Speculators get burnt all the time, they have a sook for awhile, then before you know it they are getting a margin loan.
It may cause a minor ripple, or it may cause a surge in consumer sentiment, when people actually see house prices falling.
The losers, investors who have geared into property with a capital gain being the sole underpinning rationale.
The winners, the government, tenants and prospective home buyers.
Judging by the number of foreign retailers building huge new stores in Sydney and Melbourne, I'd say it's having no effect.
I think you need to read more than just MB, syd.
To my way of thinking the Government are big winners if it fails.
From memory, the last time NG was stopped only 13% of residential property was NG, now it is near 40%.
If it is stopped what happens?
Those that are overgeared have to sell. Which should put downward pressure on prices.
Those that can afford to hold, will be more motivated to ensure it is rented. Which should put downward pressure on rents.
If it causes a collapse, there is a lot of cheap welfare housing for the Government to pick up, or the next generation of landlords. You have to remember these are suplimentary houses, not PPR.
The only real issue is the shock it would cause to the banks and the $A. But once the dust settles, the banks still hold the properties, their share price halves and the dividend dries up for a couple of years. Then the merry go round fires up again and the $A is too high anyway.
Sorry but I can't see any downside for the government, maybe you can enlighten me.
I'll be shocked if they do anything about negative gearing. I think the overlap between property investors and liberal voters would be very high.
The only way the current Govt will be able to make any changes to NG is if they grandfather the current situation.
I don't have any problem with that.
The rumours are still vague so not sure if they will still allow NG against other income or if it will be capitalised onto the cost base and reduce CGT on sale (my preferred way forward).
Eitherway, there should be reduced demand from specuvestors on established properties, and hopefully with an increase in FHBs that will mean any newly built apartments will have to be a bit better than the crap being churned out at present otherwise it's going to be hard to rent out.
Another NG change could be to only allow it for say 80% of the purchase price. Probably easier than getting the RBA to bring in MP via higher risk weightings for > 80% LVR
Your quotes seem to be contadictory, on one hand you are saying it is mainly lower income earners($70 - $80k)that will be hurt. Then you say the majority are Liberal voters.
Negative gearing when you are on $70-$80k is hardly worth it, as your marginal tax rate is so low, you only recover a small percentage of your losses.
The bottom line is, the government and it doesn't matter which party, is supporting NG to supply rental accomodation.
Once it costs more than it saves, and that is not only in a fiscal sense, they will jump on it.
No I'm saying that that most negatlively geared property investors are earning average wages and they aren't going to take the loss of NG on the chin. Negative gearing on an average wage may not be worth it but a lot of people still do it:
http://blog.rpdata.com/2013/05/ther...ared-property-over-the-201011-financial-year/
According to the above data there were over a million individuals who are NG and I'd still suggest that a high proportion of them (including the average income aspirational voters) are liberal voters.
In the prime areas of the capital cities that may be true, but then take a walk to say Oxford St, or King St Newtown in Sydney and wander past the many vacancies. I'm sure other capitals have similar once popular shopping areas now nearly deserted.
As for having no effect, the fact we're paying far higher prices for the goods provided by the foreign retailers is a pretty important one I'd think. Very high rents are probably not the sole reason, but an important one. Add in the fact that Australian management of a lot of retail companies is shockingly bad and I'm quite surprised the foreign invasion has taken so long. Will be interesting to see how DJs is performing in 2016 under new management. Wonder how long it will be before myer is taken over too.
I'll be shocked if they do anything about negative gearing. I think the overlap between property investors and liberal voters would be very high.
Well, we signed the contract on our first IP last night, hopefully the vendor signs today and in 30 days we'll own a two bedroom unit and a studio in the same complex, yielding 4.5% net....at normal vacancy.
Onto the next one! Thanks TS as well for getting us started
Where did you buy CanOz? Any more details you might like to share? My agent has been calling me asking if I want to sell. My unit has jumped from 420k (valued in 2012) to 490k ish in 2 years. I am seriously thinking of selling but am hanging off as I have some pending travel coming up. Well done on the purchase!
We bought in Brisbane, within 10km of the CBD. Love the weather here! It's raining in Sydney today....off to see the swans play the lions tonight at the gabba!
Good stuff, good location, enjoy the game.
Congrats CanOz ... Welcome to the property circus. It would appear that you have done your due diligence and have purchased after much consideration of the pros and cons of the real estate world.
Congrats CanOz ... Welcome to the property circus. It would appear that you have done your due diligence and have purchased after much consideration of the pros and cons of the real estate world.
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