{"id":8246,"date":"2016-06-14T10:00:10","date_gmt":"2016-06-14T00:00:10","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=8246"},"modified":"2016-06-14T10:00:10","modified_gmt":"2016-06-14T00:00:10","slug":"the-imapct-the-election-will-have-on-the-market","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/the-imapct-the-election-will-have-on-the-market\/","title":{"rendered":"The imapct the election will have on the market"},"content":{"rendered":"

There\u2019s a lot of uncertainty surrounding our property markets at present, much of it related to the intense debate between the government and opposition about housing tax policy including treatment of Capital Gains tax and negative gearing and whether these would be good for property or not.\u00a0 So it\u2019s understandable that many investors are considering putting their plans on hold until after the election. \u00a0\u00a0But is that a sound strategy?\u00a0\u00a0 \u00a0That\u2019s a question I\u2019d like to ask of Michael Yardney.
\n 
\nTranscript:<\/strong>
\nKevin:<\/b>\u00a0 There certainly is a lot of uncertainty surrounding the property market right now, much of it related, of course, to the intense debate between the government and the opposition about housing tax policy, including treatment of capital gains tax and negative gearing, and whether or not it\u2019s going to be good for property.
\nIt\u2019s also understandable that many, many investors are considering putting their plans on hold until after the election. Is it such a good strategy? This is highlighted in a question that I received from Adam. Adam, thank you for your question, which I\u2019m going to read now and then refer to Michael Yardney.
\n\u201cI\u2019m just wondering what you or any of your experts may think about investing in this current time with an election looming and both parties with very different views on negative gearing. Do you think that by buying now, pre-election, you could end up in a bit of strife should Labor come into power and do what they say they\u2019re going to be doing with negative gearing?\u201d
\nAdam then goes on and makes a few nice comments about the show, so thank you for that, Adam. It is a great question.
\nMichael, I know there is a lot of confusion about this. You can see that in Adam\u2019s question, can\u2019t you?
\nMichael:<\/b>\u00a0 Definitely. A lot of people are wondering. Maybe we should start off with what are the proposed changes that are being discussed a lot? The first thing is that the Opposition proposes to stop negative gearing of established properties that are bought after the 1st<\/sup> of July, 2017. In other words, you can only get negative gearing for new properties.
\nThe other is that they\u2019re talking about capital gains tax of any<\/i> investment property, both old and new, bought after the 1st<\/sup> of July, 2017. They will be subject to more capital gains tax. You\u2019d be paying 75% of any gains that have accrued over time compared to 50%, which is the rate today.
\nKevin:<\/b>\u00a0 What\u2019s the thinking behind this? Why are they doing this?
\nMichael:<\/b>\u00a0 Labor is saying they\u2019re doing it to make properties more affordable, but in my mind, it\u2019s probably to raise additional revenue. They\u2019re also saying it\u2019s to increase housing supply to make properties more affordable. But Kevin, there are lots of places in Australia where there is oversupply of properties; it doesn\u2019t make them more affordable. The only way you make housing more affordable is to make it cheaper, and I don\u2019t think those 8 million people who own homes in Australia actually want their homes to go down in value, Kevin.
\nKevin:<\/b>\u00a0 Yes. The other thing that\u2019s confusing a lot of investors, too, is that if Labor <\/b>do win, they\u2019re not going to come in and make it retrospective on current investment properties. If you have a property that\u2019s negatively geared, you\u2019ll be able to continually negatively gear that until you sell it.
\nMichael:<\/b>\u00a0 Correct, Kevin. The other thing is that there\u2019s a window of opportunity when this new regulation comes in on the 1st<\/sup> of July. In my mind, that\u2019s going to create a boom in established properties for 12 months. It will bring forward demand just like it did when we knew there was an end date to first-home owner grants or stamp duty concessions.
\nI also believe after that, though, many investors are going to get burned. Negative gearing losses are only worth enduring if you\u2019re going to get capital growth at the end. But it\u2019s going to drive people to the new and off-the-plan properties and the new estates where there is minimal capital growth.
\nThey\u2019re going to own what will in the long-term probably be secondary properties, and if they choose to sell \u2013 and many have to because they end up having a bit of financial trouble \u2013 those investors are now going to have a limited market to sell to, because what\u2019s going to happen is they\u2019re going to have second-hand properties rather than new properties.
\nKevin:<\/b>\u00a0 What do you think property investors should do? I guess that is the question that many people are asking.
\nMichael:<\/b>\u00a0 Good question, Kevin. My thoughts are based on investing through numerous checks, changes, and homebuyers\u2019 incentives over the years. Most of the time, they were supposedly going to seriously impact the market. Remember they were going to remove negative gearing in the 1980s? I invested through that. There was the introduction of capital gains tax and that was going to wipe out property. There were these reductions of GST in the early 2000s, and that was going to make properties too expensive. They increased stamp duties, they decreased stamp duties, they gave us First-Home Owner Grants.
\nInterestingly, history has shown that investors will thrive if they don\u2019t let all these tax changes distort their asset selection process. Instead, they really have to remain focused on accruing quality assets and then holding them for the long term. History seems to have shown that the investors who have lost out are the ones who are purchasing the wrong assets to try to take advantage of the latest tax [4:30 inaudible]<\/b>.
\nI guess what that means if you were really to invest today, do it now rather than putting it off for several months just to see the outcome, because the consequences really never seem to matter as much as the politicians would like us to think they will.
\nKevin:<\/b>\u00a0 Indeed. That\u2019s great advice from Michael Yardney, Metropole Property Strategists.
\nMichael, thanks again for your time.
\nMichael:<\/b>\u00a0 My pleasure, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"

There\u2019s a lot of uncertainty surrounding our property markets at present, much of it related to the intense debate between the government and opposition about housing tax policy including treatment of Capital Gains tax and negative gearing and whether these would be good for property…<\/p>\n","protected":false},"author":176692471,"featured_media":8247,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[32,34,10,11,13,36,25,27],"tags":[101],"class_list":["post-8246","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buying-a-property-topic","category-finance-topic","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment-topic","category-sponsored-channels","category-trends-topic","tag-podcast"],"yoast_head":"\nThe imapct the election will have on the market - 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