Quote:
Originally Posted by Astro_Bot
You completely misunderstand me, Pete, so I'll make it clearer: At any given point in time, "it's the same number of people and the same number of properties/beds".
Property investors mostly buy existing properties (as do owner occupiers). Whilst negative gearing is a sledgehammer that supports enhanced wealth creation for investors regardless of the type of property, we want to increase affordability of whatever stock there is for owner-occupiers. If any investment re-direction is going to occur, IMHO, we want to direct investment purchasing towards new construction (and, yes, I realise land release, zoning and corresponding infastructure investments are vital parts of that solution). This requires more of a "scalpel" approach to policy.
Although I would have thought it goes without saying, population growth is a factor that affects demand, not supply.
I'd like to address a few of your other points, in both posts, but I'm afraid they're layed out in such a way that I can't follow your argument. Perhaps it's for the best, as I should let others have their say. 
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If negative gearing were to be removed, I agree that a step change could be quite harmful. It would need to be carefully phased-in, as others have suggested.
Here's a related question (to which I don't know the answer):
Do all those in favour of retaining negative gearing own* an investment property, have a plan to purchase one, or otherwise benefit from keeping property prices high (e.g. part of their retirement funding will come from a property sale**)?
* Or through a family member, property trust, etc.
** Keep in mind, people who trade a property on moving (sell one, buy another) are fairly well immunised against price movements, except for "downsizers" who may convert some liquidity to other assets or cash. |
Agreed.
Demand and supply are interrelated anyway Astro. It's all well and good to say that investors are only buying established properties, but that isn't correct. The last figure that I saw, mid last year, from the ABS, was that around 45% of new starts were for investors, at that time, although owner occupiers had risen as well, annually around 13% last year, as far as I am aware. If you remove that 45% from the building industry, what happens to employment? It all has a flow on affect.
But, as I have said, I am no economist, so what the hell would I know? All I can say for certain is that I am glad that I am not just starting out, as it would be tough.
Full comments withdrawn. I withdraw from all further comment on IIS.