This morning the Labour Party’s finance spokesperson Tony Burke said on national radio that one of the reasons labour was changing the Negative Gearing policy is that First home buyers were fed up with being outbid at auction by investors – and that these First home buyers didn’t think it was fair for a government to assist someone with buying their third or fourth or even fifth “home” when the First home buyers receive no assistance.
There are so many issues with this one comment that we don’t really quite now know where to start. But let’s give it a go. Investors are not stupid and implying that they would wantonly spend money with no limits on an investment is just plain daft. We all know that it’s all about the numbers and no savvy investor will spend more than true market value on an investment property. The banks won’t lend them the money, plain and simple.
‘It is in fact the over-emotional First home buyers who are far more likely to overspend’
..and the banks far more likely to lend, because 25 year Principal & Interest home loans is where they make most of their money. Why is there not more outrage about this ? It implies that Australia has one housing market and that the buying conditions are the same all over the country. We can assure the shadow government that they are not the same.
Most investors don’t buy at auction. In most of Australia’s fastest growing suburban housing markets there is not an auction in sight. Once again the comment makes reference to a limited number if times this may have happened in a Sydney or Melbourne market over the past 18 months. Judging the whole country’s housing market or making sweeping comments about a policy decision based on a handful of occurrences is surely NOT a wise move.
An investment is not a home.
Need we say more here ? The assistance received by the investor is not with the purchase of a home, it’s with the holding of a long term asset which is to provide the investor with an income later on in life which supplements the old age pension. Labour’s policy seems to pointedly ignore the fact that if you take this tax concession away, SOMEONE, even the labour party, will need to fund the old aged pension on a level few have thought through.
Who will provide housing for the 30% of the adult population who rent ?
Do they want us to plan for our own retirement or not ? They are clearly being ill-advised.
If you’d like some help getting your investment property portfolio organised – then get in touch.