Real Estate MT: Prices, Capital Gains Tax (CGT), Negative Gearing, Foreign Investment, 'Bubbles'...

[Ice-Wolf]

Assuming then that investor then start to shy away from residental property as an investment they will turn to other options, the money won't be lost as people will always look for a return on their capital, its just a question of how you get that return. It could have a much greater impact by getting people to look at various business ventures or even opening the window for the government to look at the way it conducts public-private partnership, so instead of turning to the corporate market for funds, it opens the window to small investors.

I'd have definitely have invested in some NBN bonds.

 

[Mofra]

I'd have definitely have invested in some NBN bonds.

It's an interesting statement - Macquarie bank have made billions over the years from packaging up assets then floating them as separate entities, all the while collection management fees (e.g. Sydney Airport).

Given how politically sensitive spending is these days, public offerings as part of PPP proposals may be one avenue to explore.

 

[crackerjack4X4]

To remove Negative Gearing would show that we haven’t learnt anything from history. When negative gearing was abolished in 1985 it had disastrous consequences for the property market and for people trying to rent. Rents rose 37% across Australia and by 57% in Sydney. Thankfully, negative gearing was reinstated in 1987.

The myth that negative gearing is a plaything of the wealthy also needs to dispelled. The majority of taxpayers with a negatively geared property earn less than $80,000 a year. With the new government, expectations that industry will be involved in finding workable solutions to these old issues are high.

http://www.crikey.com.au/2013/10/29/should-negative-gearing-be-abolished-experts-weigh-in/

 

[Frank Grimes]

I think the two big factors in the increasing house prices is mainly down to changing demographics over the last couple of decades and poor city/infrastructure planning. 20+ years ago a single household income was the norm. Now it's a dual income household which is the norm. More household income means more money people can borrow from the bank. As far as infrastructure/city planning goes, the vast majority of jobs are focused in the cities CBD's. Ideally a city should be developed to have business hubs and spread the jobs out. That would make living in the outer suburbs more viable.

I think capital gains tax concession has a moderate effect on property prices, but I think negative gearing doesn't have much effect. Property prices sky rocketed soon after Capital Gains Tax concession was introduced, but I don't think many people buy property these days because of it. I think most people can see we are not going to get the 20% p.a rises we've seen in the 2000's. A small wealthy minority may buy property mainly for the Negative Gearing Tax concession purposes, but most investors are not well off enough for it to be the reason to buy property. I think the simple reason why most people invest in property is to simply prepare for retirement.

Many years ago I remember people saying "remove the First homebuyers grant and watch property fall". The First homebuyers grant has been removed or greatly watered down. While it may have stagnated property for a few years, the prices has started to increase again. I think it would be the same with negative gearing.

 

[Empire_Persian]

Two economists from the RBA recently released a research paper exploring if housing is overvalued (link). They tried to answer the question using a comparison between the cost/benefit of renting compared to buying. The cost/benefit analysis compares the costs incurred such as rent, interest and maintenance, and future capital gains or losses.

They found that if house prices grew at the long term historic average (approximately 2.2 per cent) then buying a house at todays prices is a better than renting. However they acknowledge that it is likely that house prices will grow below this average making renting better and housing overvalued. Funnily some media outlets concluded that housing is overpriced, while others reported the opposite.

There are obvious flaws in this analysis, such as the reality that there is great variance in housing and rental markets across jurisdictions, and the assumption that buying and renting are equivalent and interchangeable, nonetheless it provides another measure to analyse the state of the housing market alongside more traditional measures like house price to income ratios.

 

[Jade's_]

yes but more than that

council rates are for services etc where a property tax would and should be based on the benefit of public infrastructure.

ie let's pick on the burswood casino

Packer buys it with the public infrastructure of a highway, a freeway, two train stations and now a football stadium and a walk bridge across the river. How much does he pay for these bonuses that improve his business?

now pick on CBD prime land with two owners both who have held the land for 60 years. One develops his property and spends $250m on a 30 story building (maximum height as per building restrictions in the 90s) whilst the other owner chose to keep a single story old building.

Both have seen the capital city grow around them increasing the price of the land of which they have not contributed to but benefited from. This tax is designed to capture some of that benefit and return it to all people in the state and not just the first people.

The council then changes the building restrictions allowing 50 story buildings. The person who has not developed his land gets the most benefit as the demolition costs and opportunity costs are lower than the 30 story building. How can we have a system that rewards people doing the least? For me, if you can build a 30 story building you should pay a tax based on the potential income of a 30 story building.

On this system CBD areas, special privileged zoning and economic hubs with infrastructure such as ports etc would pay more and pay their fair share. None of this windfall crap like Packer getting 60,000 potential customers to his pubs, hotels (footy teams, interstate supporters and country supporters) and the casino.

I would suggest you read a little into how things like CGT and Land Tax actually work.

 

[Power Raid]

I would suggest you read a little into how things like CGT and Land Tax actually work.

I think you are missing my point as these taxes as they are currently structured promote development.

 

[Power Raid]

I know the mining tax failure is a touchy subject to some, but it is a relevant case study when talking about broader tax reform and its upsides and downsides.

CGT, Negative Gearing and Stamp Duty/Land Tax impacts the property market, to what extent is debatable, but reforms of taxation in this area needs to be more of the "Henry Tax Review" in style, and less of the "Rudd's response to the Henry Tax Review"

here is a good article supporting your comments

http://www.smh.com.au/business/mini...ead-already-20140718-zukfb.html#ixzz37uRwJdkf


The version that Labor first proposed, the Resources Super Profits Tax, was cherry-picked by the Rudd government out of Ken Henry’s tax review in May 2010.

It was an overly elaborate structure that effectively imposed the government as a co-investor in resources projects, taking not only a 40 per cent share of profits that beat the long-term Commonwealth bond rate, but subsidising 40 per cent of mining project losses, either in tax concessions or in cash. Because it was a profits tax, it also ignored the fact that resources companies were also paying state royalty taxes on their revenue.

One point of reference is the report on overall resources sector tax that Deloitte Access Economics prepares for the Minerals Council of Australia. It estimates that in 2011-2012 the compound federal-state tax rate on the miners was 40.6 per cent. It was 42.1 per cent in 2007-2008, 40.6 per cent in 2008-2009, 42.2 per cent in 2009-2010 and 39.8 per cent in 2010-2011.

Read more: http://www.smh.com.au/business/mini...ead-already-20140718-zukfb.html#ixzz37uSGM3Cs

 

[Whit3y]

id hate to be on minimum wage wanting to buy/build a house

 

[Smiling Buddha]

Snouts in the trough.

It is evident that politicians are heavily invested in the property game, with the 226 members in both houses of parliament with an ownership stake in a total of 563 properties – an average of 2.5 properties per member, conservatively estimated at around $300 million (563 multiplied by the median dwelling price of $530,000 as of July 2014).

http://www.macrobusiness.com.au/2014/08/aussie-politicians-300m-property-portfolio/

 

[Bestbird]

Snouts in the trough.

http://www.macrobusiness.com.au/2014/08/aussie-politicians-300m-property-portfolio/

now we just need to see the super contributions of politicians

 

[Slax]

Fairfax now also running with it. Pretty clear why politicians don't want to change the tax laws involving negative gearing on rental properties. Once again proves that politicans care far more about liningtheir own pockets than what is good for Australia.

http://www.theage.com.au/business/t...-interest-in-high-prices-20140806-10110y.html

 

[Ratts of Tobruk]

Fairfax now also running with it. Pretty clear why politicians don't want to change the tax laws involving negative gearing on rental properties. Once again proves that politicans care far more about liningtheir own pockets than what is good for Australia.

http://www.theage.com.au/business/t...-interest-in-high-prices-20140806-10110y.html

I disagree. They get paid a lot and I think would be thinking foremost of the pockets of those that donate to them and vote for them. Altering negative gearing would be a risk to them losing government or losing their seat. That is more of a worry than losing a bit of value of their property portfolio. And I think a gradual removal is a good idea.

 

[Slax]

I disagree. They get paid a lot and I think would be thinking foremost of the pockets of those that donate to them and vote for them. Altering negative gearing would be a risk to them losing government or losing their seat. That is more of a worry than losing a bit of value of their property portfolio. And I think a gradual removal is a good idea.

Lose the seat, lose a massive chink of your income, the two are intertwined. But then again that depends on your seat though, in mortgage belt seats it could actually lead to swing towards the member.

We need something to happen and I'd be glad to see a gradual transition as a sudden line in the sand change will have a massive impact on property prices with a large drop leaving many with mortgages greater than the property's value. A gradual removal will result in either a slowing of the increases or a staganation of them. Either way it won't have the same impact.

 

[Smiling Buddha]

I would suggest that this is quite the understatement.

Real estate values dip in Australia and our entire financial system collapses.

Yes. Our entire financial system collapses.

What do you think happens to our banks' solvency when the value of the assets backing the majority of their loans go south?

And never mind that the major driver behind the banks' astonishing profits is lower provisioning for bad debts.

The government knows that it cannot allow real estate values to dip. This is (one reason) why we are now selling citizenship to foreign investors. And it is why (I predict) we will soon be able to dip into our superannuation to purchase property.

The government will do everything in its power to keep real estate prices high. No politician wants to be in the hot seat when the system finally crashes.

Hahahahahahaahahahaha.

http://www.news.com.au/finance/supe...t-of-struggle-st/story-e6frfmdi-1227093458723

* you, Xenophon. One of the few mother*ers in Canberra I used to defend. *. You.

But serious lols at how predictable all of this has been.