Quote:
Originally Posted by Astro_Bot
There'd be no drop in supply, all other things being equal - it's the same number of people and the same number of properties/beds - just a conversion (to what degree is arguable) from renters to owners.
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Not exactly true Astro Bot, although I agree that it is currently the case.
The population projections for Australia are
staggering. The ABS shows that Australia's population is projected to reach, on current trends, 46 million by 2075.
House ownership (owned or buying) in Australia is currently around 70% of the population. Assuming that current trends remain the same, which it won't (due to housing affordability), that will mean that 30% of the projected growth will not be able to buy their own home. That is a staggering extra 7 million (around 14 million in total, including those that currently rent) people will require either fully subsided government housing or privately provided rental accommodation.
If government remove negative gearing, it will mean one of three things, I think.
Either the government has to directly provide the housing, at a tremendous cost, including the maintenance cost of these properties (which is much more than what they are paying for negative gearing), or give incentives for private investors to provide this housing, through negative gearing or some other form.
The third alternative, which is the more likely, will be to jack up rents to cover the full cost of buying an investment property. And don't forget, you still have to factor in the interest costs, as that will also be passed on to the tenant.
If this percentage of people cannot afford to buy their own home, then they certainly won't be able to pay rent.
Unfortunately, as I see it, it is a viscous circle. The government will have to pay, one way or the other, so it comes down to what is cheapest. Currently, in helping people create wealth, makes the nation wealthier as a whole. Unfortunately, there will always be losers.
Whether we, or the government, like it or not, they are going to help people create wealth. The only other alternative is to end up a poor, third world like, country, unless we just end up with a dictatorship.
Hockey may be right when he says the 'age of entitlement' is over, however, history shows us that never ends up being pretty.