\nIn today’s show John Edwards<\/b>\u00a0from On The House says that Governments could be creating oversupply and in fact there is evidence that the Sydney market is already oversupplied. John also speaks out about negative gearing.
\n <\/p>\nRead the transcript here:<\/h4>\n
Kevin:<\/b>\u00a0 In a report from Onthehouse.com.au is a sign that we should have seen coming, and that is just how unaffordable Sydney property prices are right now.
\nConsulting analyst for Onthehouse John Edwards joins me. John, this probably wouldn\u2019t have been a big surprise for you, but it certainly looks as if it\u2019s out of the reach of first-home buyers in the Sydney market.
\nJohn:<\/b>\u00a0 Yes. It wasn\u2019t a surprise because I\u2019ve been watching it, but the bottom line for people is that housing in Sydney, particularly houses, have now just passed $900,000 for the median value of a house. When you look at how much money people have left after tax after they\u2019ve met their mortgage repayments, they have about $780 a week. That\u2019s not going to do very much if you have to educate your kids, and buy clothes, and have a holiday. Even with a 0.5% reduction in interest rates, that\u2019s still going to be under $800 a week for people to spend.
\nHousing in Sydney is out of reach of the first-home buyer.
\nKevin:<\/b>\u00a0 One of the big dangers for first-home buyers, too, is that they\u2019re lured into the market with low interest rates that we have now, and then obviously, at some stage, they are going to go up. If it\u2019s unaffordable now, it\u2019s almost going to break the bank.
\nJohn:<\/b>\u00a0 I think there\u2019s a bigger problem than that, frankly, and I issued a warning on this today. When I look at all of the markets across Australia, what I note is that population growth is falling. If we look at New South Wales, we can see that the growth to the five-year median, the number of people that are now coming is 4,000 less than what it has been on average over the last five years per quarter.
\nWhat governments are doing is trying to stimulate the economy by boosting housing market activity. But in boosting the housing market activity, what they\u2019re going to do, given the falling population, is create oversupply. Wouldn\u2019t you know it, New South Wales has already got an oversupply, and by my calculations there are about 10,000 dwellings that are surplus to need based on what\u2019s currently happening.
\nWe\u2019re looking down the barrel of some issues here unless people are very careful about what they\u2019re doing.
\nKevin:<\/b>\u00a0 In your report, you looked around at other states and cities around Australia. Which would you say is probably the standout for being one of the best performers going forward this year?
\nJohn:<\/b>\u00a0 Going forward, I had all my money on Brisbane, because everything in Queensland was doing really well and was looking like as if government had it sorted. They knew what they needed to do to maintain employment. It was all looking pretty good, and when I look at the trends, the growth that was going on in Queensland was pointing to increased rates of growth in the housing market.
\nThe unit market, like in New South Wales, is over-supplied \u2013 probably no surprise with that. The over-supply there is not as bad as New South Wales, but we\u2019re still looking in the thousands. That was the market that I thought was going to do well, and that\u2019s where I would have had my money, but now I\u2019m not sure, because I\u2019m not sure what the new government is going to be able to do.
\nI haven\u2019t been able to see anything that points to exactly what their policies are, how they\u2019re going to stimulate the economy, and how they\u2019re going generate growth and jobs. We have to recognize that as the resource projects come to an end, and the crude oil prices fall, that this is going to have an impact on gas exploration and the gas industry.
\nKevin:<\/b>\u00a0 I guess only time will tell on that front, too. One other thing I\u2019d like to touch base with you on, John, is a report that I saw you\u2019ve released about the hype around negative gearing and whether or not it\u2019s necessary. What were your findings there?
\nJohn:<\/b>\u00a0 In essence, negative gearing should stay. It would be wrong to remove negative gearing because it would be a distortion. There is no other asset sector in Australia that you can\u2019t negatively gear on.
\nThe problem we\u2019ve got is that basically the government \u2013 via the Tax Office \u2013 isn\u2019t enforcing the legislation that it has. I think the majority of people don\u2019t realize is that what you can\u2019t do is borrow money on the basis that you just have no intention of ever gaining a profit other than through capital gains from the ownership of that asset.
\nYou have to be able to show that at some point in time you are going to be throwing off taxable income. I don\u2019t think people totally understand that, and because of that, it\u2019s actually getting out of hand. It\u2019s time for government to actually let everybody know \u2013 through the Tax Office \u2013 what the rules are. Then we wouldn\u2019t have a problem.
\nKevin:<\/b>\u00a0 There\u2019s a great report you can get that was written by John that deals with this. That\u2019s just at Onthehouse, John?
\nJohn:<\/b>\u00a0 Yes it is, but the easiest thing to do is go to Residex.com.au. On there, you\u2019ll be able to get a copy of that report when you buy other products.
\nKevin:<\/b>\u00a0 We all know that name, because that\u2019s the company you founded. John Edwards has been my guest, and we talked about a number of things there.
\nJohn, thank you so much for your time.
\nJohn:<\/b>\u00a0 My pleasure.<\/p>\n","protected":false},"excerpt":{"rendered":"
In today’s show John Edwards\u00a0from On The House says that Governments could be creating oversupply and in fact there is evidence that the Sydney market is already oversupplied. John also speaks out about negative gearing. Read the transcript here: Kevin:\u00a0 In a report…<\/p>\n","protected":false},"author":176692471,"featured_media":2942,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[10,25],"tags":[101],"class_list":["post-3497","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-kevin-turner-sponsored-channels","category-sponsored-channels","tag-podcast"],"yoast_head":"\n