my agenda for suggesting changes to negative gearing (not removing it) is very simple. it has skewed the housing market and speculators/investors are driving up the price of houses for those wanting to buy a house to live in.

the figures i quoted came from the Reserve Bank's submission to the Productivity Commission Inquiry into housing affordability.

Quite simply those figures showed housing affordability has dropped to the 1991 levels when interest rates were high.

New financing for owner/occupiers is dropping.

A decent society allows fair opportunity for people to acquire basic necessities such as housing. Our tax system should not allow speculators to drive house prices up by providing public subsidies for wealth creation at the expense of those wanting to achieve home ownership.

We should have fiscal policies that enable affordable housing, not encouraging asset inflation with the corresponding impending correction that could leave many devasted people in its wake.

Thus the changes I have suggested will remove the extreme heat from the market. It will encourage investors/speculators to turn over their properties every seven years and realise their capital gains, thus providing a mechanism to provide affordable housing.

I propose a law be enacted, to make it illegal to collect rent or interest, before you write me of as a loonie, think about a world without those parasitical activities, it will never happen because governments and the system of permission/justice are chocker block full of rent and interest collectors.
You may say we cant survive without the collectors of rent/interest, that is because you do not know what this world would be like without them.
To start with ,all nations would have money of the same value, that would mean we would not be bringing pineapples from Brazil to sell in a market in Queensland surrounded by pineapple farms, this happens because of the middle men in the money market, if you make 100 times more for a product you sell ,you are said to be a good business person not a thief, thats because those with the power collect rent and interest, negative gearing and rent assistance are indirect payments to greedy collectors, Howard handed out a $14000 first home grant it generated hundreds of billions of dollars out of thin air, where did all this money come from, and who recieved the most the collectors of rent and interest

Here is the rental data from the 80s when negative gearing was abolished ... I don't see the correlation, given what interest rates where doing at the time ...
QUARTERLY MEDIAN RENTS OF THREE BEDROOM HOUSES LET
($ PER WEEK)


QUARTER SYD MEL BRI ADE PER CAN HOB DAR
Mar N/A 94 87 82 74 82
Jun 130 108 90 76 78 84
Sep 115 102 96 92 79 82
Nov 108 96 103 85 75 85
Mar 105 95 95 95 87 90
Jun 116 103 108 100 81 N/A
Sep 109 106 95 107 79 N/A
Nov 125 110 94 99 79 117
Mar 125 108 99 110 88 110
Jun 132 116 97 108 88 130
Sep 128 115 101 118 80 127
Nov 131 117 102 111 102 145
Mar 137 124 101 108 83 142
Jun 160 119 97 114 89 140
Sep 161 125 102 113 86 152
Nov 163 123 109 114 85 144
Mar 157 123 110 118 102 150
Jun 152 129 110 120 136 152
Sep 162 129 106 119 131 160
Nov 181 136 104 119 142 149
Mar 187 133 105 119 130 145
Jun 252 136 128 125 123 153
Sep 230 138 122 122 120 149 129
Nov 215 139 123 125 124 158 125
Mar 205 140 125 120 120 150 130
Jun 223 143 128 123 130 152 120
Sep 210 145 140 120 125 150 120
Nov 220 140 140 125 135 153 120
Mar 220 145 147 131 135 155 123
Jun 200 150 150 130 135 155 120
Sep 200 150 150 140 135 150 130
Nov 200 160 150 140 138 155 135

oops here it is with the years:


QUARTER SYD MEL BRI ADE PER
1982 Mar N/A 94 87 82 74
Jun 130 108 90 76 78
Sep 115 102 96 92 79
Nov 108 96 103 85 75
1983 Mar 105 95 95 95 87
Jun 116 103 108 100 81
Sep 109 106 95 107 79
Nov 125 110 94 99 79
1984 Mar 125 108 99 110 88
Jun 132 116 97 108 88
Sep 128 115 101 118 80
Nov 131 117 102 111 102
1985 Mar 137 124 101 108 83
Jun 160 119 97 114 89
Sep 161 125 102 113 86
Nov 163 123 109 114 85
1986 Mar 157 123 110 118 102
Jun 152 129 110 120 136
Sep 162 129 106 119 131
Nov 181 136 104 119 142
1987 Mar 187 133 105 119 130
Jun 252 136 128 125 123
Sep 230 138 122 122 120
Nov 215 139 123 125 124
1988 Mar 205 140 125 120 120
Jun 223 143 128 123 130
Sep 210 145 140 120 125
Nov 220 140 140 125 135
1989 Mar 220 145 147 131 135
Jun 200 150 150 130 135
Sep 200 150 150 140 135
Nov 200 160 150 140 138

dovif,

could you explain how a rising tax free threashold decreases the attractiveness of negative gearing?

Negative gearing need not bee abolished overnight it could just be an incremental thing so as not to shock people.

To me its a thing that happens with a second property and only happens to avoid tax.

Since the name of the game is to have everyone buy a house of thereown and live in it, and negative gearing raises the price of houses and makes them inaccessable to first home buyers it may be a bad thing.

Lets have negative gearing on only the home you are living in!!

If it is remeoved could not tax rates be lowerred all around?

Abolish it.

So the holding of property (at current prices only) will be very unattractive.

So the prices will fall - by 20%, by 50%, by 90%? They will fall to the TRUE value, where the cost of buying an investment property gives a return which is equivalent to the borrowing interest rate or a bit better.

Young people will be able to afford to buy a home, or finance its construction with loan repayments approximately equal to the weekly rental. Better a long way than the current situation where your greed has put the likelihood of home ownership out of reach of most who don't already own one.

Shame on you who want to keep it that way, like the original author of this topic, a vested interest who is motivated by greed.

If you're worried about the housing numbers not keeping up with immigration -then reduce it.

This Age article from 2003 still holds true today:
http://www.theage.com.au/articles/2003/07/07/1057430135658.html

What could be better (except for all those of you blinded by greed)?