Poirot, do you seriously think a 2% reduction in house prices ($10,000 on a $500K home) will be the difference between home ownership and no home ownership?

Furthermore, have you considered the impact on values and how the banks will view this. What happens if the banks see the devaluing of housing as a reason to strengthen borrowing criteria?

What if banks decide that home owners are going to have to carry more of the risk, say 25% or 30% as used to be the norm in the 70's/80's. How is this going to assist housing affordability?

What if mortgage insurers decide that their risk is worth more and charge more. How is this going to make home ownership more affordable?

If rents were cheap and houses were in abundance, and more importantly, affordable, then by all means look at NG, but the situation is exactly the op.

I do agree that Ng needs to be looked at, but a smarter approach would be to set limits, not abolish it on used homes, as well as used commercial.

You are welcome to think that rents will drop, I just hope you are not renting as I would not be tasking such a gamble.

Rechtub said;
Great for me but who's going to buy the new homes ?

Errr, it won't be the Chinese.
On the TV & radio last night; the banks are banning making loans to
overseas real estate investors. So far only NAB is holding out.

It seems that the mainly Chinese "investors" were playing the rising
market by putting deposits on units and then selling for the capital gain.
As the capital gain has halted they are trying not to go ahead
when time for settlement comes up. The banks are having trouble
getting money out of the buyers.
It would be interesting to know the mortgage default rate.

While the Grattan institute is nominally independent and non aligned, so supposedly is the Fair Work Commission, that labor set up and stacked with ex union heavies, and the ABC which is left of Labor.

The "report" from the Grattan institute on the issue is by John Daley alone, and while containing some information is not based on modelling at all, and as such is no more than a relatively well informed opinion piece. That in the report it cautions that the report does not reflect the opinion of the Grattan institute is give away.

This should be competently modelled by treasury, and until then the closest we have is the independent BIS report.

If "It does not say house prices would drop", Poirot, what is all this about improving housing affordability? Is this just a screen for the envy driving Labor's policy?

Luciferase,

"If "It does not say house prices would drop", Poirot, what is all this about improving housing affordability? Is this just a screen for the envy driving Labor's policy."

Lol!..the "envy"....it's a "class war" - yep, we've heard it all before.

I expect housing prices would drop minimally - and it may certainly stem housing price rises. We have one of the most expensive real estate markets in the world - zooming up since negative gearing was established.

Have you got a problem with making housing more affordable for...um...well...first homebuyers?

We all know negative gearing has inflated house prices.

And the big winners are the top 10% who gobble up around 50% of the negative gearing dividends.

SM,

What have you got to say about the independent modelling from the ANU?

As far as I can tell, apart from righties, the BIS Schrapnel report was laughed off the table.

Furthermore...

"The report addresses not just negative gearing but also the forgotten child of the housing affordability debate – capital gains tax.

In reality it is changes to capital gains tax in 1999 that really set the fire under the housing market by turning negative gearing from a niche activity to one which the treasurer would suggest is a favourite of nurses and teaches and police officers – the archetypal “mum and dad investors”.

Prior to 1999 capital gains were taxed at a real rate – the nominal return less the inflation rate over the period you owned the investment. The Howard government then changed it to taxing the nominal rate, but only for half the amount.

At the time there was actually debate over whether or not this would lead to people paying more tax."

"Prior to the CGT changes, the number of rental properties that produced a loss were roughly equal with those that made a profit. But as soon as the changes came in, rental losses became much more attractive"

"The reason is the combination of the CGT discount and negative gearing made for a very attractive tax minimisation scheme.

The tax system thus in effect encourages you to engage in “debt-financed and speculative investments” because negative gearing enables you to minimize your current income and the CGT discount enables you to minimize the tax on your profit – because you get to choose when you sell your property."

"The Grattan Institute notes that 54% of the benefits from negative gearing goes towards the top 20% of taxpayers. But importantly, because negative gearing is used to reduce people’s taxable income the report also notes that when you look at peoples’ incomes before taking out the rental losses, the benefits are even more unequally distributed – with 47% going to the top 10% and 68% to the top 20%."

http://www.theguardian.com/business/grogonomics/2016/apr/28/how-negative-gearing-replaced-the-great-australian-dream-and-distorted-the-economy?CMP=share_btn_tw