Proposed negative gearing changes – what does it mean for you
Australia’s house prices have fallen for 13 consecutive months, with average Australian capital city prices now down 4% from their peak.
For an outsider looking in, reports of ‘doom and gloom’ headlines may make the idea of investing in property not so attractive at this time. With the threats of Labor looking to abolish negative gearing for investors should they win the federal election along with the banking royal commission causing banks to become paranoid with their lending……you can’t be blamed for thinking it’s not a great path to take at this time.
The experts are somewhat divided!
Helen Collier-Kogtevs from Real Wealth Australia explains the current conditions are ripe for property investors.
“We’ve got a stable government, we’ve got high immigration coming in, we’ve got low interest rates; these are all good signs for investors to be investing,” Ms Collier-Kogtevs said.
She said these signals are getting crossed through what she calls “quite a negative media” and property investors are being scared as a result, which calls a self-fulfilling prophecy; as more investors are scared by negative reporting, the market declines further.
Looking to the next 18 months to two years, Ms Collier-Kogtevs predicted the market will keep consistently quiet for the most part, with some outliers possibly experiencing declines up to 50 per cent.
After this period is when she expects property investors to strike.
Professor Bob Deutsch, the Tax Institute's senior tax counsel, rejects the notion that introducing Labor's negative gearing changes is a major threat, particularly in a weakening property market.
"Obviously when interest rates are higher you get more negative gearing," Professor Deutsch explained.
He argued that many investors have already been driven out of the market by the banks' tighter lending practices, and that now is a better time to introduce the change.
Given much of this hangs on who gets elected, many of your investing decisions, regardless should be discussed with your planner. Understanding the bigger picture and your personal circumstances will determine if you should invest in the property market now or in years to come.