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but investors aren't in this business for yields/income. They are in it for the hope of capital gains. What a business model!!!
Some intersting reading.
Rentals showing poor yield
''You can put money in the bank and get 5.5 per cent without any maintenance costs, insurance and repairs.''
A far cheaper alternative to government-funded housing is privately-funded and investors are incentivised to fund housing through negative gearing. This way governments can actually gain revenue through CGT, stamp duty etc and pay for other government services.
If investors who can negative gear arrive at sale time they are able to out compete people who are using the house as a place of residence thus forcing up house & land cost and pushing would be owners into forever renters.
This has created a new underclass where the mother and father both need to work extreme hours just to keep afloat if they choose to outbid/overcommit and buy,surely this does not have a positive impact on their children.
This is the most relevant issue to housing affordability and the effect on NG.
Children are shipped of to daycare, then before and after school care, then in high school, allowed to roam the streets during school holidays because both parents have to work to afford even a basic mortgage.
The stress this is putting on relationships is incredible with the children in between.
Cheers
I doubt it. The cost of building public housing is just too great and there are too many competing public services that require huge investments (such as health and transport). All of this with a massive budget deficit!
A far cheaper alternative to government-funded housing is privately-funded and investors are incentivised to fund housing through negative gearing. This way governments can actually gain revenue through CGT, stamp duty etc and pay for other government services.
Whether we like it or not, negative gearing is the best idea we've got to increase housing stock.
http://en.wikipedia.org/wiki/Negative_gearing_(Australia)In Australia in 2007, 9 out of 10 negatively geared properties are for existing dwellings, so the creation of rental supply comes almost entirely at the expense of displacing potential owner-occupiers. Thus, if negative gearing is to exist, it should only be applied to newly constructed properties.
Landlords
2005 = net loss -$4.1bn .......... % of all landlords making a loss 65.4%
2006 = net loss -$5.088bn ....... % of all landlords making a loss 66.5%
2007 = net loss -$6.372bn ....... % of all landlords making a loss 67.9%
2008 = net loss -$8.63bn ......... % of all landlords making a loss 69.4%
This is the most relevant issue to housing affordability and the effect on NG.
Children are shipped of to daycare, then before and after school care, then in high school, allowed to roam the streets during school holidays because both parents have to work to afford even a basic mortgage.
The stress this is putting on relationships is incredible with the children in between.
Cheers
Guys I don't think you have considered all the implications.
I am all for affordable housing but altering the NG rules aint it! I have put my argument before, many times and have yet to get a response that will change my opinion.
Your argument seems to be that by allowing NG on future builds it will somehow encourage property investors to focus on this end of the mkt only. These people are not stupid and as correctly pointed out they consider capital growth when purchasing. CG will be greatly limited by no investors purchasing when the original investor sells. Result a huge fall off in property investors not just in exiting but in future properties as well. Effect of this will be reduced builds, effect of this will be increasing rental yields due to lack of supply and maintained demand. Effect of this will be both parents working to pay the rent etc etc etc.
Guys I don't think you have considered all the implications.
then they should not release land to developers (who end up land banking) and should instead have a nationalized organization for land developments.
lol.
Its not rocket science. The cheaper the product the more people purchase it. thats where demand comes from not higher prices due to tax concession to a few.
Who on here using NG would want it removed,maybe with comments people could disclose if they are using it.
PS not me
Would you let investors gear up at all? I am assuming you wouldn't. I have asked this before of the NG critics but havn't noticed any response.
Absolutely. Let them gear up to their nutz. Nothing wrong with idiots risking there own cash.
Trouble is in a true market you wouldn't have the government also spending tax dollars on gearing up the same punters via the sellers grant & then a tax that encourages "investment" in a non productive asset.
There is no benifit to the economy by having punters get business like deductions on dwellings.
I just don't buy the added supply line, its added demand that results. Supply comes from the end user. Whether they rent or own outside of pure speculation there is no other demand. Supply will always match demand. No need to worry about reduced development. If it drops prices rise untill they match.
Before we go there could you tell me if you think that there is a benifit to the economy by having punters get business like deductions on dwellings.What about deductions on margin loans? There not business. Do we have a go at them next?
BEIJING, April 15 (Xinhua) -- The Chinese government has raised the down payment for second-home buyers to a minimum 50 percent of the value from 40 percent, in a bid to curb property speculation.
The decision was announced in a statement released Thursday after conclusion of an executive meeting of the State Council, the Cabinet, presided over by Premier Wen Jiabao, on Wednesday.
First-home buyers must pay no less than 30 percent of the the property price if the area is above 90 square meters, the statement said.
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