The RBA's target inflation is 2-3%, so why would you assume the highest end of that? As has been repeatedly stated by many, it's also a low-interest period, while your arbitrary look at "the last 30 years" includes interest rates as high as 17%. Of course house prices will rise far more in a low-interest period, so it was predictable that 50% would be far more generous than inflation. Why else do you think they changed it? There's no point changing it if it will just effectively keep the status quo.
No, it just makes sense. The government actively encouraged people into property. They even ran an election on 'interest rates will always be lower under a Liberal Government'. They did this in many ways. CGT discount and a first home owners grant foremost amongst them. Whatever your opinion of shares (which are less likely to go up in value as consistently as property) you haven't actually made an argument yet that says the CGT discount isn't a big influence. You've said that the discount would've been about the same when it abso-freaking-lutely has been far more generous.
Howard's changes came in Sep 1999... Hmm I wonder if there was an influence:
I did have a crack at the FHOG and have done repeatedly in this thread.
Power Raid did. In any case any/everything has multiple causes, would be a crazy argument to make for a single cause.
Since '94? Hmm, I'm thinking if that graph started anywhere you'd draw a line from one end to the other and say there's a trend. Because what we can all see is there's a slight dip from 96 to 97 and then a larger one from 97 to 98. June 99 had it recovering to 97 levels before it breaks through 8% and goes up and up and up post-Howard's changes. As it should do, because Howard has just made it economically much more profitable to negatively gear through his CGT changes. The FHBG comes in one year later - June 2000 and we see another huge jump. There isn't a trend downwards after Howard's CGT changes.
I don't think the CGT Discount would have much impact on property prices. I've said that it is generous and said that some property investors could be negatively gearing hoping for a capital gain but I doubt this has put much pressure on housing prices compared to the other causes such as land being released slowly, foreign investors and the lot.
I'm just telling you what the metrics say. Structural break from the CGT discount. Obviously it isn't the biggest factor though. Interest rates being in the basement and all that.
I think you've forgotten to put in that "a later date" would be when someone is not working as much (or at all). That way they get both the advantage of only pay tax on half the profit (if Howard's CGT discount is still in place) and the half they get taxed on would be taxed like normal income - i.e. they'd get lower tax as it wouldn't be added to their salary income. Of course if you were to change the CGT rule a lot of people might decide to sell to take advantage of the 50% rule while they could, and under Labor's proposal you would have got a bunch of people trying to buy to get in to negative gearing before that advantage was removed so supply-and-demand could be somewhat evened out there.
Neither would affect you. However, if they change the 50% CGT Discount change to be retrospective then it would affect you.
Was in another thread probably, he likes to spread his garbage.
Howard's changes came in Sep 1999... Hmm I wonder if there was an influence:
No, mate. Based on what actually happened. Not based on your invented numbers. Go check out the inflation rate. Go check out how much house prices have risen. Then get back to me.
So the fact that twice as many people are negatively gearing now is not because negatively gearing has gotten a much better ROI thanks to the discount?
A recent PM suggested politics is easier if you acknowledge it's governed by the iron laws of arithmetic.
No, it hasn't. 2.7% is the correct figure. That would be rounded down if you are looking to round it? Although obviously given the relatively small movements with inflation it's odd to round it. Also 1999 itself was higher, and given the changes came in Sep 1999, you can use the RBA inflation calculator from 2000 to work out that the average now is 2.6%. Or if you look at the trend at the time to see what may have prompted Howard you can look at inflation in his first term 96-99. It was 0.9%. Of course, like you did a page ago, they could see that inflation was much higher in the past and despite the clear downward trend, they claimed those high years as part of a long-term average to justify their 50% discount that would provide the windfalls to come.
It's about the accumulation of advantages. You are earning a lot of money. You buy your house in a popular area (inner city in a capital city), and get the tax advantages of negative gearing while getting a guaranteed 50% of the sale value tax-free. As Scotland stated, by selling in a year when you aren't working or post-retirement you will also be low taxed on the other 50%. Or perhaps gift some money to a relative who's a first home buyer and get a cash bonus, plus when they sell it, it will be in their name and due to their low income they will be taxed less than you would've been. And they can neg gear it if it's an investment house too, as it very often was when people did this. Plus of course the govt saying to new buyers 'here's some free cash' encouraged more people into the market to better ensure the capital gains for those who were investing...
