Perth’s new apartment market recorded its strongest quarter of sales since Q4 2021, with 412 apartments sold in Q1 2026 and a record quarterly sold value of $537 million, according to Urbis’ latest Apartment Essentials results.

Urbis said the March quarter result reflects strong, highly product‑specific demand across both ends of the market, from more attainable projects delivering at scale, through to premium stock being absorbed by equity‑rich downsizers.&nbsp;

David Cresp, Partner at Urbis, said the key story in Perth is not demand, it is the market’s ability to convert demand into delivered housing.&nbsp;

“This is the strongest sales quarter since Q4 2021, and it reinforces that demand in Perth is real and it’s local,” David Cresp said. “But the task now is delivery, turning that demand into projects that can actually be built and completed.”&nbsp;

[smartcode_project:default project_id=110291 project_image_fid=302785]

<h2>Affordable product leads, premium demand remains resilient</h2>

Sales in Q1 were led by more affordable projects, with The Boulevard (SKS Group) recording 115 sales in the quarter, the presentation noting this is only the second time a single project has surpassed 100 quarterly sales. The project was able to offer more affordable housing product right next to a train station.&nbsp;

Palmyra West (Finbar) also delivered strong results with 28 sales in Q1, following 84 sales in Q4, with an average price of under $800,000, underscoring depth of demand for well‑located, attainable new stock.&nbsp;

At the premium end, Urbis said downsizer demand is continuing, with the results highlighting Romeo (Applecross, Finbar) recording 75 sales and reaching almost 50% sold in one quarter.

Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.

Urbis noted that Perth apartment demand is not speculative, not investor‑led, and not uniform, describing it as localised, often equity‑driven and highly product‑specific, a pattern reflected in the polarisation between strong “attainable” performers and premium downsizer product.&nbsp;

[smartcode_project:default project_id=148957 project_image_fid=364102]

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

Urbis said pricing pressure is cost not demand‑driven: construction costs and delivery risk are now a central constraint, with the results noting build costs remain elevated and volatile, and that energy, fuel and labour uncertainty weigh on feasibility.

David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.

“Developers are really feeling the pressure from a building market that was operating at capacity and securing a builder is challenging,” David Cresp said, adding that even where a builder can be secured, “trying to get to the price that makes the development financially viable is incredibly challenging in the current market.”&nbsp;

Urbis’ broader WA commentary also notes that industry remains at or above capacity with lot and housing creation, and that many builders are limiting new sales to manage stretched workforces and fixed‑price contract pressures, conditions that flow directly into apartment feasibility and delivery timing.

[smartcode_project:default project_id=108869 project_image_fid=317905]

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

While near‑term supply remains constrained, Urbis’ forecast shows completions lifting “Supply is forecast to be back above 1,500 apartments per annum for the first time since 2019”, with 1,775 completions forecast for 2026, and volumes remaining above that level over the following years.&nbsp;

Looking further ahead, completions are forecast to reach 2,500 in 2028, with the report noting 32% of that total is social/affordable, reflecting the role of government‑supported delivery in rebuilding the pipeline.&nbsp;

However, Urbis said Perth remains behind comparable markets on pipeline scale. In a national comparison of projects under construction, the report shows under construction Perth Build‑to‑Sell (BTS) at 3,446 apartments versus the Gold Coast at 7,922. Mr Cresp said “The challenge for Perth is how to we grow the delivery pipeline”.

Urbis’ conclusion is that Perth’s market is increasingly defined by product discipline and delivery certainty, with the research identifying “delivery certainty is key” and calling out builder risk and procurement models as core success factors, alongside “timing and staging”.&nbsp;

Joel Robinson

Perth apartment sales hit strongest pace since late 2021 as builder capacity tightens

<a href="https://www.apartments.com.au/developers/sammut-developments">Sammut Group</a> has secured development approval for its latest Brisbane apartment project, marking the Sydney developer’s next step in expanding its Queensland pipeline following the success of its debut Gold Coast development, Coast.

The approved project at <a href="https://www.apartments.com.au/new-apartments/44-glen-road-toowong-qld-4066">44 Glen Road, </a><a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> will deliver a 15-storey riverfront apartment building with 42 residences, significantly increasing the scale of the site’s previous approval for a smaller luxury scheme. Designed by Bureau^proberts, the development will comprise a mix of predominantly four-bedroom and two-bedroom apartments positioned to maximise Brisbane River and city views.

Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.

“Brisbane was the right step for Sammut,” Sammut said.

“With the success of Coast we thought we should definitely look to do more in Queensland alone. We then pushed up to look at Brisbane. We've been looking for I'd say two to three years actually and it was hard to find the right location.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-12-23%20at%203.27.14%E2%80%AFPM.png?VersionId=dYAVIL7qdcGA8ojvkslSrLjczXFejSSx" />

Sammut said suburbs including New Farm and Teneriffe were considered before the group ultimately focused on Toowong due to its strong downsizer demographic and limited supply of developable riverfront land.

The site was acquired off-market after what Sammut described as a lengthy negotiation and planning process, with the developer pursuing an uplift to the original approval.

“We are DA approved now which is very exciting,” Sammut said.

“We've had our change approval come through and we've obviously doubled the height, 15 storeys plus rooftop. We've got 42 amazing apartments that are going to be coming to market soon.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-23%20at%203.27.26%E2%80%AFPM.png?VersionId=ohkRkY0dIZlqdfME2EZePsCQavRiBadE" />

Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.

“A place where traditional Queensland living has taken place for centuries; Toowong is seeing a shift of contemporary influence, commercial and retail hubs mixed with well-considered residential offerings – all the while maintaining its character and charm,” the architect noted in planning documents submitted to Brisbane City Council.

The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.

“They said the mix of four and two-bedroom apartments capture the ‘fundamental qualities of Queenslander living,’ translated into the context of a contemporary subtropical building.”

The development sits just off Coronation Drive within walking distance of Toowong’s retail precinct and the upgraded Regatta ferry terminal, while also benefiting from proximity to the incoming green bridge connection to West End. Sammut said the accessibility and amenity offering were central to the site’s appeal.

The approval adds to growing residential activity along the Toowong riverfront, joining nearby projects including Consolidated Properties’ Monarch Residences and Spyre Group’s ARC Residences.

Sammut secures approval for debut Brisbane apartment development in Toowong

Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.

Lanevick, founded and directed by Steve Maroun, is expecting to receive approval in the coming months for a new apartment development in Gladesville, with the aim to launch it to the market later this year.

The 51-apartment project, designed by Studio Johnston, will comprise a mix of one-, two-, and three-bedroom apartments positioned toward the Hunters Hill downsizer market.

“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.

“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.

“They still want good spacious entertaining areas, they still want quality design, but they also want flexibility and the ability to enjoy life a bit more after working hard for a long time.”

The project sits near Boronia Park and within close proximity to the Parramatta River foreshore, an area Maroun says offers more of a Hunters Hill lifestyle than a traditional apartment precinct.

“From a lifestyle perspective, it’s really more Hunters Hill than Gladesville,” Maroun said. “You’re close to the foreshore, close to parklands, and still connected back into the village precinct.”

From level four and above, apartments will capture water views&nbsp;toward Sydney Harbour. Communal amenity will include rooftop entertaining areas, wellness spaces, and a gym tailored toward owner-occupier buyers.

“We’ve really designed these apartments around that buyer coming from the Hunters Hill LGA and what they’re actually looking for in their next chapter.”

The proposed development has also been designed to respond to the changing character of the broader Gladesville town centre, where a growing number of mixed-use and residential proposals are expected to emerge over the coming years.

“Gladesville presented a rare opportunity to deliver a genuinely design-led residential project within an evolving lifestyle precinct, just moments from the growing Gladesville town centre, and we’ve approached the project with a strong focus on architecture, liveability and long-term community value,” Maroun said.

Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.

“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.

“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”

The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.

“A big part of the thinking was how do you activate that area properly and create more vibrancy and amenity, which is what Hunters Hill has been looking for,” Maroun said.

Lanevick’s focus since 2020 has largely been on smaller-scale luxury townhouse and terrace developments. The developer recently completed Royale Randwick, also designed by Studio Johnston, where prices reached $3.65 million. The project was featured in the UDIA NSW 2026 Professional Development Prospectus and was also named a finalist for Development of the Year.

&nbsp;

Lanevick to cater for Hunters Hill downsizers with new Gladesville apartment development

Property developer One Living, backed by former Macquarie banker turned investment manager Chris Green’s investment firm, has unveiled plans to bring more institutional capital into housing to help address the national supply crisis.

The New York-based investor has focused his firm, GreenPoint Partners, on addressing the supply shortage hitting middle market housing in Australia.

It is backing the new One Living business to develop more than 1000 units along the eastern seaboard. The new firm is starting with a development on Mona Vale Road, on the border of Mona Vale and Pymble, in Sydney’s Northern Beaches, with around 140 apartments planned. They are eyeing off more sites across the city.

With cost pressures rising in the industry, One Living’s model is to be a vertically integrated developer-builder, so it can respond directly to the housing gap by removing the cost inefficiencies embedded in traditional residential delivery.

“We are building a platform designed to operate at scale and starting in a market where there’s a clear need for quality, attainable housing,” One Living joint managing director Joseph Scuderi said.

“It’s that missing middle – it’s that attainable end of housing… that’s what most Australians invest into and what Australians can actually afford.”

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="798dfa93-4941-4db6-a696-31e9dc18e81c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.31.50%E2%80%AFPM.png?VersionId=mKBqi5C_DmeiXS.AtJkcR8LQIxqCqmFi" />

GreenPoint Partners brings years of experience assembling and scaling real estate operating businesses across major markets. And Green sees a big opportunity in Australia.

“For its size, sophistication and importance to the community, Australia’s living sector has remained largely under-institutionalised, which represents significant opportunity,” Green said. “GreenPoint identified that gap, assembled the right team, and is backing One Living to build a platform that is aligned to market needs.”

Green said being a builder-developer would give the company the capacity and flexibility it required to deliver reasonably-priced homes.

“We want it to be at that attainable level; not super high end luxury but at that attainable level,” he said.

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="74a5344a-4b26-4d4a-ada3-056b1220be77" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.32.15%E2%80%AFPM.png?VersionId=vY8hXHO4reBMdO8ZXMWCNtGZJofUPQ3j" />

&nbsp;

One Living will undertake a component of affordable housing in its schemes, which it will own and operate, and it could also run build-to-rent on some sites.

Green praised local policy settings.

“The NSW government is being very supportive, strategic and pragmatic in terms of how do we generate more supply of housing,” he said. “We think it’s actually positive for development and the bit that’s been lacking at that attainable level is that it’s lots of relatively small private developers, whereas we want to create an institutional platform.”

One Living is also&nbsp;looking at high-density projects and could take on more institutional funding in the future.

“The way we will be able to achieve economies of scale is through size,” Green added.

One Living enters Sydney's new apartment market with Northern Beaches site acquisition

It's been several years since there's been an opportunity to buy a brand new townhome in Melbourne's coastal suburb of Mordialloc. Even apartment developments in recent times have been few and far between in the area.

Local developer LDS Property identified the gap in new housing, securing a site on White Street, directly opposite&nbsp;Woodlands Golf Club Mordialloc. They've recently launched&nbsp;<a href="https://www.apartments.com.au/new-townhouses/wm-residences-mordialloc-102-white-street-mordialloc-vic-3195">WM Residences</a>, just 13 townhouses which they have already started building.

Projects by Buxton Director Heath Thompson, who is selling WM Residences, says the townhouses x that perfect middle ground be

"Mordialloc residents have had limited options to downsize within the suburb, often forcing them to look elsewhere despite long-standing ties to the area," Thompson says.

"With very little comparable new supply coming to market, projects like WM Residences are well placed, particularly as buyers look to capitalise on current conditions amid constrained supply."

[smartcode_project:default project_id=134646 project_image_fid=6109]

The development, designed by regarded architecture firm&nbsp;<a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a>,&nbsp;adopts a deliberately restrained architectural approach, focusing on simplicity, durability and liveability rather than overt design gestures.

The boutique scale is central to the offering. With only 13 three-bedroom residences, each home is configured to prioritise functional layouts and everyday use, supported by private terraces and secure two-car garages.

Ewert Leaf’s design response leans into a calm, neutral material palette. Interiors are defined by oak flooring, white walls and soft finishes, creating a consistent and understated backdrop. The approach avoids trend-driven detailing in favour of longevity, with an emphasis on natural light and spatial clarity.

[smartcode_project:default project_id=134646 project_image_fid=6110]

Beyond aesthetics, the homes are designed to meet contemporary performance expectations. Each residence targets a minimum 6-star energy rating, incorporating double glazing, comprehensive insulation and all-electric Bosch appliances.

The project’s location supports a walkable coastal lifestyle, sitting within close proximity to Mordialloc’s foreshore, Main Street retail strip and the train station. Local cafés and dining venues, including Suburbia Deli and Hendriks Café, are within a short walk, reinforcing the area’s established neighbourhood character.

[smartcode_project:default project_id=134646 project_image_fid=6116]

While <a href="https://www.apartments.com.au/developments/mordialloc-vic-3195">Mordialloc</a> is often defined by its beach and pier, the project taps into other areas of day to day living, offering easy access to local food, casual dining and transport, rather than positioning itself purely as a lifestyle retreat.

WM Residences reflects a continued trend across Melbourne’s coastal suburbs towards smaller-scale, design-led townhouse developments, particularly on infill sites where proximity to amenity is already established.

With construction commenced prior to its market entry, the project aligns with a growing preference among buyers for developments with visible progress and defined delivery timeframes.

[smartcode_project_cta:default project_id=134646]

WM Residences fills gap in Mordialloc townhouse market

Negative gearing

<html><body>
If negative gearing is abolished, then renters should be prepared to pay 50% or more extra according to Chan &amp; Naylor.
While it has recently been argued that the government would save $5 billion in the first year by abolishing negative gearing, Chan &amp; Naylor’s Ken Raiss said that wider economic uncertainty and social dislocation would result as investment properties would quickly be re-directed into the hands of commercial landlords who would charge more.
With 96% of public housing provided by private investors, the majoring being ‘mum and dad’ investors, Raiss explains that as a result rental properties are available at varying levels of affordability.
Raiss argues that if the tax effect is taken out, then the 90% stock owned by mum and dad investors with one or two properties (73% an 18% respectively) will be bought up by commercial landlords who will charge more in order to get the higher rental yields that they typically see on their commercial portfolios.
Raiss notes that yields for commercial property are typically 50% above residential property.
 “Like any other public utility, as soon as they enter private and more entrepreneurial hands then prices will go up, and in the case of public housing this could lead to a rental price hike of as much as 50% over time, resulting in the government having to shoulder the weight of providing a much larger percentage of housing for tenants and social dislocation for those unable to receive government housing,” said Raiss.
“Small business owners wouldn’t invest in a new or start up business if they couldn’t claim their losses, so there is no reason why property investment should be any different,” he said.
In fact, his view is that property investors face a significant challenge of buying somewhere with enough growth that it offsets all their costs in the meantime.
“Property is the biggest asset most people will own, and so they need to surround themselves with professionals who can offer advice in making considered and informed decisions, such as buying in the right market and property cycle or choosing a property with the opportunity to raise equity through renovation or improvement, boosting both capital value as well as rental yield,” he said.
</body></html>

jduke-EHk3XBmHkn

Be prepared to pay 50% more rent if negative gearing goes: Chan & Naylor

<html><body>
GUEST OBSERVATION
Once again we have seen some commentators pushing for the abolition of negative gearing. 
The claim is that the government has lost some $13 billion dollars of revenue by allowing tax breaks through negative gearing to the 'so called rich'. 
As the government is trying to find savings to get the budget back in the black they have been criticized for asking the 'poor' to shoulder most of the budget cuts through GP co-payments, loss of family rebates, higher university fees, etc, etc, whilst so called 'rich' property investors are getting away with generous tax breaks through negative gearing. 
This is simply misrepresenting the facts.
Whilst taxpayers have claimed a total of $13 billion in losses in their tax returns, the actual revenue forgone by the government is calculated at their individual tax rates. 
Thus at an average tax rate of 35% the lost revenue is only $4.5 billion.
So the government has not lost $13 billion dollars by allowing negative gearing, but rather $4.5 billion.
Public housing provided by the government only accounts for around 4% of investment properties. The other 96% of housing is provided by the private investor.
Should they disincentivise property investment by removing negative gearing, we would see the government having to shoulder the weight of providing a much larger percentage of housing for tenants.
This would in effect cost the government much more than the $4.5 billion dollars a year in revenue forgone due to negative gearing.
In fact it would cost the government in the hundreds of billions to provide public housing.
You may recall that the Keating government attempted to remove negative gearing in the 80s but reversed their decision when the queues for public housing doubled.
Secondly there are around 1.6 million property investors in Australia and most of them are not so called 'rich'. 
In fact most property investors only own one property and fall into the category of middle class. They certainly are not considered 'rich'. 
In fact they should be applauded for the sacrifice to their lifestyle (due to the shortfall created by negative gearing) as they attempt to invest for their future and in so doing, reducing the government's burden in providing them an old age pension when they retire. 
In addition they save the government billions of dollars in not having to provide public housing for those unable to buy their own homes currently. 
Not to mention the knock on effect to the economy that property investors produce.
However negative gearing is only one piece of the jigsaw puzzle.
When it comes to the property market, many other factors such as jobs, interest rates, confidence, supply etc, have a far greater effect on the property market than negative gearing.
We need to have a growing economy which leads to increased revenues for the government as businesses do well and able to hire more people and with more jobs, our standard of living is improved. This will ensure the property market is stable and will continue to grow steadily.
Supply is a very important factor as successive governments have not provided the policies to generate more supply in past years. 
Ed Chan is non-executive chairman and founder of <a href="https://www.chan-naylor.com.au" target="_blank">Chan &amp; Naylor Property Accountants</a>.
</body></html>

echan-hSGJw4wwC5

Negative gearing only one part of the property puzzle

<html><body>
GUEST OBSERVATION
Negative gearing is currently a hot topic, with opinions clashing across the net.
Whenever an investor benefit is considered being removed, it is important to remember that under the surface the benefit could actually be more important to the end user of the asset.
If you were to reduce the investor return or benefit for any kind of asset, the investor has two options. Firstly, they could exit the market and no longer provide the resource, placing funds in another asset class. Or alternatively, they could increase the cost of providing the asset to maintain the level of return they wish to achieve.
Either way, the impact of both options is ultimately the same, rentals increase due to landlord rental increases or rental increases due to tenant competition for the same property due to low levels of rental stock availability.
All asset sectors should be treated equally to maintain a balanced marketplace – this includes shares, property, and so on. Investors must always make decisions based on quality and return prospects, not on benefits that are available as a consequence of some sort of government incentive.
There is currently nothing to stop investors negatively gearing their share portfolios and achieving the same effect as investing in the property market. Therefore, in essence, removal of negative gearing from the property market alone would create a market distortion.
Notwithstanding all the above, what one can’t do is enter a transaction with the main objective of reducing your tax liability. This would in fact be in contrary to the provision of Part IVA of the tax act - the section that deals with tax avoidance.
Equally, if you are entering the transaction on the basis that you will make profits from capital gains and not rental returns, you are in effect in the business of trading in property and therefore not entitled to the capital gains tax benefits.
Negative gearing has now been around for so long and so widely accepted that many will believe that there are no constraints as to its use. Hence, it is very likely that there are many people with significant claimed tax deductions that could be lost and if the Tax Commissioner reviewed their tax returns. The impact on many of these people would be very catastrophic.
So what should happen? The government should have the Commissioner clarify the position by having him issue a general tax ruling/advice. The advice should indicate that:
<ul>
<li>Transactions which are geared beyond a level which causes tax losses annually for an unreasonable period of time (say five years) will be subjected to review and where there is evidence of tax avoidance then the provisions of Part IVA of the act will be applied. </li>
<li>Where an investment property is sold and if at no time during a reasonable pre-sale period did the rental income exceed the interest and other deductions, the tax office would consider the transaction was a purchased for the purpose of trading in residential property and hence the capital gains tax benefit of only having to pay tax on 50% of the gain would not be available. Equally in this situation the tax office alternatively may seek to disallow deductions claimed and take action under Part IVA of the act.</li>
</ul>
Undoubtedly our tax lawyers will find numerous very technical reasons to suggest the ruling/advice is inappropriate. However, in reality the ruling/advice would simply put the nation on alert and create a level of risk for the majority which would cause negative gearing to be used as it was intended and avoid any need to remove it totally.
This is a simple and effective solution that could be implemented very easy and not require any legislative changes. It would allow the Taxation Commissioner to look at existing property transactions as they’re being sold.
Overall, I do believe that negative gearing is necessary. It is a subsidiary in favour of the lower income earners who are renting as it encourages the provision of stock for these people. However, there are increasingly cases where it is being allowed by federal government authorities when it should not be, and this is distorting the market, causing higher house prices and making it harder for first time buyers.
John Edwards is consulting analyst for <a href="https://www.Onthehouse.com.au" target="_blank">Onthehouse.com.au</a> and founder of <a href="https://www.residex.com.au/" target="_blank">Residex</a>.
If you are looking for a more in depth analysis of John's property research, you can find this in the <a href="https://investors.onthehouse.com.au/" target="_blank">Investor Centre</a> at <a href="https://www.onthehouse.com.au/" target="_blank">Onthehouse.com.au</a>.
</body></html>

jedwards-8kHM8GNY6d

It's not just investors who benefit from negative gearing

<html><body>
Of all the policies employed by the government to exacerbate Australia’s housing affordability crisis, our inequitable tax system, which includes negative gearing, is top of the list.
Negative gearing has reduced Australia’s housing supply. Over 92% of investors chase the capital gains associated with second hand dwellings rather than increase the stock of housing through investment into new supply. We replace properties for sale, with properties for rent.
<img src="/images/2014/11/20/cashmore-nov-20-one.jpg" alt="">
Negative gearing has pushed up the price of housing and widened the gap between price and yield. High and rising house prices naturally put upward pressure on rents and assist in keeping first homebuyers locked out the market.
<img src="/images/2014/11/20/cashmore-nov-20-two.jpg" alt="">
Negative gearing has turned us into a nation of speculators. Today, the investor share of the market is close to 50%. Investor finance commitments are rising at their fastest pace since 2007. 65% of loans to investors are on interest only terms and an estimated 95% of all bank lending is being channeled into real estate – mostly residential. Negative gearing costs the government billions in lost tax revenue each year. Around 1.25 million taxpayers (approximately 13% of the total) now have at least one negatively geared property. <img src="/images/2014/11/20/cashmore-nov-20-three.jpg" width="676" height="440"> Negative gearing employs one rule for the landowner and another rule for the worker. Investors that negatively gear can deduct non-work-related property losses against wages and salaries.They can lower their taxable income as much as they wish by simply by buying enough negatively geared dwellings. The wage earner has no such advantage – why work when you can speculate? Negative gearing favours the wealthy rewarding high-income earners handsomely. Notwithstanding, the property lobby use artificially reduced taxable incomes to falsely claim that most investors are “<a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2014-09-24/janda-the-myth-of-mum-and-dad-negative-gearers/5766724">mum and dad</a>” average income earners.
Negative gearing merely scratches the surface of Australia’s inequitable tax system. 
Investor tax incentives and their effect on house and land values have been repeatedly clarified by independent tax reviews, as well as previous Senate Inquiries into housing affordability.
The first inquiry conducted by the Productivity Commission in 2004, determined that prices had surpassed levels explicable by demographic factors and supply constraints alone. They stressed that a large surge in demand had rather been “predicated on unrealistic expectations (in a 'supportive' tax environment) of on going capital gains”.
The second inquiry overseen by a Select Senate Committee in 2008, found that the average house price in capital cities had climbed to over seven years of average earnings and once again, they identified inequitable disparities in the overall fairness of the tax system, that had lead to “speculative investment on second and third properties.”
Australia's Future Tax System review conducted in May 2010 stated that tax benefits and exemptions had been capitalised into higher land values, encouraging investors to chase ‘large’ capital gains over rental income and landowners to withhold supply.
The Future Tax System review recommended allowing only 40% of interest (and other expenses) associated with investments as a deduction.
This would reduce the amount investors are able to claim against negatively geared dwellings and provide a good starting point for phasing out the policy altogether.
Negative gearing as well as stamp duties (which are a volatile source of revenue, dependent on the volume of housing transfers in addition to the transacted price), should be replaced by a broad-based SLT (state land tax) – as I recommended <a href="https://catherinecashmore.com.au/wp/?p=414" target="_blank">here</a>.
Under this scenario, the upfront cost of land would fall, the higher tax base would blunt potential capital gains from speculation, and housing supply would naturally increase as land would need to generate an income.
An enhanced land tax would also provide a steady source of revenue for state government giving them greater control over public finances for the provision of essential infrastructure.
Moreover, study after study demonstrates, that basing a system on the collection of resource rents and monopoly profits, for the direct application of facilitating local and community services, can reduce the tax liability on most households whilst also maintaining complete revenue neutrality.
Unfortunately, 95% of our federal MPs own investment properties. Collectively, the are in possession of an estimated <a href="https://blog.australiaboomtobust.com/2014/08/propertied-federal-political-class/" target="_blank">$300 million</a> personal portfolio of residential dwellings. 
It is therefore unsurprising that all recommendations from previous Senate inquiries for meaningful and equitable tax reform have been studiously ignored.
This is an extract from Property Observer's exclusive article where the experts were asked: <a href="/expert-insights/investing/exclusive-negative-gearing-what-needs-to-change">Negative gearing – what needs to change?</a>.
</body></html>

catherinecashmore-6LXia3pPQj

Negative gearing merely scratches the surface of Australia’s inequitable tax system

<html><body>
GUEST OBSERVATION
In recent times there have been a lot of arguments in the public domain on whether Australia should get rid of the negative gearing tax tool for property investors.
Negative gearing is a valuable tax tool in any economy to help companies that make investments reduce their risk-burden by allowing them to make tax deductions against losses incurred where the revenue of the investment does not cover the loan costs.
In other words, allowing the investor short-term tax relief in the investment they make, or long-term relief when an investment does not turn out to be as rewarding as anticipated (a lousy investment).
However, in Australia, negative gearing has unfortunately been used as a speculative tool to help property investors cover their losses throughout the time of holding a particular asset so they are able to eventually flip the asset for a profit.
There are two key problems with this mindset:
<ol>
<li>Using negative gearing in pursuit of capital gain only works when the investment appreciates in value greater than the overhanging costs involved in maintaining the liabilities of the asset whilst under ownership.</li>
<li>If there is a market correction, those who hold negatively geared assets in pursuit of capital gain generally get burnt.</li>
</ol>
Unfortunately with so many Australian property investors incredibly negatively geared, it would be economic suicide to get rid of this tax tool overnight. Getting rid of negative gearing today would simply burn too many property investors at the same particular time causing mass damage to the Australian economy.
With the majority of negatively geared property investors earning less than $100,000 per year, it would simply send too many Australians into bankruptcy too quickly. In economic downturns, negatively geared property investors would progressively suffer which would slow the pain burden.
If anything, they should keep negative gearing for property investors, however introduce resourceful tools to mediate property investors from taking advantage of a tax law where they are willingly prepared to take excessive risk where it is all but mathematically certain that they will incur losses for a very prolonged period of time. This forces investors to invest responsibly whilst reducing tax losses.
My recommendation is property investors with loan to value ratio (LVR) greater than 50% void from making any tax deductions against the first 2% of rental yields (or equivalent to property price paid).
This would force property investors to shift their focus from speculating mode to yield-hunting mode. It would also push those who are taking an abnormal amount of risk in the name of capital gain to offload their properties to reduce fiscal losses which increases tax revenue by billions of dollars. Furthermore, this approach would reduce the risk profile of property investors in a downturn.
Lindsay David is a co-founder of clean technology company GreenRigCo and a former strategy and business development consultant. You can read his blog <a href="/expert-insights/finance/fire-the-rba-governor">here</a>.
To purchase a copy of his book 'Australia: Boom to Bust', <a href="https://blog.australiaboomtobust.com/buy-australia-boom-bust/" target="_blank" title="Buy Now">click here.</a>
</body></html>

LindsayDavid-WEhfyLvNJJ

Let's end the madness of negative gearing

<html><body>
Negative gearing is regularly in the spotlight, and Aviate Group managing director Neil Smoli says there’s one simple way to address the concerns – make it only apply to off-the-plan or newly renovated property.
Smoli notes that negative gearing tax benefits recognise the role investors play in providing rental accommodation by alleviating tax burdens.
“However, when investors use a negative gearing strategy to finance the purchase of existing dwellings, this has very little impact on new supply in a market where rental vacancies are very low,” he says.
“On one hand, investors using negative gearing to support the purchase of new off-the-plan property have a positive impact by contributing to new rental accommodation. On the other hand, investors who use negative gearing to finance the purchase of existing properties do not.”
He said that buy encouraging demand for new properties it would help stimulate construction and unlock the economic benefits of new development.
“Perhaps the fairest way to enable an investor to utilise a negative gearing strategy to contribute to new supply is to make the practice accessible from an agreed timeframe after the initial lease term commences,” he says.
“It typically takes five to six years for an investment property to become neutral, that is, for the rent received to balance the interest payable. This is influenced by the interest rate of the day, the net rental income received after costs such as management fees, letting fees, body corporate fees and outgoings are taken into account, the investor’s marginal tax rate as well as depreciation allowances.”
{mijopolls 49}
</body></html>

Should negative gearing only apply to new property?

<html><body>
If one was looking for a single word that is missing from the ongoing property debate, look no further than 'perspective'.
Some are looking at the property market from a perspective that has lead them to a conclusion which is totally and completely wrong.
Investors have got it completely right given (in the case of Sydney) we are suffering from a chronic undersupply which explains why the vacancy rate in a 10 kilometre radius from the CBD has sat below 2% for the best part of a decade.
Never before have we seen a better time to convene an inquiry into the Australian real estate markets because nobody has an accurate perspective as to what is actually happening. Earlier this year I was one of the first to write that something was not right with the influx of overseas buyers.
This brought about an inquiry (that is still going) although it has exposed the Australian Foreign Investment Board (FIRB) to be in total disarray.
Last week, Federal MP Kelly O'Dwyer told ABC Lateline:
"What we've found out though, through the evidence that our committee has received, is that these rules have simply not been enforced through prosecution since 2006 by the FIRB. I think there has been a failure of leadership of the FIRB on this. I think they have dropped the ball. I think if we have rules in place, those rules need to be properly enforced. That is the only way we can give confidence to the Australian people that our foreign investment framework's working as it should. So we would be looking to tighten up exactly what occurs in terms of enforcement penalties that can be applied, but also to make sure that FIRB is doing its job."
Well it's very clear that FIRB have not been doing their job, so in the meantime Ms O'Dwyer should be introducing a temporary ban on all overseas purchases until such time that the government can fully determine how big this matter is.
In my opinion there is no better person qualified to chair the inquiry than Bill Moss who is a former Macquarie Group banker and head of property. Speaking to The Weekend Australian, he said:
"This is the first (property) cycle we've seen where there's a deregulated global market,where capital is free to flow from Asia to Australia. We have a free floating dollar, equity makers are global and now our residential markets are going the same way."
The major concern in Australia is that nobody knows just how many properties have been acquired given nobody has a perspective as to the exact number.
Although, negative gearing presents a much bigger problem in the Australian property markets than overseas investors.
Another person who must be appointed to an inquiry is Saul Eslake, who this week called on Canberra to put an end to negative gearing for new investors as the best way to dampen frothy property markets in Sydney and Melbourne.
It should be noted that he referred to them as 'frothy' not a 'bubble'. He accepts that it is not politically feasible to abolish negative gearing because around 15%of voters are currently taking advantage of negative gearing – which explains why no politician should participate in the inquiry given they have vested interests.
Australian investors are smart and can sense a change to the property tax landscape in Australia, which I pointed out last week.
It is important to note the recommended measures are nothing more than temporary until such time that the government can get a correct perspective on the Australian property markets.
Bill Moss went on to say in his interview that our housing markets were better tackled at a state or local government level, with the federal government or the Reserve Bank of Australia's (RBA) macro prudential tools such as restricting how much banks can lend to investors. "Rather than react to what's happening, what the government needs to do is understand what is going to happen."
The interview keeps getting better, when he commented that "governments should look how to make money from a real estate bubble."
In my opinion, overseas buyers should be paying a much higher Stamp Duty and a Vacancy Tax for all properties where the owners decide to landbank by locking them up. All these taxes should be flowing into new infrastructure strategies.
The problem is that governments have neither perspective nor understanding about real estate machinations. So they need to establish an inquiry to better understand what exactly is going on as against merely flying from the seats of their pants.
 
</body></html>

robertsimeon-hRNTwJyXkQ

The new 'P' in property is perspective

"The home, built in 1857, had been unoccupied for years," said the report of a dilapidated Victorian-era mansion in Sydney's Balmain East.

Situated in an exclusive residential pocket next door to the Balmain East ferry wharf, and sporting bayside views of Sydney's Harbour Bridge, the 457 square metre block of land attracted 200 people to the auction, 18 registrations to bid, and sold $830,000 above the reserve to a local home buyer <a href="https://www.rebonline.com.au/breaking-news/8169-decrepit-house-fetches-millions-at-auction" target="_blank">for $2.68 million</a>.

According to <a href="/expert-insights/buying/uninhabitable-crumbling-1850s-balmain-east-cottage-secures-2-68-million-price">Property Observer,</a> the site had been acquired in 1973 for $33,500 by the notable gay rights activist and historian,&nbsp;Alexander 'Lex'&nbsp;Watson. Watson was the president of The Pride History Group and a lecturer in Australian Politics at Sydney University who sadly passed away earlier this year after a long battle with cancer.

$33,500 in 1973 dollars would be $289,724 in real terms today – just over 10% of today's $2.68 million selling price.

The location was the key of course, with planned upgrades to the Balmain East ferry wharf, which will now receive services from the Parramatta River along with extra ferries to McMahons and Milsons Point, further enhancing its value.

Had the home been only a few kilometres away, a few hundred thousand could have been wiped off the price tag and the media sensation may not have been so great. Even so, it is not the only dilapidated property to make the press of late.

Opportunistic buyers caught up in Sydney and Melbourne's property boom have snapped up a string of empty homes, selling under stiff competition while exceeding all expectations of price.

An empty hat&nbsp;factory on Wilson Street, Newtown, also vacant for years, sold earlier this month for $1.725 million.

A dilapidated home on 360 square metres of land in Thornley St, Leichhardt, vacant for more than 30 years, sold a few weeks ago for $1.4 million at auction.

A home in total disrepair at 19 Durham St, Stanmore, situated on 172 square metres of land, vacant for years and sold for $923,000.

And not to leave Melbourne out, an unliveable Richmond property on 726 square metres of land, also vacant for years, <a href="/expert-insights/buying/derelict-richmond-cottage-development-site-sold-at-2-544-000">sold for $2.544 million</a>&nbsp;– $900,000 above the price it achieved only two years ago (pictured above).

The <a href="https://www.news.com.au/finance/real-estate/leichhardt-property-pulls-in-14-million-at-auction-and-tops-big-money-dump-list/story-fnd91nhy-1227006222322" target="_blank">list goes on</a>.

Barring the last example, that came with plans and permits for two town houses, these properties transacted for nothing more than their land value. However, while the buyers purchased a location, they did not pay for the services that rendered that location valuable or, in the case of the first example, compensate the local residents for suppressing access to some of the best views in town.

Instead, reinforced by inelastic zoning constraints, generous tax treatment, and unrestrained speculative growth in dwelling finance commitments, they unwittingly rewarded the sellers with a substantial unearned gain for withholding valuable land from use and depleting the nation's housing supply.

This means of 'creating wealth' common in most western nations sits at the root of many of our economic and social problems today. It has both a debilitating and destabilising effect on the economy, evidenced clearly in a painful and rising trend income and housing inequality that burdens the capacity of the 'welfare state' to compensate.

This article continues on the next page. Please click below.

&nbsp;

<hr class="system-pagebreak" />
Interestingly, Lex Watson, the prior owner of the Balmain East property cited above, was purportedly greatly influenced by the writings of John Stewart Mill whose work was said to be "the touchstone of his life and later activism".

Born in London in 1806, John Stewart Mill is remembered as "the most influential English-speaking philosopher of the nineteenth century".

Inspired by his father James Mill, who tutored his nine children with daily lessons in Latin, Greek, French, history, philosophy, and politics, John Stewart Mill was a leading economist. He was a prolific logician, who dedicated his life to championing the causes of liberty and equality, while advocating 'radical' ideas, such as the abolishment of slavery and equal rights for women.

In 1848 he published the most prominent&nbsp;textbook&nbsp;on economics in the 19th century, Principles of Political Economy, critiquing systems such as communism&nbsp;and&nbsp;socialism and cementing Mill's reputation as a leading public intellectual.

Extending on the ideas set out by Adam Smith and David Ricardo, Mill employed concepts that that have been written out of today's economic narrative, that conflate land and capital&nbsp;– virtual opposites – while failing to distinguish between income that is 'earned' and the economic surplus that disproportionately flows to those that "love to&nbsp;reap&nbsp;where they never&nbsp;sowed" (a process best set out in Mason Gaffney's book The Corruption of Economics).

Writing on the moralities of taxation in Book V, Chapter II of Principles of a Political Economy Mill commented:

"The&nbsp;ordinary progress&nbsp;of a society, which increases&nbsp;in&nbsp;wealth, is at all times tending to augment the&nbsp;incomes of&nbsp;landlords; to give them both a greater amount and a greater proportion of the wealth of the community,&nbsp;independently of any trouble or outlay incurred by themselves.&nbsp;They&nbsp;grow&nbsp;richer,&nbsp;as&nbsp;it&nbsp;were in their sleep, without working, risking, or economizing."

From this Mill concluded that the government should collect society's economic rents in lieu of taxes that impede productive labour and industry, including taxes on the improvement and the transfer of property, (stamp duty) which he said, should rather be: "distributed over the land generally, in the form of a land-tax."

He was not the first or last to do so.

He followed a long line of influential activists, from Thomas Paine, who in his 1797 publication Agrarian Justice stressed:

"Men&nbsp;did not make the earth... It is the value of the improvement only, and&nbsp;not&nbsp;the&nbsp;earth itself, that is individual property... Every proprietor owes to&nbsp;the community&nbsp;a ground rent for&nbsp;the&nbsp;land, which he holds."

Most recently, Dr Ken Henry, who chaired Australia's&nbsp;Future Tax System Review, noted: "... economic growth would be higher if governments raised more revenue from land and less revenue from other tax bases."

The classical economists recognised that unless profits from the 'enclosure of the commons' – land, water rights, minerals, and so forth - were effectively collected and shared for the benefit of the community, all productive gains, every improvement in society and the economy, would be capitalised into rising locational land values, enriching those that owned the assets but more so, those who created the credit and traded on the debt.

This is equally applicable to reductions in the cost of construction.

For example, news that high-density apartment towers close to public transport in Sydney, will no longer require parking facilities, delivering an estimated saving of $50,000 - $70,000 in development costs, will do little to ease affordability.

Rather, it will simply leave more funds available to bid up the price of land. This is precisely what we are seeing in Australia – sky rocketing land prices requiring 'super tall' structures to provide a viable return on investment.

This article continues on the next page. Please click below.

<hr class="system-pagebreak" />
While the small one and two bedroom units may be spruiked as affordable, when calculated by cost or rental value per square metre of floor space, they are remarkably expensive.

Mason Gaffney expanded on the theory, coining the acronym ATCOR – "All Taxes Come Out of Rent." Showing that whether renting or buying, total tax liabilities from whatever area carried by the consumer, deduct from the cost of a site to the extent they limit the amount a buyer is both prepared and able to pay.

It follows that the removal of all taxes would naturally wash up into higher prices for real estate, which in theory leaves the resulting rise in the economic rent of land 'just' enough to replace the forgone revenue. (For more, see Fitzgerald's Resource Rents Of Australia).

When that liability falls on productive industry, deadweight losses occur. For example, 90% of our taxes are distortionary, adding 23% to prices of goods and services.

However, when the burden falls on land and monopoly rents – minerals, fuels, the broadcasting and communications spectrum, patents et cetera, the reverse is the case.

In respect of land, a higher tax rate levied on the unimproved value would discourage leaving dilapidated homes vacant for years while we struggle with an assumed housing shortage - suppressing the speculative element that adds to the volatility of the market cycle.

Furthermore, when the gain is collected and used to fund the expansion of infrastructure in order to service a growing population, the tax base is expanded without a subsequent lift in rates.

In the 19th century, nature's 'free lunch' was largely limited to the aristocracy of the great landed estates. Today, monopoly profits are absorbed by the financial sector, which wields significant political leverage from lending 'endogenously' created credit against real estate collateral, with the compounding interest disproportionately increasing levels of household debt.

As I pointed out previously - Australia will increasingly feel the effect of this as we move into 2019.

Our current tax system is crooked. It allows large companies to jump through loop holes in legislation and 'cook the books,' shipping profits offshore, leading to an estimated $1.6 billion in&nbsp;tax&nbsp;revenue forgone, while land on the other hand, is used by investors as an effective tax haven.

This article continues on the next page. Please click below.

<hr class="system-pagebreak" />
In a recent post by Dr Gavin R. Putland of the Land Values Research Group, he notes:

"No matter how high your gross income may be, you can make your&nbsp;taxable&nbsp;income as low as you like, simply by buying enough negatively-geared properties. Such artificially reduced&nbsp;taxable&nbsp;incomes are used in ATO statistics on negative gearing, which are then trotted out by the property lobby as "proof" that most negative gearers aren't rich — as exposed, for example, in Michael Janda's article&nbsp;The myth of 'mum and dad' property investors (The Drum, 24&nbsp;September 2014)."

Australia's&nbsp;economic narrative is more concerned with suppressing wages than high land values.

Joe Hockey&nbsp;has unashamedly stated that any rise to the minimum wage "will cost jobs" and "reduce competition," while remaining notably silent on the average CEO pay, which sits at an estimated 63 times average earnings (as at 2013), and showing scant regard for rising land values which increase the associated costs of running a business, while discouraging growth in productive industry.

It uncovers a damaging neo-liberal agenda, which will do nothing to raise the living standards for Australians struggling to make ends meet.

Meanwhile, in Germany, the house price-to-income ratio has fallen by almost a third nationally since the early 1990s, yet residents enjoy low unemployment and some of the highest wages per capita in the world – including the highest minimum wage in the world. Germany weathered the 2008 depression better than any other country in Europe by maintaining its focus on value adding growth.

The public needs to recapture the debate and push for a better set of democratic tools, that let the people decide directly on the benefits that can aid their communities, rather than the current state of affairs which is coloured with vested interest, polarising voters with false promises and flawed economic thinking.

The rise of citizen's juries, where a diverse&nbsp;and representative group of people are randomly selected and given the information and training needed to deliberate together on matters of policy – for the benefit of all, not just a few - limiting the power of corrupt government officials, may take us one step closer to achieving this.

Top of the agenda should be every citizen's right to affordable access to land and shelter.

&nbsp;

&nbsp;

Australia's empty homes

<html><body>
The perennial debate about negative gearing of residential property investments has been reignited yet again, by two reports in the past week.
The International Monetary Fund has <a href="https://www.theaustralian.com.au/national-affairs/imf-calls-for-exemptions-to-be-stripped-from-the-gst/story-fn59niix-1227066994700">nominated taxes</a> on housing as ripe for reform in order to improve the efficiency of the tax system. And the Reserve Bank of Australia has <a href="https://www.rba.gov.au/publications/fsr/2014/sep/pdf/bus-house-fin.pdf">argued</a> that housing credit to investors has become excessive and is driving up house prices.
Although neither report specifically recommends changes to negative gearing rules, the mere suggestion that we look at housing taxation or lending for housing investment is enough to awaken the anti-negative gearing lobby.
Before we go on, a definition: negative gearing arises where the interest on money borrowed for investment in an income-earning asset is greater than the income earned from that asset. The asset is said to be negatively geared.
Investors are prepared to bear this income loss if they think the price of the asset will rise sufficiently to more than offset the income loss. What <a href="https://theconversation.com/explainer-why-negative-gearing-is-bad-policy-21882">upsets some people</a> is that the excess of interest over income is allowed to be deducted against income from other sources, such as wages or business income, for the purpose of calculating taxable income.
<a href="https://theconversation.com/its-time-to-abolish-negative-gearing-9879">Critics</a> see negative gearing as the source of all kinds of evils: it inflates house prices making housing unaffordable for first home buyers and inflates a house price bubble that will eventually burst causing wider economic problems; it is an unfair tax handout to the rich; and it bleeds the government’s budget which is all the worse in these times of stubborn budget deficits. And according to some critics there is no upside – negative gearing serves no useful purpose.
House price rises have other causes
Let’s take a look at these claims. House prices have risen by an average of about 10% per year in Sydney and somewhat less in Melbourne in the five years since the global financial crisis. But in the rest of Australia house price growth has not even kept pace with inflation at 2 to 3% annually.
Part of the growth in Sydney and Melbourne is due to investor demand since, as the RBA notes, housing credit growth is running at twice the rate for investors (about 10%) than for owner-occupiers. But even if we think house price growth in Sydney is a problem caused by excessive investment demand, negative gearing is not the prime culprit.
The rules around negative gearing have not changed significantly in Australia for at least 25 years, so it can’t explain house price growth over the past five years. Persistent record low interest rates over the past few years is the main driver, which the RBA <a href="https://www.rba.gov.au/publications/fsr/">acknowledges</a> has meant that loans remain affordable. In fact the ratio of interest payments to household income has actually fallen since 2009.
Sure, if we restricted the tax advantages of negative gearing we would dampen investor demand for housing which would slow house price growth in Sydney and everywhere else. But at what cost? It would be tougher to rent a property, hurting low income households.
Rental vacancy rates are already low in Sydney and Melbourne and in fact have fallen in the last couple of years. Critics <a href="https://www.macrobusiness.com.au/2014/09/hia-continues-negative-gearing-subterfuge/">refute</a> this argument. They say that the vast majority of investment demand is for existing properties rather than investments in new housing stock, which simply drives up house prices. True, but higher house prices make new housing construction profitable, which boosts the rental housing stock. So restricting negative gearing is a very inefficient way of tackling a perceived house price bubble – which in any case is restricted to Sydney and, as I’ve <a href="https://theconversation.com/memo-to-the-imf-there-is-no-housing-bubble-27925">argued</a> before, is not about to burst.
What about the fairness argument? The RBA <a href="https://www.rba.gov.au/publications/fsr/2014/sep/pdf/bus-house-fin.pdf">report</a> shows that negative gearing is by no means restricted to the rich. About half of all housing property investors have household incomes under A$100,000. Half of all household property investors are young – 30% are under age 40 and 60% are under age 50. Also, if we want to be fair we have to be consistent. This would mean tackling negative gearing on other income-earning assets such as company shares and business ownership. And we would have to explain why we would want to tax the interest income received by the lender but not allow the borrower to deduct the interest paid, which would amount to double taxation.
Consider the many alternatives
If we want to tackle fairness in the tax system, there are lower hanging fruit. For example we could bring the family home into the pension assets test, address tax avoidance through artificial structures such as discretionary trusts, and tax superannuation contributions at marginal tax rates (as long as we keep withdrawals tax-free).
The budget saving argument is also overstated. According to the <a href="https://www.ato.gov.au/uploadedFiles/Content/CR/Research_and_statistics/In_detail/Downloads/cor00345977_2011TAXSTATS.pdf">Australian Taxation Office</a>, the total losses on rental property in 2011/12 were A$6.8 billion. Applying an average marginal tax rate of, say, 35%, this amounts to A$2.4 billion in tax revenue forgone, or 0.6% of total tax revenue in 2012. However we would save much less than this if we were to abolish entirely negative gearing for rental property because investors would switch to other investments and other ways of minimising tax.
We need to be clear about what problem we are trying to fix and consider whether there are better ways of doing it.<img src="https://counter.theconversation.edu.au/content/32014/count.gif" alt="The Conversation" width="1" height="1">
Ross Guest is a Professor of Economics and National Senior Teaching Fellow at Griffith University 
He does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.
This article was originally published on <a href="https://theconversation.com">The Conversation</a>. Read the <a href="https://theconversation.com/housing-bubble-or-not-negative-gearing-should-stay-32014">original article</a>.
</body></html>

rguest-QX7SdCCSpj

Housing bubble or not, negative gearing should stay

<html><body>
The debate over negative gearing continues to rage, and consumer advocate Neil Jenman has picked a side.
<img src="/images/2014/09/24/neilj.jpg" alt="">
Current negative gearing tax benefits allow investors to claim tax deductions on investment properties where rental income doesn't cover ongoing costs, including interest on the mortgage.
Earlier this week, the Housing Institute of Australia said restricting negative gearing tax benefits <a href="/expert-insights/finance/restricting-negative-gearing-would-erode-affordability-says-hia-do-you-agree">would increase affordability pressures</a>, as rents would be pushed upwards.
<a href="https://www.propertyobserver.com.au/https://twitter.com/neiljenman/status/514870860373450752" target="_blank">Neil Jenman</a> is among those who disagree. Some who call for negative gearing benefits to be dismantled claim that the practice encourages speculative investing, which inflates housing prices.
 
</body></html>

Negative gearing

Editor's Picks

Have something to contribute?

Developments

New apartments

New townhouses

News

Negative gearing

Editor's Picks

Receive the latest news stories to your inbox

Have something to contribute?

Developments

New apartments

New townhouses

News