Poirot, of course the top 10% collected 50% of the neg gearing benefits, because they pay the most tax (49%) and people on $25k should not own a property as they can't afford it, so no wonder these lower income earners are not buying new houses.

We still have 90% of investment property holders claiming tax deductions on investment properties to get ahead. The vast majority don't want to rely on the age pension and would prefer to be self funded retirees. The more self funded the better Australia is. Our social security bill keeps getting bigger and bigger.

If you remove the tax incentives of negative gearing on properties, no one would invest as the yield (rental return) is far too low.

Less private houses equals more demand on public housing which means increased rents.

It does not matter very much what the politicians do.
The banks, as the economist on Lateline explained the banks have been
booby trapping the economy in exactly the same way the US banks did in 2000 to 2008.
They have even gone to the extent of altering client incomes to enable
larger loans and doing anything to get mortgages on their books.
Just to make it worse they have bundled up these sub-prime (remember that phrase)
loans and selling them to investors.

The big difference is our borrowers are deeper in debt than the US
borrowers and have greater debt to gdp ratio by a long way.
Just like in the US, the price of oil is likely to rise around the
end of this year or by mid next year, BOOOMMM !

Will they never learn ?

just a note to the under achievers here, remember, the 'top end' are the SOLE REASON you have a roof over your head and food to eat, because they subsidise your lifestyles. Remember that when you go bagging them.

Brock, I invite you to go for a drive down just about any suburban café strip on a Saturday or sunday and you will see for yourself why so many young people don't own a house.

They claim they cant afford a house, yet willingly pay $45 per litre for warmed milk and $8 for eggs. Not to mention the tens of thousands of dollars painted on their skin. This is why they cant afford a house, its called 'lifestyle choices'.

Porit, im starting to think you believe the rubbish you read. Simply do the math. Abolishing negative gearing will see many lining up at the soup kitchens.

Believe what you will but as an investor with multiple properties myself, I will not invest with after tax dollars to gain a 5% return when I can get the same return by debt reducing my existing portfolio. Great for me but who's going to buy the new homes.

Re Labor's NG changes,Poirot opines "The only impact on rents would be to reduce them"

Geez, even Daley's not claiming that!

Here's how it goes
a) house prices fall, hence % rental return on property value rises, but not enough to interest investors
b) investor house building ceases as the unknown of the resale hangs over the business case due to no NG permitted on the aged asset.
c) demand for housing outstrips supply and rents rise.
d) at some point the business case becomes compelling and building new or buying older houses to rent resumes.

In the transition, losers will be property owners watching their asset value fall, and renters watching rents go up. The winners will be owner-occupiers buying. After that, life will go on.

Won't it be so great tho' that everyone who wants to buy a house will then be able to do so, wherever they want! Ah, the marvel of gov't intervention in the housing market!

Luciferase,

Geez - thanks for that, but the overall picture from Daley is that there would be a minimal affect on rents.

"House prices might drop by about 2 per cent, Grattan Institute chief executive John Daley said. "These changes will make housing more affordable. They will have minimal impact on either rents or the rate of new development."

"The report by the Grattan Institute, whose founding supporters include the Australian government and BHP Billiton, has recommended phasing in a 25 per cent capital gains tax over several years. Similarly, negative gearing restrictions could be phased in, with incremental reductions in the proportion of losses that can be written off against wage and salary income."

http://www.afr.com/news/politics/grattan-institute-backs-labors-negative-gearing-policy-20160425-goe2op#ixzz4742ay1ef

John Daley - "Sorry Malcolm, you are wrong on negative gearing."

http://www.afr.com/opinion/grattans-john-daley-sorry-malcolm-you-are-wrong-on-negative-gearing-20160426-gofptb

"But independent modelling shows there will be "significant" long-term savings from Labor's proposal to quarantine negative gearing to new housing investments from July 2017, eventually raising between $3.5 to $3.9 billion a year.

It also shows Labor's proposal to cut the capital gains tax discount from 50 per cent to 25 per cent would raise about $2 billion a year in the long term.

It shows the vast majority of savings would be at the expense of the top 10 per cent of earners who negatively gear their properties.

It also estimates that by restricting negative gearing to new housing, the policy would "increase the share of investment housing devoted to newly built housing" by 10 to 20 per cent.

It does not say house prices would drop.

"Our modelling shows that negative gearing benefits high-income families with 52.6 per cent of the benefit going to the top 20 per cent of incomes," the paper says.

"Only 5.2 per cent of benefits go to the bottom 20 per cent of incomes. This result is mostly driven by high-income families being more likely to negatively gear, having larger negatively geared deductions, and a progressive tax system that magnifies the gains for higher income persons.

The modelling was done by the Australian National University's Centre for Social Research and Methods.

It was not commissioned by any political party, organisation or individual."

""Most of the benefit of negative gearing clearly goes to the top 10 per cent, and it's the same for the capital gains tax, by a very large margin," Mr Phillips told Fairfax Media."

http://www.smh.com.au/federal-politics/political-news/independent-modelling-backs-labors-negative-gearing-policy-20160219-gmyl8o.html#ixzz474fJmOUK