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stui magpie 
Prepare for the worst, hope for the best.
Joined: 03 May 2005
Location: In flagrante delicto
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That's one clearly biased view, here's a different view that may or may not be just as biased, I'm not sure.
| Quote: | NEGATIVE gearing.
Evil multi-billion-dollar tax rip-off? Perfectly legitimate tax practice? The absolute foundation of a good investment portfolio for ordinary Australians? The driver of over-inflated property prices? The only honest answer is bits of, all, and none of the above.
Let’s start with the term, which is actually meaningless nonsense if taken literally. |
http://www.heraldsun.com.au/business/terry-mccrann/demonising-the-logical/news-story/ad21b3b33cccd39cc11cd6d6ac733783
That's the explanation in simple terms of how it works.
Here's the analysis of Labor's policy.
| Quote: | BILL Shorten’s plan to limit so-called negative gearing to new investment properties is fundamentally flawed and would wreck the investment property market.
Not only would it savagely reduce all such investment into both old and new properties, the Shorten plan would actually lure unsophisticated investors into the very property investments that would likely end up burning them badly.
Further, the Shorten plan is at the same time a bizarre, if unstated admission that the very same negative gearing is not only good for the economy but vitally necessary.
Yet Labor would — obviously, totally unknowingly — undermine it! |
http://www.heraldsun.com.au/business/terry-mccrann/shortens-plan-to-limit-negative-gearing-to-new-investment-properties-is-flawed-and-would-wreck-the-investment-property-market/news-story/650b1ec8f05e5d555783aaf6cf302935
I'm sure there's holes in it but McCrann is actually usually a pretty good economic analyst
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Every dead body on Mt Everest was once a highly motivated person, so maybe just calm the **** down. |
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Culprit 
Joined: 06 Feb 2003
Location: Port Melbourne
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| I love negative gearing. To suggest that removing it will drop house prices is laughable. Supply and demand dictates pricing, always has. |
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stui magpie
Prepare for the worst, hope for the best.
Joined: 03 May 2005
Location: In flagrante delicto
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| Culprit wrote: | | I love negative gearing. To suggest that removing it will drop house prices is laughable. Supply and demand dictates pricing, always has. |
Yeas and no, Supply and demand will dictate prices no doubt and always will but every house isn't equal, location plays a big part.
Investors usually have deeper pockets than home buyers but you also pay a higher interest rate on an investment loan than on a home loan to live there. So if you want to buy a house to rent out, remove negative gearing and you need to make sure the rent will cover repayments and maintenance because you can't rely on claiming a tax deduction for any loss.
You'd have to surely expect that's going to impact the amount an investor is willing to pay which, under supply and demand, will bring prices down which is a double edged sword.
Would be a good thing to make housing somewhat more affordable for first home buyers (although they already get all kinds of concessions) but not so much for someone who recently purchased and now finds the value of their home is less than what they paid for it. That's the point that may influence a lot of people, nothing like self interest. 
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Every dead body on Mt Everest was once a highly motivated person, so maybe just calm the **** down. |
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think positive 
Side By Side
Joined: 30 Jun 2005
Location: somewhere
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| stui magpie wrote: | | Culprit wrote: | | I love negative gearing. To suggest that removing it will drop house prices is laughable. Supply and demand dictates pricing, always has. |
Yeas and no, Supply and demand will dictate prices no doubt and always will but every house isn't equal, location plays a big part.
Investors usually have deeper pockets than home buyers but you also pay a higher interest rate on an investment loan than on a home loan to live there. So if you want to buy a house to rent out, remove negative gearing and you need to make sure the rent will cover repayments and maintenance because you can't rely on claiming a tax deduction for any loss.
You'd have to surely expect that's going to impact the amount an investor is willing to pay which, under supply and demand, will bring prices down which is a double edged sword.
Would be a good thing to make housing somewhat more affordable for first home buyers (although they already get all kinds of concessions) but not so much for someone who recently purchased and now finds the value of their home is less than what they paid for it. That's the point that may influence a lot of people, nothing like self interest. |
I know a few people who invested back when it was really worth it and the price was well reflected with the rental expectation, none of them had deeper pockets, just an attitude of a second hand car will do me now, let's invest for the future, for us and our kids. And yes, now, they and we can afford new cars and nice houses, and boy don't we get resented for it! (I'm no saying resented by you, I know you don't see things that way).
The investors that should be deterred are the overseas buyers, buying up whole towns, they are the ones doing the real damage, not average joe buying uncle Fred's house for a song.
An investment is a form of work, saving for your future like super, so you don't have to claim a pension, and expenses, just as a mechanic and his tools, should be able to claim a tax deduction.
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You cant fix stupid, turns out you cant quarantine it either! |
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stui magpie
Prepare for the worst, hope for the best.
Joined: 03 May 2005
Location: In flagrante delicto
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^
Zero argument with the overseas investors, you shouldn't be allowed to buy residential property if you aren't a resident. Screw em.
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Every dead body on Mt Everest was once a highly motivated person, so maybe just calm the **** down. |
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David
I dare you to try
Joined: 27 Jul 2003
Location: Andromeda
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Why not? Do you oppose free trade in principle, or just when it comes to housing?
(Personally, I also think overseas investors have played a role in the huge rise in house prices, but probably less so than locals playing the property market. The answer is to stop subsidising both, imho.)
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All watched over by machines of loving grace |
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HAL
Please don't shout at me - I can't help it.
Joined: 17 Mar 2003
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| No one has all the answers. |
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stui magpie
Prepare for the worst, hope for the best.
Joined: 03 May 2005
Location: In flagrante delicto
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| David wrote: | Why not? Do you oppose free trade in principle, or just when it comes to housing?
(Personally, I also think overseas investors have played a role in the huge rise in house prices, but probably less so than locals playing the property market. The answer is to stop subsidising both, imho.) |
I agree with free trade but I don't believe it should apply to residential housing in particular and property in general.
They aren't going to make anymore land anytime soon, purchasing that should have residential limitations.
Chinese investors have played a large role in driving up house prices in many of the sought after areas, driving locals out of the market more than local investors ever could.
Free trade is a different thing IMHO.
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Every dead body on Mt Everest was once a highly motivated person, so maybe just calm the **** down. |
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What'sinaname
Joined: 29 May 2010
Location: Living rent free
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Change negative gearing to not allow losses to be offset against other income. Just quarantine the loss to be offset against gains on tat property.
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Fighting against the objectification of woman. |
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pietillidie
Joined: 07 Jan 2005
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| stui magpie wrote: | | David wrote: | Why not? Do you oppose free trade in principle, or just when it comes to housing?
(Personally, I also think overseas investors have played a role in the huge rise in house prices, but probably less so than locals playing the property market. The answer is to stop subsidising both, imho.) |
I agree with free trade but I don't believe it should apply to residential housing in particular and property in general.
They aren't going to make anymore land anytime soon, purchasing that should have residential limitations.
Chinese investors have played a large role in driving up house prices in many of the sought after areas, driving locals out of the market more than local investors ever could.
Free trade is a different thing IMHO. |
Housing, like health care and education, among other core life requirements, needs to be quarantined from *any* destructive investment capital, ranging from overseas buyers to negative gearing. It's got nothing to do with the capital being foreign or not, as with health and education.
I've got no problem harnessing capital in these areas, but under strict provisos. Once it starts interfering with good policy and access, it has to be reined in.
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In the end the rain comes down, washes clean the streets of a blue sky town.
Help Nick's: http://www.magpies.net/nick/bb/fundraising.htm |
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Wokko 
Come and take it.
Joined: 04 Oct 2005
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Even as a free market Libertarian I tend to agree with not allowing foreigners to buy up residential housing AND farmland. I guess that's why I prefer National Libertarianism (or whatever that would be called) to the open borders anarcho-capitalists.
Free trade is almost always a good thing, but 'selling the farm' both figuratively and literally is not a good thing. Do we really want China controlling our food production and exports? Are we happy to have houses sitting idle while young couples live in emergency housing with the Salvos while they wait for a public housing unit to free up? In a world that doesn't and cannot have true open, free trade there has to be a few National safeguards to protect your society from economic warfare. |
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pietillidie
Joined: 07 Jan 2005
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| What'sinaname wrote: | | Change negative gearing to not allow losses to be offset against other income. Just quarantine the loss to be offset against gains on tat property. |
Well, that's the very heart of what drives the additional market activity and speculation, of course, so it's the same as saying get rid of it and return to more normal levels of activity in the housing market.
There are two parts to the problem here:
The first is the special nature of housing and its critical role in high-quality, high-functioning societies. You can't take away the incentive and stability of home ownership from society; that is just a rubbish idea. As Keating said, you want everyone to be rewarded with a stable nest egg, which in most cases is a home. (He then added super reforms on top of that). This gives society an actual and psychological stability.
Flowing from that is the second part of the problem. Because housing is an essential social requirement, you don't want to create an unstable third-person market for it. You want investment in it as needed, but you don't want to create speculation and bubbles.
This is not only because of times of hopeless un-affordability as we have presently, but because (a) bad urban planning is extremely expensive, and wrecks budgets long-term, and (b) we want to direct people's investment activities to more appropriate parts of the economy.
The bizarre fact which seems to have been missed by everyone is that the GFC, which saw a massive expansion in housing, and then a collapse of prices (in many countries), has resulted in greater housing un-affordability. How did that happen?
Simple: Housing is not a dumb first-year economics supply-and-demand line. Draw one of those and you might think the GFC should've made housing more affordable.
Wrong! The GFC was a general economic crash, not a collapse in something like the price of sugar or LCD screens. Housing crashed along with employment and the ability to secure and service loans. Combine this with the long-term trend of declining real wages, and even less people can now afford homes.
Even worse, much of society has lost the psychological incentive of owning a home and a stable asset; watch the dastardly impact of that flow through (to be blamed on the arrival of dirty brown people, of course!).
Meanwhile, socially-detached wankers who think the shadow of another structure should not come within a hundred yards of their house, as if they purchased an entire suburb along with their property, have the money to politic and push this speculative building further beyond the city, smashing budgets and dumping young people in Nothingville suburbs. (Oh, but everyone will tell you how "lovely" their service-less, ridiculous-commute outer suburb is because they're scared shiteless reports of reality will affect their house price).
And so the clown show goes on.
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In the end the rain comes down, washes clean the streets of a blue sky town.
Help Nick's: http://www.magpies.net/nick/bb/fundraising.htm |
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pietillidie
Joined: 07 Jan 2005
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| Wokko wrote: | Even as a free market Libertarian I tend to agree with not allowing foreigners to buy up residential housing AND farmland. I guess that's why I prefer National Libertarianism (or whatever that would be called) to the open borders anarcho-capitalists.
Free trade is almost always a good thing, but 'selling the farm' both figuratively and literally is not a good thing. Do we really want China controlling our food production and exports? Are we happy to have houses sitting idle while young couples live in emergency housing with the Salvos while they wait for a public housing unit to free up? In a world that doesn't and cannot have true open, free trade there has to be a few National safeguards to protect your society from economic warfare. |
This gets back to the problem you face trying to be Libertarian: At some point you hit real, non-market constraints, such as national boundaries, and city limits.
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In the end the rain comes down, washes clean the streets of a blue sky town.
Help Nick's: http://www.magpies.net/nick/bb/fundraising.htm |
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Wokko
Come and take it.
Joined: 04 Oct 2005
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| pietillidie wrote: |
This gets back to the problem you face trying to be Libertarian: At some point you hit real, non-market constraints, such as national boundaries, and city limits. |
The same applies to any ideology. When a political ideology is allowed to have total free reign you get the USSR or National Socialist Germany. If someone can't look over the fence and cherry pick some things that are better from the 'other side' then they're simply zealots. |
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pietillidie
Joined: 07 Jan 2005
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^Yeah, but Libertarianism isn't cherry picking; it's applying friction-less expectations to a world of friction. As outlined above, the housing market, like many such markets, has massive frictions associated with.
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In the end the rain comes down, washes clean the streets of a blue sky town.
Help Nick's: http://www.magpies.net/nick/bb/fundraising.htm
Last edited by pietillidie on Wed Feb 24, 2016 12:33 am; edited 1 time in total |
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