Belly, if you stop negative gearing you will also stop investers investing in housing, which, in turn, will increase rents as the old supply V demand issue will arise.

I do agree that we build our homes to large. To many 1st home buyers today don't just want 'a home' they want 'the home' and that;s the main problem.

As for your cottage senario, that's simply due to location and nothing more.

The cottage is litterally wothless, it's the land that holds the value.

Up here in Brisy, many older homes have lost value due to councils placing restrictions on what can be done to an older house. In this situation the land is worthless, yet concils don't see this with regards to rateable values.

Some owners have even resorted to placing termite nests under the older homes in an effort to have them condemned just so they can build their dream home.

My opinion is that so many people are to worried about 'street appeal' and, as a result they build a mansion, then scrape together what they can to deck it out.

In my view if one has say $200K to build with, they would be better to build a 'box' for say $80K, then spend $120K on fixtures and fittings. After all, we live inside houses and the outside is only 'wank factor' in many cases, often for the benefit of the jones.

Even public housing these days is build to fancy in my view. If they saved say 20% per house, that's an extra one in every five they could build with the same money.

Many people today are simply to fussy.

I agree with almost all of that Rechtub.
How ever did you see my proposal was to use very much positive gearing, in some areas,to increase building.
Even I if I had the money,would jump at the chance to invest and pay no tax on my earnings.
You have started a thread ,at a time, that is about to become historic.
The bubble has bust.
Just a small leak so far a threat that some ignore.
But no patch exists than can fix it or stop it blowing wide open.
Owners driven by THE HOUSE syndrome, we can bank on its value going up, now owe more than it is worth.
In your state a home bought for $550.000 offered for sale at $700.000, has been reduced to $400.000 and no offers have been made.
My cottage went up 250% in the first three months after I bought it,luck.
Each side of me has sold for twice purchase price the second time.
But one, sold three times lost $30.000 for its last seller
20 years ago every house in town could be bought for a quarter of what I paid ,country homes will remain about stable.
We live in harsh times this bubble will hurt many but others will buy and in time,not soon make good profits our housing bucket has many holes in it and we will see that all too soon.

Yeah, I REALLY need to win lotto.

<many older homes have lost value due to councils placing restrictions on what can be done>

<Many people today are simply to fussy.>

See the contradiction? It is the restriction on people that is the problem, not their fussy tastes. The big joke is that the restriction is there supposedly to protect people from poor quality development. It doesn't, as the many shoddy rabbit warrens in capital cities amply demonstrate. And the approval for such slums are made free of public scrutiny.

The truth is that the housing crisis is a direct result of development rights being severely restricted, then secretly and frequently corruptly administered.

OUG, why do you think that landlords are rich speculators? Some might be, but the richer ones tend to own commercial property (shopping centres etc), not houses. Most landlords earn not much more than the average income, and plenty earn below it. They often live in modest homes themselves, prefering to try and make more money for themselves in the long run than spend it on short term gratification. I own one rental property myself (which is negative-geared at the moment, as the rental has not yet increased to the stage where it covers my interest cost, let alone the capital repayments I have to make). When I had to evict a tenant for non-payment of rent, I went 5 months without rental income and still had to pay the mortgage. I have my own mortgage to pay as well, and a young family to support. I am not whinging about that (although I think its wrong to take so long to get rid of a tenant that is blantantly not doing what they should) - my point is that most people that rent out houses are not rich. Lakc of negative gearing would not stop property investors, but it does take away some of the reward for the risks taken, and it would certainly slow investment (money would head into the share market instead in a lot of cases). The result would be higher rents due to a shortage of properties. The impact is evident in country towns that have been subject to a mining boom. Rents soar, and the tend to stay up, even when the demand slackens off. It will only hurt renters more.

It never did make much sense to me to take a large chunk of money off the top of young peoples income at the time when they are trying to buy a home, & probably raise a family at the same well. You will be much better off at retirement age if you can get into the housing market young, than than you will be with a few extra dollars per week from super.

To do this to try to get the folk from the private sector off the government pension system, so they could afford the extremely generous public sector retirement benefits was to me a most cynical act.

I am not against super, I would have loved to have some, but it should be available to young home buyers to use when they need it most.

Surely it should not be too hard to develop a system that works better than the present one.