Labor.
Potential negative gearing changes
- Thread starter pickle pickle
- Start date
Interesting comment from Michael Yardney in one of his latest articles on his site:
This was in relation to buying the "better" investments, which are usually NG in the early years of the investors's ownership.
So, based on this comment; it would be fair to assume that there are not multitudes of investors cutting the FHB's out of the market too much.
This was in relation to buying the "better" investments, which are usually NG in the early years of the investors's ownership.
So, based on this comment; it would be fair to assume that there are not multitudes of investors cutting the FHB's out of the market too much.
Yep.
Everyone can do it, and it's been available for everyone to do it since I can remember, yet all of a sudden it is the evil cause of increasing prices...what happened to Sydney prices over the last decade or so?
Exactly. As I mentioned before, for literally half of every cycle - that's a good 5-8 years - prices either drop or remain painfully stagnant. FHB'ers are terrified during this period because it's always bleak and it seems like things will never get better. Investors don't see this cup as half empty - why should they not benefit from having this vision and courage? Prices are stagnant because no one else wants in, yet everyone has an equal opportunity to do so if they chose to.
Bidding the price level up of any step of the "property ladder" will have flow on effects to those above and below it.
You speak as if all these markets reside in separate silos. All property markets are connected BV, to suggest that investors don't have an impact on the FHB market (even if they aren't direct competition, which they often are, despite your insistence otherwise) is misleading.
I'll just leave this here...
I read Michael Yardney's article today where the data showed that about 33% of Australians are on 80% LVR or higher? This makes it interesting for all those heavily geared investors, wether they would be able to copy without the negative gearing? Somehow I doubt that?
For others not so heavily geared it may be beneficial, so like all policies it will help some worsen others, the interesting points will be wether the balance will be maintained, right?
If they haven't geared to 80% LVR again right?
It would be interesting to know how many forum investors' pull out their equity and how often?
I read Michael Yardney's article today where the data showed that about 33% of Australians are on 80% LVR or higher? This makes it interesting for all those heavily geared investors, wether they would be able to copy without the negative gearing? Somehow I doubt that?
For others not so heavily geared it may be beneficial, so like all policies it will help some worsen others, the interesting points will be wether the balance will be maintained, right?
Don't forget some will buy at high LVR's and hold cash in their offsets.
I don't believe so.
From my experience; there are often times when the various markets are operating independantly of each other.
In the case of the lower end of the market (where most Mum and Dad investors are, and many of the FHB's should be), it is a price range which is affordable by the majority of the population, and the most in demand by the population because people need to live somewhere. The rent yields are often higher, which is more attractive and makes investing affordable for many M&D's.
So even when the economy is bad, or interest rates are higher etc, these places still trade.
The middle level pricepoints are most likely to be a second house (trading up, expanding due to family etc) for the more established buyers, but of course; many a FHB wants to start at this level as we have seen, and this is the group who are crying in their beer over affordability..There are some investors in this price range, but it is creeping up and the rental yields do not flow along with this, so the cashflows are usually a fair bit worse...only the more established and cashed up M&D's and professional investors play at this level.
This level is affected by the economy and interest rates a bit more, but the volume of buyers in this pricerange is still quite big.
The higher end price range is a much smaller market (much small group of income earners at the higher end), and is less affected by interest rates because there are more cash buyers, and more high income buyers who can absorb more rate increases without their lifestyle being affected.
But, this end of the market can be affected more by a bad economy; stock market crash, or business failures etc will often see these houses come on the market for considerable discounts in bad economic times. There are virtually no Mum and Dad investors at this level.
So, you can have a situation where the economy is bad, rates are low and the lower end of the market will still be trading to a degree, while the middle and higher end will stagnate.
This also brings down the median price.
I've seen this a few times. You will see cheaper end houses fly out the doors, while $2mill properties and above sit there for ages, and eventually go off the market, or sell at a discount.
Currently we are seeing a lot of areas going well, mostly due to the low rates.
For sure, the investor level has increased due to this, and I would wager the majority is in the lower end.
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Some will hold it in available funds for withdrawal on their LOC's .
Who's that hobo?
In all seriousness, is there any ruling party in the world that is truly small government party?
By the way who are these people who are negative gearing at 3.95% 3 year fixed rates?
Well said, I thought exactly the same thing when reading his blog, I would be interested the % of investors that keep utilising this strategy. Does anyone know?
Good question.
As more experienced investors, most of us here would know of this structure and probably have it in place, or are planning to.
But a large number of would-be investors are new at it, and may only ever purchase one IP, so it's more likely that they won't have a more sophisticated structure in place, or put one in place unless they are lucky enough to cross paths with a knowledgeable MB first.
How does anyone know who the investors are at these auctions? Surely this late into the "boom" no real investors are outbidding anyone at a Sydney auction.
If you are paying (or trying to pay) $750k for a 2 bed apartment;
I'd bet my left teste it is not in an area where FHB's should be looking for affordability and property selection as a FIRST home.
This is where this argument falls over time, and time, and time again....
FHB's need to get into reality and start looking at what they can actually afford; not where they would LIKE to live.
And if they WANT a 2 bed apartment, they can get one for half that price if they go west, but of course, we don't want to live west, do we.
They can even get a 3 bedroom home with plenty of change if they move west too.Oh, and let me just add, before Hobo jumps up & down & says they should be able to buy something affordable where they want to live, that it has always been the case that desirable locations cost more. Simple supply & demand.
I didn't WANT to live in a tumbledown, grotty, old house, near a large HC area, but that was all I could afford as a first home owner, so that is what I bought. You can always upgrade later, you know.
