2021 … There has been an extraordinary shortage of homes for sale to meet the needs of Australians seeking to buy a home!
‘Sydney house prices reach record median $1,410,133 – rising almost $1200 a day in just three months.’ And buyers are not getting a lot for this!
WHENEVER this issue is aired in the media … at the dinner table … at the tennis club …
THIS is what Property Investors usually say …
‘If investors don’t invest in property there would be no rentals.’
Are they trying to shut down any other point of view? Cough … cough …
Back in 2014 ECONOMIST SAUL ESLAKE ‘Put Paid to This’!
Summarised here below are the points Saul Eslake made:
-RBA Stability Review revealed that with strong investor demand housing loans accounted for about 40% of all home loans
–15% of voters took advantage of negative gearing to buy assets and deduct the interest costs against other income (CAAN: Free Money)
-it would be easy for Canberra to decide that any new investment past a certain date would not be eligible for negative gearing
RATHER THAN THE RBA TACKLE THE UNBALANCED HOUSING MARKET AND HURT THE WRONG PEOPLE SUCH AS FIRST HOME BUYERS …
-the Government (Canberra) could curtail negative gearing by reducing borrowing by investors *
–businesses … unlike property investors … do not get a 50% discount on any profits they make concerning capital gains tax (CGT)
-what happened in 1985 when Treasurer Paul Keating abolished negative gearing rents rose in Sydney and Perth but not in any other market!
.because in 1986-87 Sydney and Perth had vacancy rates of less than 2% which led to rent rises
-if landlords dump their properties other people will buy these properties; they will move from being renters to home owners!
.and a drop in demand for rental properties
–investors are more inclined to take out ‘interest only’ loans because the interest costs on investment property are tax deductible
–64% of loan approvals to investors are ‘interest only’ loans compared with 31% owner-occupiers
-if investors are not reducing the principal on their loan(s); risk they will be in negative equity if house prices fall
–investors with incomes in the top 20% owe 60% of all investor housing debt; more than one quarter of Australia’s housing debt
Kill negative gearing to calm housing market, says Saul Eslake