"It is the speculators that have driven house prices to hardly affordable levels"

Wild claims such as that defy commonsense. They also challenge fact. Honestly now, any type of investment has its cowboys. But taking huge risks like that they don't last long.

That is gambling not speculation. The bigger fool, as where new units are being bought off the plan to be sold later and before the final payments are due. How will Shorten's 'initiative' prevent that?

Then there are the 'windfalls' the tabloids like to stir the serially jealous with. The odd house that has stood and been owned for many decades and has apparently boomed in 'profit'. But no-one has factored in the costs of holding, the opportunity costs and the comparative/relative buying power if that house is sold for another.

The elder's home that might be worth a large sum on the market if sold, but is worth nothing because it will not be sold. She needs somewhere to live and the familiar surroundings where the family was raised and dad died save the taxpayer big money while she continues to live an independent life.

The one-sided debate about negative gearing is actually about Labor raising higher and new taxes. But it is known that Labor's policies do not include necessary review of existing expenditure that is poorly directed and is NOT producing the outcomes originally claimed. For example, how many billions need to be wasted on indigenous before anyone takes notice of the government's own auditor, the ANAO?

All government programs need to be reviewed often and straight questions asked whether the original goals, if stated! :( continue to exist and what measures of achievement and performance, value for money, have been set.

steelredux,

you quoted "But what Labour proposed was to wind up negative gearing for future purchases of existing homes. It seems quite a sensible policy. If you would like to explain why it isn't then I am all ears."

If we follow Labors policy of neg gearing for new homes only, What is a new home? 12 months, 5 years old, ten years old or when you sell it, it is no longer a new home?

So, let's say, the house becomes an old home when you sell it. So, you advertise to sell it, but no investor will want to buy it (as he can't get any neg gearing advantage) so the only people who might buy it are 10% of the population (first home buyers) which means you cant sell it for a profit (or very little).
Your next door neighbour is unhappy as his property also decreases in value. The banks are unhappy as their debt exposure increases and therefore they have to restrict borrowings more (eg you need a 40% deposit saved rather than 20%)This means first home buyers have to save more just to buy the same house.

Investors will think, why should I buy a new home, when I have no guarantee I will get my money back when I sell it?

So, what happens, no investor in their right mind would buy an investment property with no capital growth, so demand exceeds supply and rents go up. Less buildings are being constructed meaning more unemployment, banks are forced to restrict borrowings as house prices drop and potentially more foreclosures.

Higher rents, more unemployed, more homeless = recession, welcome to America 2007

contd..

The debate about NG is one such skewed politically motivated debate, where the focus should be on population first, then the provision of housing (as a subset of broader considerations) and flowing down to the examination of risks and treatments for a sustainable, profitable rental housing sector that can stand on its own feet as a business without NG if that is to be removed for all investment classes.

Is all population growth good, for instance in a few big capitals? Maybe not. Outside of the big cities there is plenty of housing going for a song. However Whitlam and many others have proposed all manner of initiatives, spending more taxpayer money of course, to encourage migrants to settle in the country, but to precious little success. That is because the 'diversity' tail is forever swinging the immigration policy dog and preference is stupidly being given to migrants who are known to lob in cities and are forming no-go 'burbs for others. Nothing learned from the European experience apparently.

I will leave it at that, except to repeat that the NG debate is at best a distraction. The familiar class war from the Labor leaders who espouse International Socialism, but are careful not to make that the rightful subject and focus of their electoral promises. Then there are 'Big Australia' and 'Growth Forever', that are not being subjected to due scrutiny either.

Above all, it is spendthrift Labor saying they have no intention whatsoever of being accountable for government expenditure and an open chequebook please.

Meanwhile the lies continue. In this case the big lie being the refusal by political parties to admit the obvious, which is that they all rely on large scale population growth through escalating immigration because there are some very serious problems they are avoiding and they stink at planning.

Steel, if I as an investor, or better my wife, as she does not invest through a trust, buys a new home assuming the rules change, can anyone guarantee the value of that new home once it is ready to be sold again, a day, week, month or years later. Of cause the answer is no. There in lies the problem as the only ones who can take such a gamble are governments providing public housing, but they're broke.

This is why this is a stupid policy and this is why it will hurt so many, yet effect so few because if you want the NG benefits on older homes, you simply pay $1500 and form a trust.

Rents will go up simply because new homes will not be built in the numbers they are today, because no one will guarantee the value of the used asset.

It is so simple its almost stupid to belie otherwise and I ought to know because I have bought and sold almost twenty properties and still hold quite a few. Only one is not paying its own way and that's because of time.

As for businesses loosing money, its quite common because some businesses don't return a profit for years, orchids are one example.

"...if you want the NG benefits on older homes, you simply pay $1500 and form a trust."

Huh? NG is against income from paid employment. Trusts can't NG, only carry losses forward to write down against future profits.

If NG is abolished, surely individuals would be allowed to carry losses forward without having to resort to company/trust arrangements.

"Government told months ago negative gearing benefits high-income earners"

"SCOTT MORRISON: I think it goes against fairness of people, ordinary mum-and-dad investors, who are just trying to get ahead. And if you want to do something for families, you don't go and hit mum-and-dad investors with a housing tax.

DAN CONIFER: But a Treasury document, prepared for Federal Government ministers and obtained under Freedom of Information laws, shows most of the windfall from the tax breaks goes to high-income earners.

Treasury put forward modelling from the Australian National University that found more than half the negative gearing tax benefits go to the top 20 per cent of earners, with the bottom 20 per cent getting just over five per cent of benefits.

And it says the top 10 per cent of income earners account for nearly three quarters of the capital gains tax savings."

"CHRIS BOWEN: These documents confirm what sensible people already knew: that negative gearing and capital gains tax both benefit high income earners particularly and especially.

But what they also confirm is that the Treasurer was told this by the Treasury, but has continued to lie about it, has continued to hide these documents."

http://www.abc.net.au/news/2016-06-18/government-told-months-ago-negative-gearing/7522662

Ho hum...now you can all have a go at the ABC for reporting Treasury's advice.

Notwithstanding that rehctub, Luciferase et al obviously have far more expertise....