Australian Housing Affordability Discussion

[whatmeworry]

A report by the Grattan Institute shows the top ten percent of wage earners get half of all the benefits of negative gearing before rental deductions. Grattan Institute also calculates $5 billion could be saved with changes to negative gearing.

The Federal Government could save more than $5 billion per year through changes to negative gearing, according to research released by the Grattan Institute.
[h=2]Key points:[/h]

• Current negative gearing arrangements push up house prices, Grattan Institute says
• Says new housing investment losses should not be deducted from wage income
• Says restricting negative gearing to new properties "makes it harder for young investors"

The independent think tank's Hot Property report argues losses from new housing investments should only be deducted from other investments, instead of from wage income.
Chief executive John Daley is calling on the Government to also abolish the income tax deduction and halve the 50 per cent capital gains tax discount.

Negative gearing: Tax deduction's removal 'would boost Commonwealth revenue by $5b annually' - ABC News (Australian Broadcasting Corporation)

PM Malcolm Turnbull when confronted with that negative gearing favours high income earner disproportionately, replied : "High-income earners benefiting from property tax concessions 'beside the point', Malcolm Turnbull says"

Prime Minister Malcolm Turnbull says the fact investment property tax concessions heavily benefit high-income earners is "beside the point", and Labor's plan to restrict deductions is "unjust".
[h=2]Key points:[/h]

• Top 10pc of earners get almost half all negative gearing tax benefits, receive two thirds of all capital gains income: Grattan Institute
• Institute wants to scrap negative gearing, half capital gains tax discount
• Labor wants to curtail negative gearing to lesser extent

A Grattan Institute report on Tuesday showed the top 10 per cent of income earners — before rental deductions — get almost half of all tax benefits of negative gearing.
The same group receives two thirds of all capital gains income.
But Mr Turnbull told 7.30 the income of claimants was not relevant.

High-income earners benefiting from property tax concessions 'beside the point', Malcolm Turnbull says - ABC News (Australian Broadcasting Corporation)

Meanwhile a cartoon of the Subs v the NBN.

 

[JohnK]

The issue is much bigger than just foreign investment (and tbh, foreign investors aren't generally smart enough to buy anything other than glitzy marketed apartments/houses) , investors who rent out property for tax reasons also inflate the market. That needs to be dealt with as well.

It is a global issue, and London has the same pressures.

Point taken and a good point too.

Personally I feel stopping foreign ownership immediately (including existing ownership) would be a good start.

 

[cove]

Watch what the new 7% Victorian stamp duty on foreign purchasers does. It starts on July 1st and then there is a vacant land tax of 1.5% coming.
With banks not wanting to lend 90% any more the market is likely to start falling in most of Australia.

 

[Hvr]

Point taken and a good point too.

Personally I feel stopping foreign ownership immediately (including existing ownership) would be a good start.

And what about Australians owning property overseas? Would you ban that as well?

 

[andye]

In the UK the (Conservative) govt has cut the ability to claim mortgage interest as a deduction on rental property, let alone negatively gear.

Although I think this goes too far, owning your own house is the best social security for old age there is. Governments should encourage it rather than pander to vested interests

 

[JohnK]

And what about Australians owning property overseas? Would you ban that as well?

That would depend on whether they have paid their tax in Australia or not on the money used for the purchase.

 

[travelislife]

And what about Australians owning property overseas? Would you ban that as well?

In a lot of countries foreigners can't own freehold land. Some even restrict leasehold.

 

[Hvr]

That would depend on whether they have paid their tax in Australia or not on the money used for the purchase.

Heck we don't even apply that policy to Australians.

 

[marki]

Point taken and a good point too.

Personally I feel stopping foreign ownership immediately (including existing ownership) would be a good start.

Would that not cause a drop in house prices ?

 

[Mal]

Watch what the new 7% Victorian stamp duty on foreign purchasers does. It starts on July 1st and then there is a vacant land tax of 1.5% coming.
With banks not wanting to lend 90% any more the market is likely to start falling in most of Australia.

Indeed. I wasn't aware of that change, but trust your information. This will decimate the unit market in Melbourne in particular, and it is about time. The day of reckoning is long overdue, and I pity anyone stuck in the middle.

 

[JohnK]

Would that not cause a drop in house prices ?

That would be desired intention.

 

[marki]

As long as it's not too much. Primary investment in real estate will cost me money.

That would be desired intention.

 

[penegal]

Don't even get me started on Stamp Duty... What a racket.

 

[JohnK]

As long as it's not too much. Primary investment in real estate will cost me money.

It would cost me as well but clearly property prices are overinflated.

 

[yohy?!]

Will be interesting to see how much the increase of stamp duty does affect foreign buyers - I think the effect will be fairly minor given the difference in median price between melbourne and sydney, seems like a good move by the government to capture revenue.

The duty is still less than in Hong Kong for foreigners, where it can go up to 20% and was introduced at only hours notice!

 

[Cruiser Elite]

Who saw 4 Corners last night?

 

[drron]

I did.Not impressed.Really was more of the political process rather than looking at how to get young people back into the housing market.To do that house prices have to come down.If that happens there are people who are going to be hurt,some wiped out.Are the politicians up to shouldering that pain?Has to be some agreement between the 2 sides to get anything meaningful done and I just don't see it happening.

 

[travelislife]

I did.Not impressed.Really was more of the political process rather than looking at how to get young people back into the housing market.To do that house prices have to come down.If that happens there are people who are going to be hurt,some wiped out.Are the politicians up to shouldering that pain?Has to be some agreement between the 2 sides to get anything meaningful done and I just don't see it happening.

This is kind of the issue, due to leverage if things did start to fall significantly (30% plus) there would be many people in a bit of trouble. Smaller falls aren't really an issue as most people are happy to hold the asset for the longer term.

 

[Warks]

I only heard this info on radio when I was in Melbourne last week that it is estimated that there are 80 000 empty dwellings in MEL. Neat way of doing it through water use stats. I wonder what the numbers are for Sydney - at least that I'd say. Some housing crisis. (article is from December though)
More than 80,000 empty properties in Melbourne: Prosper Australia report

 

[whatmeworry]

I only heard this info on radio when I was in Melbourne last week that it is estimated that there are 80 000 empty dwellings in MEL. Neat way of doing it through water use stats. I wonder what the numbers are for Sydney - at least that I'd say. Some housing crisis. (article is from December though)
More than 80,000 empty properties in Melbourne: Prosper Australia report

I think I posted it up thread.

Sydney's housing affordability crisis is being artificially inflated by up to 90,000 properties standing empty in some of the city's most desirable suburbs, experts say.
Vacant properties were among the "perverse outcomes" of tax incentives that encouraged some investors to favour capital growth over rental returns, according to the analysis by the UNSW's City Futures Research Centre.

Read more: Thousands of empty homes adding to Sydney's housing crisis, experts say
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