<p>National diversified developer Fortis has officially launched Crest &amp; Walker, its latest Brisbane apartment development, with construction now underway on the 20-storey Newstead project.</p>

<p>Award-winning builder BINAH has commenced construction on the Bureau^Proberts-designed building, which will deliver a limited collection of 65 two and three-bedroom apartments on Kyabra Street.</p>

<p>[smartcode_project:default project_id=145922 project_image_fid=373556]</p>

<p>The project marks Fortis' fourth active residential development in Brisbane, following River House, which is nearing completion, alongside projects in New Farm and Hamilton as the national developer continues to expand its South East Queensland pipeline.</p>

<p>Fortis General Manager – Development Queensland Dan Boman said Crest &amp; Walker reflects the developer's long-term commitment to delivering design-led residential projects in Brisbane's established inner-city suburbs.</p>

<p>"We're proud to be strengthening our presence in Brisbane with Crest &amp; Walker, particularly in such a sought-after lifestyle destination as Newstead," Boman said.</p>

<p>"Every Fortis project is shaped by its context, and we approach each one with the respect and care it deserves.</p>

<p>"Our focus is always on creating places that feel connected to their neighbourhood and elevate the everyday experience for residents. Newstead continues to evolve as one of Brisbane's most sought-after urban communities, and Crest &amp; Walker reflects our ambition to contribute meaningfully to that story."</p>

<p>[smartcode_project:default project_id=145922 project_image_fid=373559]</p>

<p>Positioned between Gasworks Plaza and James Street, <a href="https://www.apartments.com.au/new-apartments/crest-walker-newstead-12-kyabra-street-newstead-qld-4006">Crest &amp; Walker</a> has been designed as a boutique residential address offering privacy and generous living spaces within one of Brisbane's most established lifestyle precincts.</p>

<p>The building features a contemporary brick podium softened by integrated landscaping, while the upper levels are characterised by restrained architecture and enduring materiality. Interiors have been designed to maximise natural light, acoustic performance and long-term liveability.</p>

<p>[smartcode_project:default project_id=145922 project_image_fid=373583]</p>

<p>Residences comprise spacious two and three-bedroom floorplans, with two-bedroom apartments priced from $1.55 million and three-bedroom, half-floor residences from $3.95 million.</p>

<p>Residents will have access to a wellness-focused rooftop featuring a swimming pool, sauna, steam room, landscaped dining spaces and outdoor lounge areas overlooking Newstead and the Brisbane CBD.</p>

<p>[smartcode_project:default project_id=145922 project_image_fid=373571]</p>

<p>Sales are being managed by Slaite Projects, with Fortis expecting strong demand from owner-occupiers seeking a high-quality, design-focused apartment in one of Brisbane's most tightly held inner-city suburbs.</p>

<p>Completion of Crest &amp; Walker is slated for late 2028.</p>

<p>[smartcode_project_cta:default project_id=145922]</p>


Joel Robinson

Fortis expands Brisbane pipeline with launch of Crest & Walker in Newstead

<p>The enormity of delivering a true skyscraper in Australia's new development market is often overlooked.</p>

<p>It has taken the best part of a decade since plans for Chevron One were first unveiled, but the 52-storey tower is now complete, with residents collecting their keys and moving into what has become one of the Gold Coast's most recognisable new landmarks.</p>

<p>Rising 127 metres above Chevron Island, Chevron One stands almost twice as high as any other building on the island. Its scale places it alongside the trio of towers at Jewel, arguably the last truly significant addition to the central Gold Coast skyline when they were completed around six years ago.</p>

<p>While there are several developments underway around a similar height to Chevron One, they are more concentrated within clusters of the highest towers in the city. The fact Chevron One sits within a developing precinct, looking back at the other high-rise developments in Surfers Paradise and Broadbeach, makes it a different proposition altogether. It will certainly become a reference point on the Gold Coast skyline.</p>

<p>[smartcode_project:default project_id=6515 project_image_fid=68833]</p>

<p>Developer Bensons Property Group is behind the 52-storey tower, which has just shy of 250 apartments, along with an exhaustive list of resident amenity spread across what is the largest development site ever assembled on Chevron Island.</p>

<p>The tower has been the talk of the town for years, says Ray White Projects Gold Coast agent Caitlin Rosenboom, who is selling the remaining apartments.</p>

<p>"People have been watching Chevron One go up for years," Rosenboom says, adding that many prospective buyers have been surprised by the scale of the views once they step inside.</p>

<p>"It's only when they walk through a completed apartment that they truly understand the position of the building," Rosenboom says.</p>

<p>"The views are jaw-dropping. Whether you're looking east over the ocean, across Surfers Paradise, along the river systems or out to the hinterland, every level offers something different but equally impressive."</p>

<p>[smartcode_project:default project_id=6515 project_image_fid=360215]</p>

<p>One of Chevron One's defining advantages is its location on the eastern side of Chevron Island on Stanhill Drive, a position which protects the views forever.</p>

<p>"There's only one row of houses between Chevron One and the water, and the height restrictions along the river means views from Chevron One can never be built out,"&nbsp;Rosenboom says.</p>

<p>While new apartment developments continue to emerge across the Gold Coast, Rosenboom says opportunities to secure a completed apartment with this level of outlook are becoming increasingly rare.</p>

<p>"The size of the site is something that would be incredibly difficult to replicate today," she says.</p>

<p>"That's allowed Chevron One to deliver the sort of amenity, open space and resident facilities that very few projects can offer. There are not many completed apartment buildings on the Gold Coast right now that can compete with the combination of scale, quality and amenity."</p>

<p>[smartcode_project:default project_id=6515 project_image_fid=68839]</p>

<p>There's around 2,000 sqm of amenity solely for the use of residents of Chevron One. Club One features a uniquely shaped swimming pool that mirrors the footprint of the building itself, set within a extensively landscaped gardens. There's also an indoor pool and spa, a fully equipped gym with a Pilates room, a yoga garden, a bookable private dining area and lounge that can host up to 30 people, and a 24-hour concierge service.</p>

<p>As for the buyers, Rosenboom is fielding enquiry from everywhere: Sydneysiders and Melburnians looking at the new and off-the-plan market following the changes in the Federal Budget, as well as those looking to relocate, through to South East Queenslanders seeking either a permanent home or a weekender bolthole.</p>

<p>"The Gold Coast lifestyle continues to resonate with people relocating from the southern states, and when they see the views and the quality of what's been delivered at Chevron One, it becomes very easy for them to understand the appeal," Rosenboom says.</p>

<p>A diverse mix of one, two and three-bedroom apartments remain available, with each offering "something a little different", be it the orientation and views, configuration, or level, to suit a wide variety of buyers.</p>

<p>The remaining apartments are ready to inspect in person, by appointment.</p>

<p>[smartcode_project_cta:default project_id=6515]</p>


A decade in the making: Residents to move into Chevron One as construction wraps up

<p>A general rule of thumb in new apartment developments is that the penthouses get the rooftop.</p>

<p>It's a formula that's become commonplace across Australia's apartment market. Residents might have access to a pool, gym or barbecue facilities on a dedicated lower level, but the most desirable outdoor spaces are typically reserved for the highest-priced homes at the top of the building.</p>

<p><a href="https://www.apartments.com.au/developers/sherpa-property-group">Sherpa Property Group</a> has taken the opposite approach.</p>

<p>Rather than dedicating the rooftop to a handful of buyers, the Gold Coast developer has made it the centrepiece of its Flourish collection, creating expansive shared spaces from the best vantage point in the building.</p>

<p>The philosophy has reached its most ambitious expression at <a href="https://www.apartments.com.au/new-apartments/flourish-soleira-palm-beach-1150-1160-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a> in Palm Beach, where two rooftop precincts connected by a skybridge will deliver one of the most extensive lifestyle offerings seen in a residential apartment project on the Gold Coast.</p>

<p>[smartcode_project:default project_id=150017 project_image_fid=374053]</p>

<p>"We're seeing a clear move toward developments that offer more than just an apartment," Sherpa Group founder Christie Leet said.</p>

<p>"People want spaces that support how they actually live, whether that's working from home, staying active, or spending time with family and friends.</p>

<p>"That's where amenity becomes critical. It's not just about what's included, but how those spaces are designed to be used every day."</p>

<p>[smartcode_project:default project_id=150017 project_image_fid=374052]</p>

<p>The breadth of amenity has already attracted buyers across multiple demographics. Younger first home buyers have been drawn to Soleira's one-bedroom apartments, a product rarely delivered in Palm Beach, while families have responded to practical inclusions such as the shallow children's pool adjoining the main lap pool and the extensive communal recreation areas.</p>

<p>Instead of a single rooftop, Soleira delivers two distinct lifestyle zones.</p>

<p>[smartcode_project:default project_id=150017 project_image_fid=372547]</p>

<p>The southern rooftop has been dedicated to wellness, featuring a gym, yoga and Pilates studio, work-from-home facilities, a wellness centre, spa, and hot and cold plunge pools.</p>

<p>The northern rooftop focuses on recreation and entertaining, incorporating a heated resort-style pool, private dining rooms, pizza ovens, barbecues, a golf simulator, children's recreation areas, and what is expected to be the Gold Coast's first rooftop basketball court, which will also double as a squash court.</p>

<p>[smartcode_project:default project_id=150017 project_image_fid=374054]</p>

<p>Beyond the rooftops, Soleira will introduce 1,500 sqm of curated retail beneath the towers, creating one of Palm Beach's first genuinely mixed-use lifestyle precincts where cafés, restaurants and convenience retail become part of residents' everyday lives.</p>

<p>Sherpa has also retained management rights across the development, allowing it to oversee the long-term operation of the building through a 24-hour concierge model. The developer is also exploring additional revenue streams within the precinct aimed at helping offset ongoing body corporate costs for residents.</p>

<p>[smartcode_project:default project_id=150017 project_image_fid=370962]</p>

<p>While Soleira is the largest project Sherpa has delivered, the rooftop-first philosophy has been evolving for several years.</p>

<p>It began with <a href="https://www.apartments.com.au/new-apartments/amargo-6-12-sixth-avenue-palm-beach-qld-4221">Flourish Amargo</a>, the first project released under the Flourish brand. Rather than competing at the ultra-luxury end of the market with oversized half-floor and full-floor residences, Sherpa focused on creating lifestyle-driven apartments supported by resort-style shared spaces.</p>

<p>Amargo introduced more than 800 sqm of rooftop amenity, combining wellness facilities, heated pools, entertaining areas, cabanas, pizza ovens and private dining spaces into what was designed as an extension of residents' homes rather than a facility used only occasionally.</p>

<p>[smartcode_project:default project_id=146527 project_image_fid=366550]</p>

<p>That approach continued with Flourish Oasis, where the same amenity-led philosophy was refined into a more boutique development. Strong demand from Sherpa's growing VIP database saw much of the project sold before it reached the broader market, reinforcing buyer appetite for apartment communities centred around shared lifestyle experiences.</p>

<p>Flourish Amargo is slated for completion mid-way-through next year, with Oasis to be delivered by late 2027. Flourish Soleira is expected to complete in 2030.</p>

<p>[smartcode_project_cta:default project_id=150017]</p>


Sherpa takes amenity to the sky as Flourish Soleira captures booming Palm Beach demand

<p>As apartment living continues to evolve across Sydney's growth corridors, the quality and distribution of shared spaces is increasingly shaping how residents experience home. Rather than functioning as add-ons, amenities are being embedded into the daily rhythm of a building, supporting everything from quiet retreat to social interaction, often within a single vertical community.</p>

<p>At <a href="https://www.apartments.com.au/new-apartments/aeris-melrose-park-nursery-street-melrose-park-nsw-2114">Aeris</a> in Melrose Park, this approach is resolved through a layered amenity offering that unfolds from ground level through to its upper podium. Developed by <a href="https://www.apartments.com.au/developers/sekisui-house-australia">Sekisui House Australia</a> in partnership with Hankyu Hanshin Properties, the project introduces 468 apartments across two towers and a mid-rise building, positioned at the highest point of the broader masterplan.</p>

<p>[smartcode_project:default project_id=426 project_image_fid=359199]</p>

<p>The amenity experience begins at street level, where two courtyards sit within a landscaped setting that connects residents to the wider network of parks and green spaces. These green spaces are not isolated pockets but part of a wider pedestrian network that links Aeris to the surrounding <a href="https://www.apartments.com.au/developments/melrose-park-nsw-2114">Melrose Park</a> precinct, including Central Park, future schools, and the Town Centre opening in July 2026. The result is a transition that moves from public to private without abrupt boundaries, allowing residents to pass through shaded, tree-lined environments before reaching the building itself.</p>

<p>Moving upward, the focus shifts to the level five podium, where the primary communal facilities are concentrated. This space brings together a 16-metre swimming pool, outdoor seating areas, and a communal BBQ zone arranged to take advantage of elevated outlooks. Seating is positioned beneath pergolas, creating pockets of shade that extend the usability of the space throughout the day. The pool edge aligns with views toward the wider district, reinforcing the sense of elevation that defines the project’s positioning.</p>

<p>In the adjacent building, this is complemented by quieter, more contemplative spaces, including an outdoor cinema set within the same level. Positioned to operate primarily in the evening, it introduces a different tempo to the shared environment, shifting from daytime activity to after-hours use without requiring separate zones.</p>

<p>[smartcode_project:default project_id=426 project_image_fid=360299]</p>

<p>The podium also accommodates an intimate private resident gym. Located on the lower levels, it gives residents convenient access to fitness facilities without leaving the building.</p>

<p>Above, the elevated podium sky deck extends the amenity offering, providing additional open-air spaces with elevated outlooks across the surrounding landscape. While more restrained in program, this upper level reinforces the project’s vertical progression, from ground-level greenery to elevated outlook, allowing residents to move between distinct spatial conditions within a single address.</p>

<p>This distribution of amenities reflects a deliberate response to how residents use space across the day. Sekisui House Australia Sales and Marketing Director Peter Kalaf points to the role these shared areas play in shaping buyer demand. Aeris has been conceived as more than a collection of apartments, with the podium pool, gym and outdoor cinema forming part of a broader lifestyle offering that extends the home beyond each individual residence.</p>

<p>[smartcode_project:default project_id=426 project_image_fid=360300]</p>

<p>What distinguishes Aeris is not the inclusion of these elements individually, but how they are arranged in relation to one another. Active, social, and passive spaces are layered vertically rather than separated, allowing residents to choose between them without leaving the building or moving far from their apartment. This proximity supports both routine use, such as a morning swim or evening workout, and more occasional gatherings, whether around the BBQ area or within the cinema setting.</p>

<p>The amenity design also sits within a broader framework of connectivity across Melrose Park. The Melrose Park Town Centre, anchored by Coles and Dan Murphys, features a mix of retail, dining, health and lifestyle offerings, bringing everyday convenience closer to residents. By the end of the year, more than five hectares of parks and open space, equivalent to around seven football fields of green space on residents' doorstep, will further enhance the precinct, allowing the internal facilities at Aeris to operate as an extension of the wider neighbourhood rather than a substitute for it.</p>

<p>Construction at Aeris continues to gather momentum, with ground floor slabs expected to be completed in late 2026 before the first sections of the buildings begin to rise above ground.</p>

<p>[smartcode_project_cta:default project_id=426]</p>


Elevated amenity anchors daily life at Aeris, Melrose Park

<p>Repeat buyers are one of the strongest measures of confidence in any apartment development.</p>

<p>At <a href="https://www.apartments.com.au/new-apartments/era-newcastle-west-124-126-bull-street-newcastle-west-nsw-2302">ERA</a> in Newcastle West, some purchasers are returning to <a href="https://www.apartments.com.au/developers/gwh">GWH</a> after living at the developer's One Apartments. Their decision to purchase again was driven by the quality of life they found after moving into their first GWH home.</p>

<p>Keith Wilton had spent years living in a house in East Maitland before deciding it was time for a change. Apartment living had always been on his radar, but he was selective about what he wanted.</p>

<p><iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/FH_1EzB-1vs?si=XScVlP1ERsTDJoME" title="YouTube video player" width="560"></iframe></p>

<p>"I had some boxes I wanted to tick," he says.</p>

<p>Keith points to the open-plan design, generous outdoor areas and considered inclusions as key reasons One Apartments worked for him.</p>

<p>“One of those things was a nice indoor open plan area, but also I wanted a nice outdoor open area that I could entertain on in summer or Christmases or birthdays,” he says.</p>

<p>He also found value in the smaller details, from integrated appliances to shared resident spaces including the pool, cinema and rooftop areas.</p>

<p>[smartcode_project:default project_id=135096 project_image_fid=356818]</p>

<p>After comparing several developments, he chose One Apartments because of GWH's longstanding local reputation and his own experience working with the developer on a commercial project more than a decade earlier.</p>

<p>"I knew that they were local, that the quality of the build was going to be up there. I'd looked at other apartment complexes around and close by, and I just knew that here was a better decision location wise."</p>

<p>Today, Keith says the move has completely changed how he experiences Newcastle.</p>

<p>"I enjoy living in this location because it's more of a lifestyle change. That Newcastle city living where you can walk to restaurants and bars and even beaches and parks and even shopping across the road."</p>

<p>[smartcode_project:default project_id=135096 project_image_fid=356828]</p>

<p>Beyond the location, he says it's the sense of community that has surprised him most.</p>

<p>"Everyone loves living here because they chose to live here, but everyone looks out for each other. It's a real great community feel here."</p>

<p>For Aimee and Lyle Goodman, the journey started almost by chance.</p>

<p><iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/tsioMLcnjas?si=zq-ys3JuWpfa5hFv" title="YouTube video player" width="560"></iframe></p>

<p>The couple happened to be having coffee in Newcastle when they noticed the site where One Apartments was about to begin construction.</p>

<p>"We were aware GWH was planning a development," Aimee says. "We made one phone call and things moved pretty quickly after that."</p>

<p>As busy business owners, they initially thought apartment living would simply reduce the maintenance that came with larger homes. Instead, it fundamentally changed how they spent time together.</p>

<p>"We actually catch up more as a family now," Aimee says.</p>

<p>"We've had homes with big yards and lots of space, but everyone ended up in different rooms. Here we'll have dinner together, the kids can play, and we spend far more quality time together."</p>

<p>[smartcode_project:default project_id=135096 project_image_fid=356829]</p>

<p>Lyle says their confidence came from GWH's reputation within Newcastle's building industry.</p>

<p>"I know people who've worked across different apartment projects, and whenever GWH came up the feedback was always the same. They're rock solid. They're quality."</p>

<p>That confidence only grew throughout the buying process.</p>

<p>"One of the things that really impressed us with GWH was the whole process, was the communication," Lyle says. "It was consistent, it was regular, there was no problem if we had some weird questions, there was no problems in getting answers."</p>

<p>[smartcode_project:default project_id=135096 project_image_fid=351104]</p>

<p>Aimee says one moment stood out.</p>

<p>"The project actually finished on time. We realised we needed to hurry up and sell our house because everything was happening exactly when they said it would."</p>

<p>The positive experience at One Apartments ultimately gave all three buyers the confidence to purchase again with GWH, this time at ERA.</p>

<p>Their confidence reflects what many buyers are seeking in today's apartment market. Location remains important, but so too does certainty around delivery, quality and long-term liveability.</p>

<p>[smartcode_project:default project_id=135096 project_image_fid=356822]</p>

<p>ERA builds on those foundations with 280 one, two and three-bedroom apartments across two landmark towers in <a href="https://www.apartments.com.au/developments/newcastle-west-nsw-2302">Newcastle West</a>.&nbsp;</p>

<p>Designed by <a href="https://www.apartments.com.au/architects/fk-australia">Fender Katsalidis</a>, the project will include more than 2,000 square metres of resident amenities, including a resort-style pool, gym, sauna, private cinema and rooftop entertaining spaces overlooking the harbour and coastline.&nbsp;</p>

<p>The development is also within walking distance of the Newcastle Interchange, Honeysuckle, Darby Street, the harbour foreshore, restaurants, retail and the city’s beaches, continuing the walkable lifestyle that existing GWH buyers say has transformed how they live.</p>

<p>[smartcode_project:default project_id=135096 project_image_fid=356826]</p>

<p>For Keith, the appeal remains straightforward.</p>

<p>"You feel at home even before you've moved into your home."</p>

<p>For Aimee, the change is measured in time.</p>

<p>“I just felt like I had more time,” she says.</p>

<p>[smartcode_project:default project_id=135096 project_image_fid=351102]</p>

<p>Construction at ERA is now underway, with more than half of the residences already sold and limited two and three-bedroom apartments remaining in the East Tower release. Priced from $980,000 for two-bedroom residences and $1.46 million for three-bedroom residences, buyers can secure an apartment with a 10 per cent deposit, with premium homes offering ocean views from Level 8 and harbour views from Level 10.</p>

<p>ERA is also backed by Resilience Insurance's 10-year Latent Defects Insurance policy, providing protection against structural or waterproofing defects for 10 years after completion. The project is anticipated to be completed in early 2028.</p>

<p>[smartcode_project_cta:default project_id=135096]</p>


From ONE to ERA: Why buyers are choosing GWH again in Newcastle West

Negative gearing

<html><body>
<p class="Default">It’s contentious: Should we keep negative gearing?</p>
<p class="Default">The Housing Industry Association has released research that said restricting access to negative gearing for investors buying residential property would reduce the amount of investment in housing, erode affordability and push rents higher.</p>
<p class="Default">HIA managing director Shane Goodwin said that discounting residential negative gearing in isolation is a retrograde step for tax reform in terms of efficiency and equity.</p>
<p class="Default">“New housing is one of the most highly taxed sectors in the economy, and the removal of negative gearing would only make that situation worse and discourage investment,” said Goodwin.</p>
<p class="Default">“This would in turn reduce housing supply and increase the cost of renting,” he said.</p>
<p class="Default">Goodwin says that negative gearing promotes private investment in the rental market, stimulating economic activity and taking pressure off social housing.</p>
<p class="Default">“With an aging workforce and future pressure on services, policy settings such as negative gearing that promote wealth creation and self-sufficiency in retirement should be promoted,” he said.</p>
<p>“It is important to remember that negative gearing is not the domain of so-called ‘wealthy investors’. Figures from the ATO demonstrate that 74% of tax payers receiving rental income have a taxable income of less than $80,000.”</p>
<p>The much debated topic has been<a href="/expert-insights/finance/room-for-debate-should-negative-gearing-be-abolished"> under discussion on <em>Property Observer</em> for years</a>.</p>
<p>There have been many suggestions of how it could be phased out, including grandfathering it out or just slowly toughening the rules. You can <a href="/expert-insights/finance/who-will-get-stung-by-negative-gearing-and-tax-changes">read some of those suggestions here</a>.</p>
<p>RESULTS:</p>
<p><img src="data:image/png;base64,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" 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jduke-EHk3XBmHkn

Restricting negative gearing would erode affordability, says HIA: Do you agree?

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<p>GUEST OBSERVATION</p>
<p>Positively geared property investing has become very popular over the last decade, but what exactly is it and how can you benefit from it?</p>
<p><span style="line-height: 1.3em;">Positive property is an investment vehicle that by definition pays the holding costs of a property and puts profit in the owner’s pocket. That is, it provides a passive income to you, the investor, from the first day of holding. This is called ‘passive income’ and it’s what makes it different from other forms of investing when you’re paying out each month.</span></p>
<p>When you begin investing, it pays to start with the end in mind if you want to be successful.</p>
<p>This includes two main aspects of planning. The first is being clear about your goals and motivations, and the second is understanding exactly what success looks like to you (for instance, retiring early, travelling more, working part time). The key is to understand exactly what you want your investment outcome to look like, as this will assist you in structuring and shaping a property portfolio that will get you there. Without a clear end, you won’t know the type of property to purchase and the required benchmarks to reach your goal, and it’s entirely likely you will fall short as a result.</p>
<p>A recent in depth study by University of Melbourne and Towers Watson found that only 53% of couples and 22% of single people are on track to achieve a comfortable level of retirement income - a grim prospect.</p>
<p>If you’re like most who look to property investing, you’ll want to continue living on your current household income into retirement, which really should be the minimum standard you consider. Even on $100,000 per year as a household income, 20 years into retirement works out at a requirement of $2,000,000. Sadly, Australians who have not created a stable investment portfolio through their earning lives will have no chance retiring with this sort of money put away.</p>
<p>Even if you are saving, the numbers are against you. Just 1% of Australians are considered “wealthy” in retirement.</p>
<p>It is crucial to prepare for a financially stable life by investing. Which brings us back to positive property.</p>
<p><strong>Here are four reasons that you should consider it:</strong></p>
<ol>
<li><span style="line-height: 1.3em;">It pays a profit from day one and builds a passive income<br><br></span></li>
<li><span style="line-height: 1.3em;">As your portfolio grows, your serviceability and passive income also grows<br><br></span></li>
<li><span style="line-height: 1.3em;">The extra income from positive property improves your lifestyle and future investment choices, providing you a stable base to build a portfolio, a life and a family<br><br></span></li>
<li><span style="line-height: 1.3em;">You can eventually look to achieve a goal of passive income where you are not controlled by your job, your budget or just “getting by”. Opportunities that didn’t exist beforehand can open up for you.<br><br></span></li>
</ol>
<p>Often when I see a new client, I ask them how much of a passive income they are seeking to achieve their goals. A very common figure is $100,000 per annum, which appears to be a pivotal point at which people consider replacing their working life for something else. It’s always exciting to see people cross this threshold and realise their options have changed.</p>
<p>By using the high yielding passive income method, investors can grow and expand their portfolio much more quickly than if they were paying out on a regular basis. It also means it won’t affect your lifestyle, and you’ll see a return far more quickly than if you were to go down a negatively geared path. </p>
<p>This doesn’t work in every location.</p>
<p>Highly positive properties are not, for instance, located in capital cities – if they were, everyone would be investing there and everyone would be a wealthy investor. They are usually spread between regional coastal and resource towns across the country.  </p>
<p>You must undertake your due diligence when it comes to finding the right town with the right outcome. You cannot find these in the inner city property regions, and you must accept that if you’re chasing positive property then you will likely be looking outside of areas you are familiar with.  Good due diligence will help you feel comfortable investing in these areas.</p>
<p>Picking the right property for now and down the track is also important. You must consider not only the individual property, but how it will affect your future purchases. Each property should be bought with the next in mind.</p>
<p>You need to get that yield and return figure right – you will want to pick a specialist in the area who deals with the corporate leasing market. They can maximise your return and, ultimately, your income.</p>
<p>It’s interesting to note that the property clock applies to all markets across the country, and has done so for as long as property prices have been recorded. When looking at the statistics, in particular the historical performance of Australian properties over the last 50 years, a clear and steady incline is noted.</p>
<p>Generally, every seven to 10 years, our capital cities run from the top of the clock, which you may call the peak, downwards to the bottom of the cycle. This then goes back up to the peak again, each time rising through its highs and lows, but taking strong and substantial steps forward in both capital growth and rental yield in each cycle.</p>
<p>In some of the largest property downturns of this century, investors have simply had to wait until the end of that cycle to receive capital growth.</p>
<p>Despite the long running success for many in property, only 5% of the Australian population own an investment property, with less than 0.2% owning more than four. Considering our access to lending, low interest rates and high wages, this is a staggeringly low number.</p>
<p>Many property investors purchase blindly – without considering their desired income and without having a stable base to invest from. Having a base of positive property will allow you to keep borrowing and not hit the serviceability glass ceiling that many hit when they reach two to three negatively geared properties.</p>
<p>My recommendation? Build a passive income first, with three to four positive properties generating $100,000 or more. Then look to diversifying into the capital cities either with negative gearing or through projects like flips and renovations.</p>
<p>Why? Because positive income acts as a risk buffer that not only allows you to do these active projects, but also allows you to protect yourself in the event that something goes wrong or interest rates increase.</p>
<p><strong><em>Ryan Crawford</em></strong><em> is group director of <a href="https://www.crawfordpropertygroup.com.au" target="_blank">Crawford Property Group</a>.</em></p>
<p><em>Ryan is one of Australia’s most successful property investors under 40 and a leading expert in positively geared property investment. In less than a decade, Ryan built a portfolio of more than 40 positively geared properties and is now dedicated to helping others plan and implement successful property investment strategies. </em></p>
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RyanCrawford-aLR2qkAu6t

Four reasons why you should consider positive property

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<p><span>Any move to scrap negative gearing would affect Australia’s “mum and dad” investors, according to research that shows 70% of those claiming the rebate earn less than $80,000.</span></p>
<p><span>With <a href="https://www.smartcompany.com.au/finance/42835-negative-gearing-could-be-putting-the-financial-system-at-risk-murray-inquiry" target="_blank">calls to scrap the tax</a> never far from public debate, the research shows the property tax break is not just for the wealthy, as often assumed.</span></p>
<p><span><a href="https://www.smartcompany.com.au/finance/investment/34310-should-negative-gearing-be-scrapped-experts-weigh-in" target="_blank">Negative gearing</a> allows investors to claim full tax deductions for interest costs and other property expenses when the investment is less than the cost of owning and managing the investment.</span></p>
<p><span>Statistics from the Australian Tax Office, provided by the Property Council of Australia, show 883,325 of the 1.266 million taxpayers claiming benefits from negative gearing earned under $80,000 in 2011-12.</span></p>
<p><span>Job classifications from the ATO show the majority of those are teachers, nurses, clerical and emergency workers and salespeople.</span></p>
<p><span>Nick Proud, executive director of the Residential Development Council, told <em>SmartCompany</em> many would also be small business owners or sole traders, but it is difficult to determine given the ATO’s classification by industry.</span></p>
<p><span>The statistics also show 73% of the Australians accessing negative gearing only own one property and a further 18% own two.</span></p>
<p><span>“The majority of these people are not property barons,” says Proud.</span></p>
<p><span>“They are average mums and dads, people who don’t want to leave it up to the government to look after their retirement.”</span></p>
<p><span>Proud says these investors are providing homes for people not far below their own earning capacity.</span></p>
<p><span>He says any action to remove negative gearing from the tax books will result in a slowing up in the interest in rentals, with rental numbers declining and an upwards pressure placed on rents.</span></p>
<p><span>He also says investors claim around $16 billion in other rental deductions for property maintenance through their negative geared properties.</span></p>
<p><span>“That flow-through to economy would happen straight way and we would see a significant decline in jobs,” says Proud.</span></p>
<p><span>Proud also says there would be a significant effect on the demand on public housing, with Australian Bureau of Statistics data showing a huge reduction in building approvals for such accommodation in recent years.</span></p>
<p><span>Brian Chant, managing director of Property Asset Planning, agrees scrapping negative gearing would have a detrimental effect on rent prices, job creation and public housing demand.</span></p>
<p><span>He tells <em>SmartCompany</em> negative gearing legislation has been in place from 1996 for good reason.</span></p>
<p><span>“Negative gearing is a fantastic opportunity for everyone, in any wage or income bracket,” says Chant.</span></p>
<p><span>“People love getting into property and what easier way to reduce your income tax.”</span></p>
<p><span>But Taxpayers Australia’s head of taxation, Mark Chapman, tells <em>SmartCompany</em> it may not be worth those in lower income brackets getting into negative gearing investments.</span></p>
<p><span>“I wonder whether so many people in those lower income thresholds misunderstand the extent of tax brackets,” says Chapman.</span></p>
<p><span>He says often these lower income earners hear “wonderful things about negative gearing”, but they don’t necessarily fully understand paying tax at a lower rate also means earning at a lower rate.</span></p>
<p><span>“If people in those income brackets go into property investment because they want to be property investors and have commercial judgement fine, but if they look at it as a means of saving tax, ultimately they will be disappointed.”</span></p>
<p><em>This article first appeared on <a href="https://www.SmartCompany.com.au" target="_blank">SmartCompany</a>.</em></p>
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krobb-aCrRNnPq6D

Who really claims negative gearing? ATO stats reveal it's not just a strategy for the wealthy

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<div class="WordSection1">
<p>GUEST OBSERVATION</p>
<p>Negative gearing is a form of financial leverage where the gross income generated by an investment is less than the cost of owning and managing the investment, including interest charged on the borrowings.<span style="line-height: 1.3em;">The negative </span><span style="line-height: 1.3em;">cash flow</span><span style="line-height: 1.3em;"> is then offset against personal incomes. </span></p>
</div>
<p><strong>Doesn’t negative gearing just help the rich get richer?</strong></p>
<p>According to 2011-12 ATO statistics, there were 12,736,030 individual taxpayers in Australia and 1,897,668 (14.9%) of them owned one or more investment properties. 73% of property investors own one property and only 4% of investors own four or more properties. For a property to be negative geared there must be a significant debt against it (they don’t own it outright).</p>
<p>In other words, an overwhelming majority of investors are ordinary mums and dads; they are attempting to fund their own retirement, as opposed to being a burden on Australia’s taxation system via government-funded pension.</p>
<p><strong>Doesn’t negative gearing reduce the amount of revenue available to governments each year?</strong></p>
<p>A report produced by REIA in August 2014, mentioned that a total of $7,860 million in losses were claimed by Australian property investors in 2011-12. The ATO also charged extra taxes on the $5,939 million worth of investment property profits.</p>
<p>Should changes ever be made to negative gearing and results in fewer property transactions each year, governments would stand to lose a lot more tax revenue from stamp duties, infrastructure charges, land tax, construction industry payroll taxes, and more. The existing $71 billion (and growing) spent each year on tax-payer funded pensions and allowances will increase significantly. </p>
<p><strong>What impact would the removal of negative gearing have on Australia’s housing supply?</strong></p>
<p>According to 2011 Census data, Australia has 9,117,003 residential properties and we are adding approximately 160,000 more each year. Negative gearing is a tax-policy linked to property – other policies include stamp duty, first home buyer incentives, tax rebates and incentives to purchase new property, land tax, and capital gains tax.</p>
<p>Tightening of any of these policies will directly influence consumer behaviour and become a disincentive to buying and holding property. As we’ve seen already with ‘new home building grants’, the introduction and removal of tax policies directly affects the construction industry (Australia’s biggest industry by direct and indirect jobs).</p>
<p><strong>What about Australia’s social housing problem?</strong></p>
<p>75% of residential properties in Australia are occupied by the owner. Of the remaining 25% that are rented only 5% are provided by governments. Governments can’t afford to fund social housing (some governments have actually been selling off parcels of properties in order to raise money for other reasons).</p>
<p>The National Rental Affordability Scheme (NRAS) is government admission of our social housing shortfall which governments can’t fund so they developed a policy designed to encourage others to do it for them. Removal of negative gearing would be a gross contradiction to this.</p>
<p><strong>How might the removal of negative gearing affect Australia’s welfare system?</strong></p>
<p>Australia’s financial literacy crisis is in our DNA - only 4% of people are financially independent by age 65. The federal government have said that we can't support our ageing population with our unsustainable reliance on tax-payer pensions. They have touted the possibility of the superannuation age increasing to 70. Stripping back incentives which encourage investment would only compound this country's problem.</p>
<p><em>Article continues on the next page. Please click below.</em></p>
<hr class="system-pagebreak">
<p><strong>Does negative gearing force property prices up and make it harder for first home buyers to get in to the market?</strong></p>
<p>Property markets are affected by dozens of factors. The factors which affect property values the most are related to the general economy, employment, and credit policies, not tax policies). When property markets perform strongly, like they have in Sydney in 2013-14, it is not uncommon for segments of the community to blame investors for driving values up and making bit harder for others to get in.</p>
<p>Negative gearing has been in place for generations and it is no more responsible for Sydney’s property price growth in 2013-14 than it was for its flat-line performance from 2001 to 2008.</p>
<p><strong>Doesn’t negative gearing make rents more expensive?</strong></p>
<p>In July 1985, in response to claims that negative gearing was the primary cause of property rents rising uncontrollably, the Hawke government quarantined negative gearing. During the two years that the quarantine was in place, ABS figures show rents rose by an average of 22%. The policy was reversed in 1987 and rents still rose by 21% over the next two years. A similar trend occurred with property values. As mentioned previously, tax policies have a smaller impact on property markets (values and rents) than most people think.</p>
<p><strong>What other potential impacts could occur if negative gearing was tinkered with?</strong></p>
<p>Propertyology often describes property investment as a business – the business of providing accommodation – and the investor’s role is akin to that of a company director (to make responsible decisions which are in the best interest of your balance sheet and profit and loss statement).</p>
<p>Negative gearing involves claiming interest expenses from borrowings plus other costs associated with maintaining an asset in much the same way that more traditional businesses do. Similarly, a share investor will claim the interest expense from their margin loan. Time will tell whether property investors will be singled out or not.</p>
<p><strong>A final word...</strong></p>
<p>Rumours of negative gearing getting scrapped arise almost every year – either in the lead up to a federal budget or whenever there is a major review of Australia’s taxation policies. It is the responsibility of governments to periodically review everything; nothing lasts forever. <span style="line-height: 1.3em;">The reality however is that negative gearing has existed in Australia for a few generations.</span></p>
<p>In the event that negative gearing was ever scrapped, there might be some short-term referred pain but the real estate body will eventually realign itself (once the dust settles, it will be business as usual again for most property investors).  The potential implications to scrapping negative gearing will be spread a lot further than property investor’s tax returns. Any government who is bold enough to make a change faces consequences far greater than the revolt of 1.9 million people at the election box. For these reasons, it is my view that negative gearing will survive further generations.</p>
<p><em><strong>Simon Pressley</strong> is managing director of <a href="https://www.propertyology.com.au/" target="_blank">Propertyology</a>, a full-time property market analyst, accredited property investment adviser, and Australia’s (REIA) Buyer’s Agent of the Year (2012+2013+2014)</em></p>
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spressley-sBoeMhannA

Scrapping negative gearing would have consequences far beyond an investor's tax return

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<p><span>The current tax treatment of investment property losses, through a combination of negative gearing and capital gains tax, has come under fire for putting the financial system at risk, according to the federal government’s Financial System Inquiry interim report.</span></p>
<p><span>Currently, <a href="https://www.smartcompany.com.au/finance/investment/34310-should-negative-gearing-be-scrapped-experts-weigh-in" target="_blank">negative gearing</a> means that interest costs and other property expenses are fully tax deductible, while capital gains tax on properties is applied with a 50% discount.</span></p>
<p><span>The Financial System Inquiry, headed up by David Murray, states in its interim report that these arrangements “encourage leveraged and speculative investment — particularly in housing”.</span></p>
<p><span>“Because of these tax arrangements, owners of residential property have an incentive to repay their mortgage as slowly as possible to maximise the tax deductions they can accrue,” says the report.</span></p>
<p><span>“Loans with interest-only periods help to maximise these tax deductions in the early years of a loan, although these loans also give borrowers more flexibility with repayments. The tax system, therefore, encourages individuals to take on more risk, which does have implications for risks to lenders.”</span></p>
<p><span>Aside from negative gearing and the asymmetric tax treatment, the report identifies additional tax-related factors that are also distorting the housing market.</span></p>
<p><span>“In addition to the more favourable tax treatment, individuals have an extra incentive to put more of their wealth into their primary residence because of the means test for the age pension, which excludes the primary home. This leads to higher allocation of wealth to housing and, for some, an inefficient level of consumption of housing services,” the interim report states.</span></p>
<p><span>Current arrangements also mean family homes are a key savings vehicle for many Australians.</span></p>
<p><span>“Returns on owner-occupied housing (including imputed rent and capital gains) are exempt from tax, although this is not unusual by international standards. This makes housing a very attractive vehicle for savings,” the report states.</span></p>
<p><span>The favourable tax treatment for property investment has created a situation of increasing mortgage indebtedness, which in turn has created risks for the financial system.</span></p>
<p><span>“Since the Wallis Inquiry, the increase in households’ mortgage indebtedness has been accompanied by banks allocating a greater proportion of their loan book to mortgages; the share of loans for housing has increased from 47% in 1997 to its current share of 66%,” says the report.</span></p>
<p><span>“A large enough disruption to the housing market could have significant implications for household balance sheets, financial stability, economic growth, and the speed of recovery in household spending and broader economic activity following a shock.”</span></p>
<p><span>Mark Chapman, head of tax with lobby group Taxpayers Australia, told <em>SmartCompany</em> the report is correct in identifying that tax deductions people claim over the life of a property are greater than the losses they claim at the end.</span></p>
<p><span>“For high income earners, it’s an astute way to reduce their tax rate. But 70% of those using negative gearing are not high income earners, and are required to buy an asset to get a tax deduction,” Chapman says.</span></p>
<p><span>“It needs to be reformed. From a tax policy perspective, [negative gearing in its current form] makes little sense. In most jurisdictions, offsets for losses on property investments can only be claimed against profits on other properties, or be carried forward against future profits.”</span></p>
<p><span>Philip Soos, a research Masters candidate at the School of Management at Deakin University specialising in property tax law, told <em>SmartCompany</em> that since 2001, most investment property rents have not been high enough to cover interest and expenses.</span></p>
<p><span>“Around 60% of investor loans are interest only. It’s a big leverage bet on a capital gain – as long as wages are high enough to sustain the rents,” Soos says.</span></p>
<p><span>“While the argument is that it encourages new property development, around 96% of all investment property loans by value are spent on existing properties.”</span></p>
<p><span>“Abolishing negative gearing would be better than reform, but that’s unlikely, so quarantining it or reforming it so it’s limited to new, rather than existing properties, is probably the best option,” says Soos.</span></p>
<p><span>Brian Chant, managing director of Property Asset Planning, told <em>SmartCompany</em> negative gearing has some important benefits when applied to new properties.</span></p>
<p><span>“I think it’s very effective when used on brand new property. It allows you to turn over the economy, and when you turn over the economy, you employ people. It allows you to build new homes and new affordable housing,” Chant says.</span></p>
<p><span>“It needs to be reviewed and discussed further, but when it’s applied to new homes, it’s brilliant.”</span></p>
<p><span>However, Property Tax Specialists' Shukri Barbara told <em>SmartCompany</em> reforming negative gearing too quickly could create its own risks.</span></p>
<p><span>“One important issue is the banks, who lend up to 90%, are heavily dependent on negative gearing. If you remove it too quickly, the values will drop and create the risk that people will sell their properties for less than they owe on their mortgages,” he says.</span></p>
<p><em>This article first appeared on <a href="https://www.SmartCompany.com.au" target="_blank">SmartCompany</a>.</em></p>
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asadauskas-o9wSWMRiAW

Negative gearing could be putting the Australian financial system at risk: Murray inquiry

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<p>It’s always refreshing to read an intelligent report, so when the Centre for Independent Studies released <em><a href="https://www.cis.org.au/images/stories/issue-analysis/ia146.pdf" target="_blank" title="Eight Housing Affordability Myths">Eight Housing Affordability Myths</a></em> by Dr Stephen Kirchner, we finally got to see why Australia’s housing debate is long overdue.</p>
<p>The only problem that comes from such a precise paper is that it will require government intervention which, as most would agree, is where the problems start. They just don’t get it – if they did, we would not have the glaring problems that we see today. Some of the interesting points raised are:</p>
<ul>
<li>Housing consumption and investment are both taxed and subsidised by all levels of government. The net effect of these taxes and subsidies on housing affordability is difficult to determine as it depends on the benchmarks used to assess what is taxed and what is subsidised.</li>
<li>Housing affordability is a relative rather than an absolute concept and there is no unique way of measuring housing affordability.</li>
<li>Much commentary on housing markets focuses on dramatic, ‘short-term’ changes in house prices, failing to put these changes into ‘long-term’ context.</li>
<li>The supply of new land for housing has declined over the last decade, with the average number of lots produced in the five largest capital cities declining by 21%.</li>
<li>The long-run increase in the price of new land for housing is indicative of the failure of state governments to increase land supply to accommodate rising demand for new housing.</li>
<li>A fundamental principle of economics is that if you tax something more heavily you will get less of it. This principle is well understood in relation to markets in goods and services, but it is often forgotten in relation to housing.</li>
</ul>
<p>Some will argue that today, we are seeing two very clear markets; namely the principal place of residence and the investment market which in Melbourne and Sydney has gone berserk.</p>
<p>More confusing, is that we keep reading reports that consumer confidence is in a downward spiral even though investors are in an absolute feeding frenzy for off the plan properties and to such an extent, that they will pay over and above the asking prices.</p>
<p>Now let’s bring out those conspiracy theories. It is clear that since the global financial crisis (GFC) that the mum and dad investors have stayed well clear of the share market and will continue to do so simply because they don’t trust it. This massive investor shift is now driving property values upwards and creating an unprecedented financial burden on the federal government in terms of negative gearing subsidies and Australia is just one of a few developed countries that allows negative gearing.</p>
<p><a href="https://www.rwm.com.au/files/2014/07/3-07-2014-3-44-05-PM1.jpg"><img class="aligncenter size-full wp-image-57102" src="https://www.rwm.com.au/files/2014/07/3-07-2014-3-44-05-PM1.jpg" alt="3-07-2014 3-44-05 PM" width="683" height="252"></a></p>
<p><a href="https://www.rwm.com.au/files/2014/07/10-07-2014-9-33-53-AM.jpg"><img class="aligncenter size-full wp-image-57104" src="https://www.rwm.com.au/files/2014/07/10-07-2014-9-33-53-AM.jpg" alt="10-07-2014 9-33-53 AM" width="630" height="312"></a></p>
<p>Today, 1.2 million negatively gear with the Australian Tax Office statistics revealing that property investors claimed $13.2 billion in losses in 2010/11 which was up from $10.1 billion the year before.</p>
<p>Given the huge run on investment property over the last few years it will be frightening to see what the negative gearing figures are for 2012/13 and 2013/14. <a href="https://www.businessspectator.com.au/article/2014/7/9/australian-news/why-negative-gearing-australias-biggest-policy-failure" target="_blank" title="Why negative gearing is Australia’s biggest policy failure ">Why negative gearing is Australia’s biggest policy failure </a>– “It is difficult to find a government policy that has been less successful at meeting its objectives than negative gearing on residential property. But unfortunately that is the nature of housing policy in Australia, where sound policies are ignored in favour of policies that encourage speculation, reduce home ownership and redistribute wealth towards the already affluent.”</p>
<p>Negative gearing by property investors reduced personal income tax revenue in Australia by $600 million in the 2001-02 tax year, $3.9 billion in 2004-05 and $13.2 billion in 2010-11 – so this itself leaves a pretty good clue as to how popular it has become. Negative gearing was introduced back in July 1985 and many argue that today, it is no longer relevant. Investors have taken the first home buyers out of the market and they can’t compete as it is not a level playing field.</p>
<p><a href="https://www.rwm.com.au/files/2014/07/9-07-2014-4-11-47-PM.jpg"><img class="aligncenter size-full wp-image-57106" src="https://www.rwm.com.au/files/2014/07/9-07-2014-4-11-47-PM.jpg" alt="9-07-2014 4-11-47 PM" width="573" height="345"></a></p>
<p>Then you have the foreign investors where an inquiry is currently underway, although the only way to really see what is happening is to extrapolate the relevant stamp duty records and cross pollinate this data – every sale in Australia pays stamp duty although for some strange reason this point has been missed by the inquiry. This data is readily available – although I doubt it will ever see the light of day.</p>
<p>So the debate should be “what benefit is negative gearing to the Australian economy when nearly all the other advanced economies don’t permit it”. Australian property markets would be decimated if it was abolished and would take the banks with them given the significant borrowings on each investment property which are crucial to maximise the negative gearing subsidies.</p>
<p>When the government brought in the GST in July 2000, this immediately brought about the decline of property developers as they had to pay the 10% GST on the construction costs. Maybe a possible answer is to remove the GST on construction, to see more construction which will increase employment and off-set this by scaling back negative gearing subsidies. In the long-term, this would lower property prices more particularly in the property investment sector. Or, do you place a limit on the number of investment properties allowed that can qualify for negative gearing subsidies?</p>
<p>Now we need to see a politician brave to start this conversation. Better still the Abbott government might even decide that they now need a Housing Minister.</p>
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robertsimeon-hRNTwJyXkQ

Why Australia urgently needs a housing debate

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<p>GUEST OBSERVATION</p>
<p>We all want a property portfolio that costs us nothing to hold. It’s the dream to be able to purchase more and more properties because every property pays for itself. So why do people opt for negatively geared property if the best option is a positively geared property portfolio?</p>
<p>The general argument is that negatively geared properties are that way because they are in areas offering higher capital growth but lower yields. For example, metropolitan areas where the value of the property is high in comparison to the rental income it receives. And the common notion is positively geared properties, are typically in regional or fringe areas of cities or may involve a dual occupancy, like a granny flat and as a result achieve higher rental yields in comparison to the overall value of the property.</p>
<p>However like all things there are exceptions to the rules and some properties with reasonable capital growth can still offer reasonable rental returns. For example, according to the Commonwealth Banks recent report on the state of the property market in Australia over the last 12 months:</p>
<p><a href="/news">Kelvin Grove</a> in Brisbane reported 4% capital growth and averages 4.7% rental yields.</p>
<p><a href="/news">Strathfield</a> in Sydney reported 13% capital growth and averages 4.5% rental yields</p>
<p><a href="/news">St Kilda</a> Melbourne reported 4.7% capital growth and averages 4.3% rental yields</p>
<p>And with RP Data’s latest economic report showing average nationwide unit rental yields while down are still achieving on average 4.7%, most investors would be looking at the current three year fixed interest rates under 5% and thinking we have hit the sweet point where you can achieve the dream and just keep adding properties almost ad infinitum.</p>
<p>So why is lending still a problem and why can’t investors just keep adding properties?</p>
<p>The first thing to keep in mind is the normal costs associated with owning an investment property, like real estate agency fees, council rates, strata fees. Then there are the ones that people often overlook like the unexpected hot water system replacement.</p>
<p>Let’s assume though that you achieve a rental return of 6% and the costs are no more than 1% so that you have net rental of 5%.</p>
<p>Won’t the lenders give you unlimited loans?</p>
<p>This is when the lenders start to apply their own stress testing to your borrowing and it can make a huge difference. For example while some lenders will allow you to consider the actual interest rate of your loans where the loans are fixed for more than three years others will apply the normal variable testing interest rate.</p>
<p>And what a difference, on a typical $500,000 loan the difference could be. Interest only payments with a fixed rate of 4.99% of $2,079 per month or calculated loan repayments of $3,530 per month where the lender loads the interest rate by 2% and applies principle and interest payments over 25 years.</p>
<p>That is a difference in rental payments of $1,451 per month in order to get the loan to match the rental income or put it another way, a net rental yield of 8.47%.</p>
<p>Now there are creative ways of increasing your rental yield like renovations, allowing the tenants to keep a pet or adding an extension or granny flat that will allow the property to generate an additional income stream.</p>
<p>So why do lenders look differently at your current loan repayments? We know it all comes back to the four credit rules or  four C’s of credit. That is each lender is weighting the importance of your ability to afford the loan repayments slightly differently depending on their expectation of where interest rates, unemployment and the general economy might be going.</p>
<p>So there is no right or wrong answer to the question about whether negative or positive is right or wrong because for every investor is comes down to personal circumstance, your individual goals and your ability to service your loans.</p>
<p>If you would like guidance on which lenders might be right for you or a free property report on the possible capital growth of your properties why not give us a call.</p>
<p><em><strong>Albertus Waldron</strong> is a partner at Chan &amp; Naylor. For a free portfolio review or guidance on which lenders might be right for you, you can contact <a href="https://www.chan-naylor.com.au/contact/" target="_blank">Chan &amp; Naylor</a>.</em></p>
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awaldron-dVhPXocinv

Why lenders are negative about positively geared property

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<p>Property investors feel the effects of interest rate changes just as much as home owners do, although that impact may be disguised in the short-term by negative gearing.</p>
<p>Investors receive a tax deduction on mortgage interest expenses, so paying more interest on an investment property loan may not seem as bad as when rates rise on the loan that funds the family home. A bigger interest bill means a bigger tax deduction, after all.</p>
<p>But interest rate increases do hit the bottom line of investment returns. Higher costs, without accompanying rent increases, reduce the income the investor receives each year. This means the investment must achieve a higher capital gain to produce the same total return.</p>
<p>Accounting firm, HLB Mann Judd has crunched some numbers for <em>Property Observer</em> that demonstrate the effect of interest rate rises on a fairly typical property investment.</p>
<p>The property in the example is worth $465,000 and achieves a weekly rent of $400. An investor buys the property with a loan of $418,500 (having paid for 10% of the property in cash). The mortgage is taken over 25 years with monthly repayments. In the example, the investor has decided to repay the principal as well as interest.</p>
<table style="width: 460px;" border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="top" nowrap width="217">
<h5>Loan details</h5>
</td>
<td valign="top" nowrap width="130">
<h5> </h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Property Value</h5>
</td>
<td valign="top" nowrap width="130">
<h5 style="text-align: right;">$465,000</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5> </h5>
</td>
<td valign="top" nowrap width="130">
<h5> </h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Loan Amount</h5>
</td>
<td valign="top" nowrap width="130">
<h5 style="text-align: right;">$418,500</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Annual Interest Rate</h5>
</td>
<td valign="top" nowrap width="130">
<h5 align="right">5.1%</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Term of Loan (years)</h5>
</td>
<td valign="top" nowrap width="130">
<h5 align="right">25</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5> </h5>
</td>
<td valign="top" nowrap width="130">
<h5> </h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Repayment Frequency</h5>
</td>
<td valign="top" nowrap width="130">
<h5 align="right">Monthly</h5>
</td>
</tr>
</tbody></table>
<p><span style="line-height: 1.3em;">The property generates an annual rental income of $20,800 and there are no periods of vacancy throughout the year.</span></p>
<p>Annual expenses total $6,306.</p>
<table style="width: 460px;" border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="top" nowrap width="177">
<h5>Estimated Annual Income</h5>
</td>
<td valign="top" nowrap width="94">
<h5> </h5>
</td>
<td valign="top" nowrap width="208">
<h5>Estimated Annual Expenses</h5>
</td>
<td valign="top" nowrap width="151">
<h5> </h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="177">
<h5> </h5>
</td>
<td valign="top" nowrap width="94">
<h5> </h5>
</td>
<td valign="top" nowrap width="208">
<h5> </h5>
</td>
<td valign="top" nowrap width="151">
<h5> </h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="177">
<h5>Rental income (at $400/wk)</h5>
</td>
<td valign="top" nowrap width="94">
<h5>$20,800</h5>
</td>
<td valign="top" nowrap width="208">
<h5>Strata Levies ($470/qtr)</h5>
</td>
<td valign="top" nowrap width="151">
<h5>$1,880</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="177">
<h5> </h5>
</td>
<td valign="top" nowrap width="94">
<h5> </h5>
</td>
<td valign="top" nowrap width="208">
<h5>Council Rates ($270/qtr)</h5>
</td>
<td valign="top" nowrap width="151">
<h5>$1,080</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="177">
<h5> </h5>
</td>
<td valign="top" nowrap width="94">
<h5> </h5>
</td>
<td valign="top" nowrap width="208">
<h5>Water Rates ($160/qtr)</h5>
</td>
<td valign="top" nowrap width="151">
<h5>$640</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="177">
<h5> </h5>
</td>
<td valign="top" nowrap width="94">
<h5> </h5>
</td>
<td valign="top" nowrap width="208">
<h5>Management Fees (5.8%)</h5>
</td>
<td valign="top" nowrap width="151">
<h5>$1,206</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="177">
<h5> </h5>
</td>
<td valign="top" nowrap width="94">
<h5> </h5>
</td>
<td valign="top" nowrap width="208">
<h5>Repairs &amp; Maintenance</h5>
</td>
<td valign="top" nowrap width="151">
<h5>$1,000</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="177">
<h5> </h5>
</td>
<td valign="top" nowrap width="94">
<h5> </h5>
</td>
<td valign="top" nowrap width="208">
<h5>Landlord Insurance Premium</h5>
</td>
<td valign="top" nowrap width="151">
<h5>$500</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="177">
<h5> </h5>
</td>
<td valign="top" nowrap width="94">
<h5> </h5>
</td>
<td valign="top" nowrap width="208">
<h5> </h5>
</td>
<td valign="top" nowrap width="151">
<h5> </h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="177">
<h5>Total Income</h5>
</td>
<td valign="top" nowrap width="94">
<h5>$20,800</h5>
</td>
<td valign="top" nowrap width="208">
<h5>Total Expenses</h5>
</td>
<td valign="top" nowrap width="151">
<h5>$6,306</h5>
</td>
</tr>
</tbody></table>
<p><strong style="line-height: 1.3em;">Case study – mortgage rate 5.1%</strong></p>
<p>In the first case, the interest rate on the loan is the Reserve Bank of Australia’s indicator rate for a discount variable mortgage, current as of May 2014, of 5.1%.</p>
<p>At that rate, the investor pays $2,471 a month for the mortgage, or $29,651 over the year. This comprises of $21,147 in interest and $8,505 in principal repayments.</p>
<table style="width: 460px;" border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="top" nowrap width="217">
<h5>Mortgage Repayments (at 5.1%)</h5>
</td>
<td valign="top" nowrap width="95">
<h5> </h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Monthly Repayments</h5>
</td>
<td valign="top" nowrap width="95">
<h5>$2,471</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Yearly Repayments*</h5>
</td>
<td valign="top" nowrap width="95">
<h5>$29,651</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5> </h5>
</td>
<td valign="top" nowrap width="95">
<h5> </h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>*Comprised of :</h5>
</td>
<td valign="top" nowrap width="95">
<h5> </h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Annual interest repayments</h5>
</td>
<td valign="top" nowrap width="95">
<h5>$21,147</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Annual principal repayments</h5>
</td>
<td valign="top" nowrap width="95">
<h5>$8,505</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5> </h5>
</td>
<td valign="top" nowrap width="95">
<h5> </h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Total cost of loan</h5>
</td>
<td valign="top" nowrap width="95">
<h5>$741,286</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Total interest paid</h5>
</td>
<td valign="top" nowrap width="95">
<h5>$322,786</h5>
</td>
</tr>
</tbody></table>
<p><span style="line-height: 1.3em;">That means the property generates a taxable loss of $6,653 for the year. Taking into account the principal repayments, the property has generated an annual cash loss of $15,158.</span></p>
<p>The principal has reduced by $8,505 so there is $409,995 outstanding on the mortgage.</p>
<table style="width: 460px;" border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="top" nowrap width="217">
<h5>Taxable profit/loss</h5>
</td>
<td valign="top" nowrap width="101">
<h5> </h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Estimated Annual Income</h5>
</td>
<td valign="top" nowrap width="101">
<h5 align="right">$20,800</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Estimated Annual Expenses</h5>
</td>
<td valign="top" nowrap width="101">
<h5 align="right">-$6,306</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Annual Interest Repayments</h5>
</td>
<td valign="top" nowrap width="101">
<h5 align="right">-$21,147</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Annual Taxable Loss</h5>
</td>
<td valign="top" nowrap width="101">
<h5 align="right">-$6,653</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5> </h5>
</td>
<td valign="top" nowrap width="101">
<h5> </h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Annual Principal Repayments</h5>
</td>
<td valign="top" nowrap width="101">
<h5 align="right">-$8,505</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Annual Cash Loss</h5>
</td>
<td valign="top" nowrap width="101">
<h5 align="right">-$15,158</h5>
</td>
</tr>
</tbody></table>
<p><strong style="line-height: 1.3em;">Case study – mortgage rate 5.6%</strong></p>
<p>Say the interest rate was 0.5 percentage points higher at 5.6%, while rent and other expenses on the property remain the same.</p>
<p>Repayments on the loan are $2,595 a month, or $31,140 over the year. The amount of interest paid increases to $23,235 for the year. However, the amount that is repaid off the principal reduces to $7,905.</p>
<table style="width: 460px;" border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="top" nowrap width="217">
<h5>Mortgage Repayments</h5>
</td>
<td valign="top" nowrap width="95">
<h5> </h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Monthly Repayments</h5>
</td>
<td valign="top" nowrap width="95">
<h5>$2,595</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Yearly Repayments*</h5>
</td>
<td valign="top" nowrap width="95">
<h5>$31,140</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5> </h5>
</td>
<td valign="top" nowrap width="95">
<h5> </h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>*Comprised of :</h5>
</td>
<td valign="top" nowrap width="95">
<h5> </h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Annual interest repayments</h5>
</td>
<td valign="top" nowrap width="95">
<h5>$23,235</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Annual principal repayments</h5>
</td>
<td valign="top" nowrap width="95">
<h5>$7,905</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5> </h5>
</td>
<td valign="top" nowrap width="95">
<h5> </h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Total cost of loan</h5>
</td>
<td valign="top" nowrap width="95">
<h5>$778,503</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Total interest paid</h5>
</td>
<td valign="top" nowrap width="95">
<h5>$360,003</h5>
</td>
</tr>
</tbody></table>
<p><span style="line-height: 1.3em;">The annual taxable loss on the property increases to $8,742. The total cash loss is $16,647 and there is still $410,595 outstanding on the mortgage.</span></p>
<table style="width: 460px;" border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="top" nowrap width="217">
<h5>Taxable profit/loss</h5>
</td>
<td valign="top" nowrap width="101">
<h5> </h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Estimated Annual Income</h5>
</td>
<td valign="top" nowrap width="101">
<h5 align="right">$20,800</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Estimated Annual Expenses</h5>
</td>
<td valign="top" nowrap width="101">
<h5 align="right">-$6,306</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Annual Interest Repayments</h5>
</td>
<td valign="top" nowrap width="101">
<h5 align="right">-$23,235</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Annual Taxable Loss</h5>
</td>
<td valign="top" nowrap width="101">
<h5 align="right">-$8,742</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5> </h5>
</td>
<td valign="top" nowrap width="101">
<h5> </h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Annual Principal Repayments</h5>
</td>
<td valign="top" nowrap width="101">
<h5 align="right">-$7,905</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Annual Cash Loss</h5>
</td>
<td valign="top" nowrap width="101">
<h5 align="right">-$16,647</h5>
</td>
</tr>
</tbody></table>
<p><strong style="line-height: 1.3em;">Case study – mortgage rate 6.1%</strong></p>
<p>If the mortgage interest rate was higher again, at 6.1%, repayments on the loan would go up to $32,664 for the year.</p>
<table style="width: 460px;" border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="top" nowrap width="217">
<h5>Mortgage Repayments</h5>
</td>
<td valign="top" nowrap width="95">
<h5> </h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Monthly Repayments</h5>
</td>
<td valign="top" nowrap width="95">
<h5>$2,722</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Yearly Repayments*</h5>
</td>
<td valign="top" nowrap width="95">
<h5>$32,664</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5> </h5>
</td>
<td valign="top" nowrap width="95">
<h5> </h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>*Comprised of :</h5>
</td>
<td valign="top" nowrap width="95">
<h5> </h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Annual interest repayments</h5>
</td>
<td valign="top" nowrap width="95">
<h5>$25,326</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Annual principal repayments</h5>
</td>
<td valign="top" nowrap width="95">
<h5>$7,339</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5> </h5>
</td>
<td valign="top" nowrap width="95">
<h5> </h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Total cost of loan</h5>
</td>
<td valign="top" nowrap width="95">
<h5>$816,612</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Total interest paid</h5>
</td>
<td valign="top" nowrap width="95">
<h5>$398,112</h5>
</td>
</tr>
</tbody></table>
<p><span style="line-height: 1.3em;">The taxable loss for the year would be $10,832 and the cash loss, after principal repayments would be $18,171. Just $7,339 would have been paid off the principal, leaving a $411,161 outstanding on the mortgage.</span></p>
<table style="width: 460px;" border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="top" nowrap width="217">
<h5>Taxable profit/loss</h5>
</td>
<td valign="top" nowrap width="101">
<h5> </h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Estimated Annual Income</h5>
</td>
<td valign="top" nowrap width="101">
<h5 align="right">$20,800</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Estimated Annual Expenses</h5>
</td>
<td valign="top" nowrap width="101">
<h5 align="right">-$6,306</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Annual Interest Repayments</h5>
</td>
<td valign="top" nowrap width="101">
<h5 align="right">-$25,326</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Annual Taxable Loss</h5>
</td>
<td valign="top" nowrap width="101">
<h5 align="right">-$10,832</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5> </h5>
</td>
<td valign="top" nowrap width="101">
<h5> </h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Annual Principal Repayments</h5>
</td>
<td valign="top" nowrap width="101">
<h5 align="right">-$7,339</h5>
</td>
</tr>
<tr>
<td valign="top" nowrap width="217">
<h5>Annual Cash Loss</h5>
</td>
<td valign="top" nowrap width="101">
<h5 align="right">-$18,171</h5>
</td>
</tr>
</tbody></table>
<p><strong style="line-height: 1.3em;">After tax comparison</strong></p>
<p>In the first example, the investor made a taxable loss of $6,653 and ended the year with $409,995 outstanding on the mortgage.</p>
<p>Let’s assume the investor’s annual taxable income (from employment and other sources) is $100,000. In the example where interest rates were 5.1%, the taxable loss on the property reduces the investor’s taxable income to $93,347 for the year, cutting the investor’s tax liability for the year by $2,462 and leaving them with an after-tax income of $70,862.</p>
<p>That means the after-tax cost of the investment (not including the principal repaid) is $4,191 and the total after-tax cash loss including the principal repaid is $12,696.</p>
<p>In the second example, the investment’s after-tax cost is $5,507 and the total after-tax cash loss is $13,412. The investor is $1,316 worse off at the end of the year in this case than if the interest rate was 0.5 percentage points lower.</p>
<p>In the third example, the after-tax cost is $6,824 and the cash loss after tax is $14,163. The investor is $2,633 worse off at the end of the year than when the interest rate was 5.1%.</p>
<p>Interest rate changes have a real impact on the returns from investment properties. To recoup higher interest charges, investors have a choice to increase rent, cut costs elsewhere (which might not be practical or possible), or cross their fingers for greater capital gains to compensate.</p>
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zfielding-GvX3Uq9KTa

Negative gearing disguises short-term impact of rate changes on investors

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<p>The federal budget certainly sent shock waves through the economy, but according to the ANZ-Roy Morgan consumer confidence index it appears to be recovering.</p>
<p>Consumer confidence has improved a further 2.4% over the past week, bringing the total improvement in confidence to 6% over the past month.</p>
<p>Also helping investors feel comfortable is the fact ME Bank are still offering a three year fixed rate at 4.69%, which gives investors more confidence about the future.</p>
<p>Property investors have already begun to re-enter the property market, but these two events are only going to add to the momentum. They will begin to change their thinking from ‘if’ they should buy property to ‘what’ they should buy and will be torn between the logic of two radically different investment strategies.</p>
<p>One says it’s always best to buy property that’s positively geared. This means that holding costs like council rates, insurance, maintenance and interest on the loan are less than the rental income received.</p>
<p>The second argument says it’s better to buy property that’s negatively geared, meaning that holding costs are greater than the rental income received. You fund the shortfall from your own pocket, giving you a ‘negative income’ which you then claim as a tax deduction.</p>
<p>In reality, these arguments are doomed to go around in circles. There’s no one right or wrong answer that applies to every investor. Each purchasing strategy has its upside and downside; both of which should be considered before making a decision.</p>
<p>Let’s start by looking at positively geared property. Generally speaking, the high-buy in price of most properties in capital cities means that to buy a positively geared asset, you must purchase in a regional or rural area where prices are lower. This may leave you with a relatively modest mortgage, making it easier to enter the property market, and easier to fund the holding costs from rental income alone.</p>
<p>The downside, however, is that positively geared property may have a lower capital growth rate. Every property’s value is determined by the ratio of two components: the land and the building. Land appreciates, or grows in value; whilst buildings depreciate or fall in value.</p>
<p>In regional and rural areas, land values per square metre tend to be low because there’s plenty of land available compared with the level of buyer demand. This means the building accounts for most of the asset’s value. The building may lose value faster than the land can gain value—hampering long-term capital growth.</p>
<p>Let’s compare this with buying negatively geared property. When the buy-in price is high, the land value probably is. This is the upside of negative gearing; you’re more likely to have purchased in an area with a limited supply of land relative to buyer demand. The land component makes up a higher proportion of the property’s overall value, giving the asset strong capital growth potential.</p>
<p>On the downside, buying a negatively geared asset means that whilst your long-term risk may be lower, your short-term risk may be higher because you have to find a way to fund the difference between holding costs and rental income from your own pocket. This can create cash flow pressure, particularly if you incur an unexpected expense such as an interest rate rise or urgent repair.</p>
<p>In short, it’s a case of short-term gain and possible long-term pain (positively geared property) versus short-term pain for possible long-term gain (negatively geared property). To decide which is right for you, it’s important to assess your financial circumstances.</p>
<p>First, consider your level of disposable income. If you have spare cash to cover the difference between your holding costs and rental income, buying a negatively geared property may be appropriate. On the other hand, if your budget is tight, negative gearing may be too hard an ask, and a positively geared property may be a better way to go. The capital growth won’t be as strong, but at least you’ll be in the market.</p>
<p>Second, consider how long you’ll be earning a good income. To ride out market fluctuations and recoup purchasing costs, property should be viewed as a long-term investment; at least seven to 10 years. If you’re close to retirement and a substantial drop in income isn’t far away, adopting a negatively geared strategy may not be viable. In this case, you should consider investment options that don’t require you to contribute funds from your own pocket. By contrast, if you’re many years away from retirement, you may have enough income over the long-term to fund the shortfall from your wage or salary. </p>
<p>Whichever gearing strategy you choose, go into it with your eyes open.</p>
<p><em><strong>Mark Armstrong</strong> is a director of <a href="https://ratemyagent.com.au/" target="_blank">ratemyagent.com.au</a>, Australia’s number one real estate agent rating website.</em></p>
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marmstrong-sd3emVLPPb

Positively or negatively geared property: Which strategy will work best for you?

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<p>GUEST OBSERVATION</p>
<p>No doubt this is one of the toughest federal government budgets we have seen in a long time. It would appear that the Liberal government have been true to their calling and were happy to make sacrifices across the economy in order to balance the books at some point in the future. </p>
<p>But just how does this budget affect property investors?</p>
<p>Well it’s with relief that no changes have been made to capital gains tax, depreciation or negative gearing. Now, I'm not a fan of negative gearing all that often, the purpose of investing in anything is to achieve good growth and income for the future.</p>
<p>However, I do like the little incentive us property investors are given when it comes to the all to controversial depreciation. Absolutely I'm biased. I benefit from depreciation so I'm not going to argue it shouldn't be in place.</p>
<p>Ultimately, I think it is a great way for the everyday Australian without a business to take advantage of some form of taxation benefit that the big guys get all the time. Currently $6 billion dollars a year is lost in tax revenue due to negative gearing.</p>
<p>However there was one sector in the property industry that got dealt the wooden spoon, and that’s the NRAS scheme. <a href="/expert-insights/finance/is-this-the-end-of-nras-frozen-fifth-round-of-applications">Round 5 of the National Rental Affordability Scheme will be frozen</a> pending a review. In my opinion this is a good move as it was lining the pockets of savvy developers and good property marketers while the everyday investor lined up to buy overpriced property to simply get some money from the government. Now I know there’s a lot more to it than that, however the scheme has been flawed in many ways. </p>
<p>The property industries push for ASIC regulation of the industry is seemingly unlikely in the near future as large budget cuts to the ASIC budget are handed down forcing large scale job cuts within the organisation. It doesn't look promising that the team at ASIC will want to take on more work with less staff and money. </p>
<p>Home owners or investors are generally a pretty small deal when it comes to federal budgets. It’s often the state budgets that can make big differences including stamp duty concessions and rates plus the ever tinkering of first home buyers grants. </p>
<p>Outside of investing, first home buyers taking advantage of the Labor government's First Home Savers Account (FHSA) <a href="/expert-insights/investing/first-home-saver-accounts-scrapped-what-now">will no longer be able to get tax breaks and co-contributions</a> as the scheme will be closed starting 1 July.</p>
<p>I think if anything, this budget should send a reminder to Australians of why investing in assets (not just property) is a necessity to gain financial freedom and retirement when you want it. With the pension age pushed out even further, serious holes in the future funding for pensioners, its clear we need to invest.</p>
<p><strong>JOSH ATHERTON</strong><em> is managing director of <a href="https://www.linkedin.com/profile/view?id=123928559&amp;locale=en_US&amp;trk=tyah" target="_blank">Portfolio Property Investments</a>.</em></p>
<p><em>You can connect with Josh on <a href="https://www.linkedin.com/profile/view?id=123928559&amp;locale=en_US&amp;trk=tyah" target="_blank">LinkedIn</a>.</em></p>
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