To You!!
Where is the Bubble!!!

Hi there peeps,If negative gearing was removed, and it is only an ‘if’, what does it mean to investors?
Remember, they tried removing it before and was a dismal failure so they re-instated it.The ‘chatter’ is that won’t be retrospective and won’t be grandfathered and probably won’t include new properties.

Initially, there would be likely to be a sell off of property from investors and this would indeed have the effect of reducing house values but would be a temporary result and most likely, not even trouble the Sydney market as this article points out.

It would dramatically reduce the building of new houses as investors will simply be spooked into moving focus onto shares and other investments which in my opinion is much more speculative and not really as ‘ safe as houses’.
Remember, the housing construction industry has been the backbone of our post mining issue recovery and now they want to kill off that Golden Goose?
Simply, the government won’t be building up stocks of public housing again so there will be a massive shortage of property as each year goes by. Demand therefore will increase significantly and what happens then?

  1. Rents go up
  2. House prices go up
  3. Housing affordability goes through the roof

The rich get richer and the poor get poorer and then it takes years to recover

I don’t believe our pollies will be silly enough to remove it but no doubt they will tweak it. Stay close to your clever accountant as he will be your best friend when it comes to the numbers. (If you don’t have a good one, just ask me).

Enjoy your Easter break.



Mike Harvey
Principal Investment Consultant and Author
 0400 098 755