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The Forum > Article Comments > Housing crisis or just bad policy? > Comments

Housing crisis or just bad policy? : Comments

By James Arvanitakis and Lee Rhiannon, published 20/8/2010

For too long housing policy has been limited to quick fix solutions that benefit developers and those already in the market.

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Ozandy, I'd never be so damn silly as to own a rental house. Perhaps a rental commercial property, but every cent I have is in my home, cars, & equipment. Not much of it gets used these days, but I can't stand to let it go. I'd love to be as well off as a retired public servant.

They tried dropping negative gearing during the greatest treasurers time. Had to bring it back, before all tenants were out on the street.

What ever you think is the reason, [I believe it's government & green stupidity], in most of the world, including the US, & the UK, rent income will pay off the mortgage on a property, but not here you may know. That's why negative gearing was introduced.

Oh, by the way, I live in whop whop myself, about 28Km from the nearest public transport, chemist, doctor, etc.

Gruptland, that's how it works now mate, or did you not know. With negative gearing rent becomes tax free, as it doesn't cover expenses, & interest costs. However, capital gains tax must be payed on all/any capital gain.

Pericles, I wouldn't care if they went bush, or were made redundant. As a bush kid, & then dad, I know the problem of country kids, having to go to the city to get any sort of job, we had to go, even to get an education.

I would love to see nice, comfortable, well paid, public service jobs available at home for these kids. I also see the problem for grand parents, particularly mothers, when the kids are a long way away.

It is just as well I like batching, but the fuel costs for all the driving are a bit "exy". It may become a real problem when the one in Sydney starts breeding. The air fares will stretch the budget a bit.

Yes, I know, pie in the sky idea, but it would be nice to see a bit of equity, & we have all those empty bank buildings, & closed hospitals to fill somehow.
Posted by Hasbeen, Friday, 20 August 2010 4:25:45 PM
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I'll tell you what...if I could get a good govvy job in a rural area I'd jump at the chance...would be heaps better than commuting into a city everyday - quieter, more relaxing, etc - but there appear to be so few govvy jobs outside the cities.
Posted by Phil Matimein, Friday, 20 August 2010 5:16:50 PM
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Re: "They tried dropping negative gearing during the greatest treasurers time. Had to bring it back, before all tenants were out on the street."

That plausibly-assertible convenient untruth is debunked at http://www.theage.com.au/opinion/politics/caught-in-the-cogs-of-the-tax-regime-20100329-r852.html (claims 1 and 2) and http://www.smh.com.au/articles/2003/08/24/1061663676588.html .

Besides, there are ways of restricting negative gearing so as to INCREASE the supply and availability of rental accommodation; e.g. allow negative gearing only if there's a tenant in place, but exempt future construction from that requirement for (say) five years after construction.

Re: "With negative gearing rent becomes tax free..."

Not at the margin. Negative gearing means that the marginal tax on rental income is at the full rate even if you're making a loss. And to qualify for negative gearing, you only have to make the property "available" for rent; you needn't actually get a tenant and starting receiving income. So finding a tenant is a fully taxable event -- a bit like losing the dole for finding a job, with a similar effect on incentives.

Re: "However, capital gains tax must be payed on all/any capital gain."

Discounted by 50% if you hold the asset for more than a year.
Posted by grputland, Friday, 20 August 2010 6:14:21 PM
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What a crock of BS is this article.Lee and Mark are blaming the developers.Govt is in bed with big business.

The reality is this.The NSW Govt restricts the supply of land to maximise the profits for both developers and the Govt in order to screw the young house buyer.The banks then get to finance over priced realestate.In NSW 38% of a house land package is made up of Govt taxes and charges.This is again screwing the young prospective house buyer.

How can a country with so much land and so small a population have the most expensive housing on the planet? It is corruption.How can a school tuckshop under Labor cost $600,000 and still be inadaquate?

Lee Rhiannon and her side kick Mark have no credibility.
Posted by Arjay, Friday, 20 August 2010 8:07:09 PM
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There is a very simple measure that would restore affordability to the housing market - the gradual re-introduction of a minimum 25% deposit from buyers. I know most prospective first-home buyers will recoil in horror at the mere suggestion, but it will be to their benefit if they're thinking long-term. The single biggest underlying cause of our "housing crisis" is unrestrained access to credit. The more money the banks throw at people, the higher they will bid up the house prices - it's simple economics and I don't understand why it's beyond the grasp of so many in this nation of ours. Of course it's not beyond the grasp of our banks, our real estate agents, or our politicans - they understand perfectly but they're working on a commission basis (be it pecuniary or otherwise) so honesty takes a back seat.

I remember going to the bank for a mortgage in 1996 and being scrutinised by the branch manager. Not only did she seek to establish that I had a minimum 25% deposit; she also wanted evidence that I'd saved it all myself and that it wasn't just a gift from some benevolent relative. And of course it goes without saying that I wore a *suit* to the interview, as any sensible person would have done back then if they wanted to secure the deal. All this for a mortgage of just $75,000.

But you know what - this strict lending approach was to my benefit because it limited the number of people I was competing against in the bidding war. When I went to view properties, I was generally only standing alongside individuals who, like me, had spent at least five or ten years saving hard. Contrast this with today's situation where almost anyone over the age of 18 comes equipped with a first home owners grant, a pre-approved mortgage for 500K or 600K (which they probably obtained online during their coffee break at the office), and a penchant for debt which makes horserace punting look conservative - go figure what that does to house prices.
Posted by Mandy9, Wednesday, 25 August 2010 5:46:17 AM
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