Absolutely spot on.
Just don't hold your breath waiting for this loaded with Landlords govt, to restore equity and fairness in the housing market?
As I understand it, we are the only country in the world who supports negative gearing madness?
Welfare for the rich that costs the taxpayer in excess of 5 billion plus per!?
Welfare for the rich that deprives single mums of a decent pension!
And then we wonder why there's ever increasing demand for abortion on demand?
There's a huge and ever widening gap between the actual cost of supplying housing and the end cost to the first occupier.
The cost of developing a quarter acre block, minus the inordinate govt fees and charges, is around 13,000. The cost of building a steel framed 4 bedroom two bathroom house, with a fifty year structural guarantee, on that block, is under 150,000!
Without all the additional fees and charges, and cascading "profiteering", new houses would still cost around three years worth of the average salary! If capital gains were to apply in spades to UNDEVELOPED land held as land banks, the cost of rezoned land would come way down. If a capital gains tax were to also apply to the windfall created by rezoning, there'd be less of this nonsense and fewer wealthy developers occupying key positions in local govt?
(And we'd get back to sanity, with less realtors than Pubs!)
Moreover, there ought to be an increasingly punitive land tax that applies to all undeveloped urban land!
Were we to reprioritize and reroute this negative gearing govt largesse, we would be able to roll out the missing infrastructure, that would make housing affordable once again!
Were that to happen, the govt would not have to also support quite massive amounts of rent payment subsidies, with equally obscene amounts of govt largesse.
Which when coupled to negative gearing, produces a huge UNEARNED windfall for indolent Landlords! Positive gearing however, would ease the pressure on our capital cities, and assist long overdue decentralization!
Rhrosty.

I agree with much of the article's analysis but I have puzzled over the lack of investment in new housing.. why has there been so little? One thought is that negative gearing investors are private and need an already built house/unit/flat, preferably with an existing tenant to help pay the interest on what are usually very high debt loads..

The actual creation of new stock would then be done by the spec building companies, who would then sell to the negatively geared investors. So the negatively geared buyers should be creating a demand for the spec buildings.. so how come so little new housing stock? The answer may be in land release policies, local government zoning and perhaps even a tax system which makes it advantageous for families to hold onto the one home.

Negative gearing is a permanent interest of swinging voters that no Party (Labor or Coalition) will disturb.

For better or worse this makes abolition or major reform of negative gearing an academic issue - no changes gonna happen.

The lack of investment in new housing has two major causes. Taxes which are in some cases, up to 40% of the purchase price. And the virtual doubling in real terms, of the cost of new stock.
Some of which is created by forcing the developer to pay additional tax, to roll out essential infrastructure.
Were we to redirect the money we would save, by cancelling negative gearing, we could roll-out most of this infrastructure ahead of development.
Thereby relieving some of the cost and the cascading tax burden, which this also creates.
Without negative gearing, there'd be fewer Landlords out there competing with ordinary home-buyers, for available stock.
Which in turn would reduce the demand for rental housing, with a subsequent reduction in average rents.
We also need to get on top of foreign property speculation, which currently, is quite massively and adversely distorting our property markets, rural and residential! Windfall profits, which can and does remain largely untaxed, is like lotto and remains equally unearned!
The property market and all who rely on it, would be far better served by volume than margins; and house prices that matched the CPI, rather than quite massively and repeatedly, year on year, exceeded it!
This would assist current property owners, inasmuch, their kids could more easily buy their own place and allow the oldies to make some actual choices about the direction they wanted their own lives to head in. As a home owner, all the increased value has actually meant, is increased rates, fees, insurance charges and realtors' fees, when I need to buy the even more expensive, in real terms, replacement home.
Or put another way, a lose/lose outcome for almost everybody, except the govt and the man with the gavel!
Rhrosty.

Rhrosty - tax has some influence on the property market but 40 per cent of the purchase price is nonsense. I have seen attempts to claim proportions of that sort but the analyses is full of holes.. you need to check your sources on that one.

The generally accepted explanations are failure to release land and the general failure to build flat and units at the pace required.. with land so expensive the usual solution would be to build up, but that isn't happening.. so why not.. part of the blame can be laid at the door of stamp duty regimes positively discouraging anyone from moving..

Curmudgeon, I think the solution to your question is to look at where rental demand is highest. It tends to be in the established areas of towns, close to educational institutions and public transport. There is very little new housing supply in these areas, so of course investors are going to buy what is available.

Another issue is probably the question of return. I suspect, but can't be sure that brand new houses don't give as good a return as older stock. Particularly if the owner is prepared to do maintenance in their own time using their own physical resources. From memory most real estate investors own one investment dwelling, so there are probably a lot of them doing their own maintenance etc. and as savings are tax free, you can more or less double the dollar value benefit as against earning the same income.