Is the Australian housing sector inquiry going to be helpful to investors in any way?
Personally, I think we will end up with a whole lot of recommendations of ways to assist first home buyers (not investors), not that the govt will take much notice.
“Yes, we acknowledge the findings and recommendations of those who conducted the studies, and we have decided to reduce taxes for first home buyers… Budget constraints simply don’t allow us to put all the recommendations into action.”
Might go something like that… [
]What do you guys think??
Will there be a new and improved equivalent to the FHOG? Will legislative changes be introduced to make it harder on property investors? Will anything happen AT ALL???
I’d be interested to hear people’s opinions.
YI.ps: Anyone know an estimated time of release for the findings of the inquiry?
“Knowledge is Power”
If you are talking about the enquiry done by the Reserve Bank, then it was released a couple of weeks ago.
In it, it basically says that the current property boom is being driven by investors in a way not really seen in Australia, or any other part of the world, before.
The increased spending is not in line with the increased purchasing power provided by deregulation of the finance industry, or the current low interest rates.
It actually calls the boom a bubble which is a fairly extreme statement for something as conservative as the RBA.
The over riding direction of the report is to say that the bubble has caused a dramatic shift in the make up of the Australian property market, making it almost impossible for new home buyers to enter the market, even with the FHOG, and that it is becoming top heavy with investors.
It also says that tax concessions allowable on property investment are basically the most favourable in the world, and suggests that this needs review by the ATO, as it is outside the area of expertise of the RBA.
What do I think it means?
Short term, the RBA will raise interest rates again, maybe by up to .5%, but that as the housing market cools, this will come down again.
Their is growing pressure on the ATO from many areas to review the tax concessions on property investment. This will be done, making it more difficult to negatively gear property thus helping to drive investors away from the market.
Also as a side effect, it is possible that laws regarding property investment seminars will be tightened, and there also seems to be a growing push to either make “Wraps” illegal all together, or at least substantially tighten controls on “wrapers”.
From my point of view, I couldn’t care less about any of it.
Driving investors away from the market, thereby lowering prices and making it easier to find genuine investment properties at reasonable prices.
Interest and tax rate changes will have minimal effect if you buy property that is genuinely a good investment, not just a property that you turned into one by some fancy accounting.
It may be more than 10 or more years before we get another boom, but I don’t care because it is only icing on the cake, and not part of my investing strategy.
Dino
“If you don’t know where you are going, every road will take you there.”
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