Any changes to negative gearing could be a major election decider.
From what I’ve read the Labor Party wants deconstruct negative gearing and limit it to “newly constructed homes”, and reduce the capital gains tax discount from 50 per cent to 25 per cent.
Both measures would come into force from July 2017.
But the Liberals are leaving it all as it is.
My synopsis is Labor’s intention is see less investors competing with first home buyers.
Hence dropping property prices to make home ownership more affordable.
Competition is the fuel in any market, so with less competition that means lower prices.
The difficulty for us in Queensland is we are not experiencing the front yard ‘bidd-athons’ that our southern neighbours are witnessing and while prices have risen in some regions they have also taken a considerable dip in others.
In fact in some regional centres if you remove investors and prices drop further the debt to value ration will be greater and without a tax advantage it could be a freefall.
Many taking that hit will be last years first home buyers.
It is a difficult one though. Of course property needs to be affordable for first home buyers. Every property owner who benefits from their ownership today was once that buyer.
And any property owner who hasn’t factored in a drop in prices has been poorly advised.
But are we looking to stop the growth or crash the market? In my experience markets are cyclical.
It’s just hard to pick where we are in the cycle.
A mentor of mine used to tell me every year prices would crash in Brisbane.
He started telling me in 2003 and he told me every year until they eventually did in 2008.
Then when they crashed, he said ‘told you so’.
A real life Nostradamus!
As an agent, a dad and a property owner it’s easy to stay impartial.
Surprisingly as an agent the market movement has less impact on me.
We are transaction based, we sell on the way up and on the way down.
It’s as a dad and property owner where I feel the struggle.
I want to do the right thing for my kids and will less competition be better or worse for them?
The question is whether once those first home buyers join the club, will they be so keen to keep property prices affordable or will they want the investors back at the party?
Haesley Cush is a Brisbane-based real estate agent and auctioneer.
Originally Published On: http://www.couriermail.com.au/