3 March 2022

Would increasing land supply solve the ACT's housing woes?

| Lottie Twyford
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Housing development

The Canberra Liberals say the government is to blame for the housing crisis in the ACT because it’s not releasing enough land. Photo: Michelle Kroll.

Critics say the ACT Government is to blame for the housing affordability problem because it’s not releasing enough land.

It’s a point raised as regularly by one side of politics as it is refuted by the other. But the housing industry argues while there’s some truth to it, nothing is black and white.

In annual report hearings earlier this week, Canberra Liberals spokesperson for planning Peter Cain illustrated the argument that there is not enough land with the example of a recent ballot for land in the new suburb of Macnamara where 12,300 registrations were received for only 71 blocks of land.

Mr Cain argued the speed at which the government supplies new land impacts the ACT’s “skyrocketing median house price”.

But Chief Minister Andrew Barr flatly rejected the assumption of his claim, arguing the release of new land constitutes less than 2 per cent of the total housing market, so it could not possibly affect the price of houses in established suburbs in inner Canberra or even Belconnen.

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However, the executive director of the Housing Industry Association (HIA) in the ACT, Greg Weller, said both arguments have “elements of truth to them”.

While Mr Weller acknowledged new homes are only a small part of the market – as Mr Barr argued – he doesn’t believe the government is distributing land in a way that is helping to control accelerating prices.

He described their current method of ballots as ‘drip-feeding’ land.

“[We have] a situation in which a lot of people are chasing a small number of blocks and that invariably puts price pressure onto new homes … making it more expensive and less attractive to build a new home,” he explained.

In turn, Mr Weller said this does lead to it being more attractive to purchase an existing home in an established suburb as their value is driven up.

Mr Weller would prefer it if blocks of land were available to buy over the counter – but only for genuine home buyers, not for people holding them purely for speculative purposes.

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But Mr Weller admits the situation is extraordinarily complex and releasing more land immediately would cause short-term problems because of the major supply issues facing the construction industry.

Recent wet weather is also unlikely to help. “There’s no silver bullet and rules have to be changed.”

Every senior ACT Government Minister can be heard making the point that all Australian jurisdictions are grappling with a housing affordability crisis and the ACT is not immune.

Mr Barr has argued current federal tax settings, as well as the current record-low interest rates, are favouring investment in real estate and with on-average bigger houses and larger blocks than the rest of Australia, it’s no wonder houses in the ACT are more expensive than the rest of the country’s.

“In the end, the price of a house is the interaction of supply and demand. The worth of a house is how much a person is willing to pay for it,” Mr Barr said.

“That is not within the ACT Government’s control.”

However, Mr Cain and Mr Weller point out that what is its control is the release of land.

Both argue against the current policy under which the government is focused on infill as 70 per cent of all new homes rather than greenfield development (30 per cent) – a promise made largely to satisfy the Greens.

Mr Weller said if enough land was available for people to buy, a significant number of housing problems would be solved and that, ultimately, more land will have to be released.

He also pointed to increasing medium-density housing in the suburbs and changing planning laws to allow more subdivisions in developed suburbs as key levers the government can pull to ease the pressure on the market.

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Stupid. Look at the example of the b doubles using our roads. Transport industry argued allowing them into the suburbs would save money for you. When they got permission to drive into the suburbs prices have gone up. The only person that benefited were the trucking companies. Supply doesn’t equal lower prices

A combination of reasons contributes to higher housing prices and lower housing affordability, mostly national, but some unique to the ACT:
– low interest rates stimulating loan demand;
– population growth;
– negative gearing, giving tax benefits to investors;
– house and land speculation;
– full employment, but with less secure employment;
– cashed up overseas buyers and investors;
– wealthier, often migrant, families helping their kids buy;
– house price inflation;
– rises in housing construction labour costs;
– major recent rises in imported housing material costs (China);
– changing buyer preferences for larger houses and quality inclusions;
– wages growth lower than housing cost growth;
– ACT govt outer land release restrictions, restricting supply to push up prices;
– ACT govt policy to promote inner city infill on higher value land, generating higher revenue and rates for itself;
– ACT govt building and zoning regulations adding to building costs, eg EERs;
– ACT 10-11% annual growth in rates, without compensating lower stamp duty;
-ACT land tax being passed by landlords as higher rent;
We can disagree on which of the above has had most impact on which group, but the irrefutable fact is that ACT housing has become less affordable now and rents have become the highest in Australia, under this Greens/Labor/Barr government. It is ‘regressive’ not ‘progressive’, when an essential human need becomes less attainable.
However, without a new, inspiring and visionary team, the Liberals remain an ineffective, demoralised, insipid and contemptable shadow of an opposition offering no hope of an alternative government.
This means the only cure for high house prices is higher house prices, and/or higher interest rates, until eventually house prices and housing costs get so high that no one can afford a house. Then house prices will come down.

Thank you!!! You have said it!

Capital Retro5:42 pm 08 Mar 22

Time to launch the ACTiON Independent Party.

I’ll support it and a a lot of disaffected Liberals would, too.

“Medium density” = Demolish the old house, cut down every single tree, pour concrete, build cheap duplex. This isn’t the answer.

Finagen_Freeman10:05 pm 03 Mar 22

Housing is first and foremost a shelter and home. It is not an investment for the rich to get richer.

One house per family, and then and only then let investors buy their second, third or fourth investments for their ‘portfolio’.

I provide this quote from an article in the latest Tax Policy Journal from the Taxpayers Research Foundation. Very relevant to this discussion.

“The ACT is a unique jurisdiction in that the one government is responsible for all sub-national taxing powers and combines this with a monopoly government power on other responsibilities of land management, such as rezoning.

With this combination of powers, the ACT government is gradually phasing out conveyancing duties and substituting higher land rates to compensate. The rate revenues are provided as a comparison with the conveyance duty revenues which are declining in their rate of taxation but in terms of the amounts collected have increased owing to rising housing and land prices.”

The ACT government drip fed 71 blocks at a 35% price increase per square meter compared to land released next door in Strathnarin Rise 18 months earlier. Barr’s suggestion that this can have no effect on the price of the broader market is utter nonsense and completely indefensible. His argument that the cost of a house is what people are prepared to pay for it is the kind of neoliberal thinking that is destroying the American middle class, and a complete abdication of social responsibility. The cost of a property is well within the control of the Singapore government as it cares about the living standards of all it’s citizens. Housing can and should cost 50-70% less than current prices – Dr Cameron Murray’s HouseMate scheme is the blueprint for how to make it reality.

50-70% less than current prices, HAHA best laugh I got all year!

What has the ACT Government done to put downward pressure on house prices. We know that low interest rates and various other Commonwealth Government stimulus measures have pushed a lot of funds into assets such as shares and real estate. This is putting upward pressure on prices. But little is being done on the supply side. 12000 bidders for 70 blocks provides an indication of demand. The ACT property market is one of the few markets that doesn’t respond to what the consumer wants, a block of land on which to build a detached house. Meeting this demand with increased supply would put downward pressure on prices. As would dramatically reducing the cost of these blocks.

It is clear that government revenue benefits most from the rapid increase in the value of a square meter of residential land. Rates and land tax are calculated as a percentage of this value.

Strangling the supply of blocks of land to owner occupiers and increasing the rights of developers to increase density guarantees the increase in the square meter value. It reduces affordability, increases rents and forces residents out of suburbs due to rate increases. The government has decided that your choice in housing is a rented townhouse or apartment.

Once again, here is an example of biased media reporting “housing affordability problem” as a statement of fact. What these self-righteous socialists believe is that any increase in house prices equates to deteriorating affordability while failing to acknowledge that repayments consist of both interest and principal. The principal may have grown but interest rates have been slashed and favourable fed government stimulus through Jobkeeper have allowed hundreds of thousands of families to enter the property market for the first time. Affordability is more about mortgage serviceability than prices.

Home ownership in this country is very high by international standards and there have been unprecedented demographic and social changes such as more dual income households. So while I agree housing affordability has deteriorated for white Caucasian males in the past 20 years, just about every other demographic has seen improvements in their ability to access credit. More than any other time in our nation’s history is it easier for single mothers to own their own home and the policy support has benefited them tremendously such as smaller deposit requirements and guaranteed loans.

Housing affordability needs to stop being used by the woke left wing media as propaganda for equality as it is incredibly misleading and biased.

Sam,
You can only think the way you do if you ignore almost every metric around housing affordability that exists over the last few decades.

Successive federal taxation changes have clearly incentivised housing speculation by investors over people who just want a roof over their heads.

This has lead to significant increases in prices well in excess of what otherwise would be expected and far above wage increases or inflation.

These increases have led to housing affordability issues that significantly hurt more productive areas of our economy, leading to worse outcomes overall. Rents are also far higher than they otherwise would be.

We need to stop pandering to the property industry and older wealthy investors looking to be subsidised by younger, poorer people.

No doubt they will squeal when their snouts are removed from the trough but it must be done.

Chewy,
Every point you make is baseless spin and for every hackneyed argument you make there are dozens of counter-arguments that debunk them.

You claim taxation is incentivising speculation when in fact it has increased the rental supply and helped reduce rental costs of those seeking to get into the market.

You claim housing investment is “unproductive” while the basic goods and services essential to every functioning economy is housing and food. I can’t think of a more productive asset than one that provides a roof over your health and keeps you warm and dry at night.

You are looking at the wrong metrics if you are comparing price growth to wages or price inflation. As I mentioned and you blatantly continue to ignore, affordability is a function of mortgage serviceability and access to credit. The total repayments over the life of a 30 year mortgage are actually more for $1m borrowed at 6% interest pa than $1.4m borrowed at 3%pa. And this is 40% difference in principal or the metric everyone is solely fixated on, the raw value of dwellings. No point house prices falling 20-40% when people can’t afford it anyway because the banks tighten lending.

And let the squealing begin.

“You claim taxation is incentivising speculation when in fact it has increased the rental supply and helped reduce rental costs of those seeking to get into the market.”

Laughable, it has clearly done the opposite. The taxation settings that have incentivised investors have driven up house prices and with them rents.

And I don’t claim housing investment is unproductive, it’s a fact. It drags investment dollars from areas of the economy that actually increase our economic outputs. Land speculation does nothing except reduce our overall economic productivity.

“As I mentioned and you blatantly continue to ignore, affordability is a function of mortgage serviceability and access to credit”

I didn’t ignore anything. Even considering your own claim, housing affordability is clearly worse because if wages and wealth aren’t increasing for most people then a growing proportion of people can’t service a mortgage. Which leads to the exact problem I mention of investors dominating the market and then forcing ever higher rents on younger, poorer people. You defeat your own argument.

Sam,
Hundreds of thousands of people have entered the property market through Jobkeeper? Can you name one person who entered the property market through Jobkeeper payments? I can’t.

Your point about affordability being more about mortgage serviceability than prices makes a few major assumptions:
1. Stable interest rates.
2. Secure income at a level that is sufficient to service a loan.
3. Sufficient deposit to complete the balance of the purchase price, stamp duty etc.

Price becomes a real issue with home affordability if you have an insecure income or income at a level that is insufficient to get a loan large enough to complete a purchase.

Taxation plays a part, although the Chief prefers to refer only to Federal taxation laws. He should also consider how his own Governments policies impact affordability. The Government argues that reducing Stamp Duty has improved housing affordability, but if given the choice I believe most home buyers would prefer to pay a higher one-off Stamp Duty payment, than higher Rates, forever. Meeting ongoing Rates forms part of that affordability calculation, it’s not all about interest rates and loan repayments.

Of course, affordability also impacts renters. The Government’s Land Tax @ 150% of Rates, ultimately is passed onto tenants through higher rent.

Still making up your own ‘facts’ I see Sam?

Romania 1st @ 96.1% ownership rate
Singapore 12th @ 88% ownership rate
Australia 47th @ 66% ownership rate

Ooops… caught out talking up your property portfolio again it seems.

@chewy, ” if wages and wealth aren’t increasing for most people then a growing proportion of people can’t service a mortgage.” Well clearly the majority of home owners can service their own mortgage because the number of loan defaults is incredibly low.

@kenbehrens, “Your point about affordability being more about mortgage serviceability than prices makes a few major assumptions”. Yes of course, it necessarily assumes stable interest rates but another assumption is that wages don’t grow. If interest rates were to rise, wages would grow offsetting the increased interest bill. Secure incomes is also the biggest factor that would drive interest rates. The unemployment rate is an incredibly low 4.2% now and do you honestly think if unemployment doubled the RBA would begin lifting interest rates. All the factors you listed are codependent and won’t occur independently to have a material deterioration in mortgage serviceability.

“Well clearly the majority of home owners can service their own mortgage because the number of loan defaults is incredibly low.”

Firstly, you ignore the point about the amount of investors in the market, which is the main problem. Of course they are currently “servicing their loans”, because they are leveraged to the hilt with low interest rates and preferential taxation settings, artificially increasing prices.

Secondly, interest rates are about to increase and mortgages last for 25+ years. You would need to consider this across the cycle but of course you’ll go in to hiding when defaults increase in the next few years.

And thirdly, even if actually homeowners are barely scraping by on their mortgage payments, it doesn’t make housing “affordable”. People spending ever higher amounts of their wages on unproductive assets is actually part of the problem I’m talking about. If we fix that problem, required debt levels to own a house will reduce.

We get it Sam, your snout is fully ensconced in the property trough and any challenge to your subsidised portfolio makes you uncomfortable.

But just because everyone else is subsidising your wealth doesn’t make it right or the best use of investment funds to improve our country’s economic performance.

Chewy, I know you enjoy imagining doomsday scenarios about investors “leveraged to the hilt” all defaulting on their loans but that is not economic reality. “ you’ll go in to hiding when defaults increase in the next few years.” The question to ask is will the RBA sit back and just watch that happen? So there are thousands of defaults, the economy pulls back and inflation falls, the RBA is going to start cutting interest rates or undertaking QE. Your lack of understanding of economic basics is reflective of all property doomers over the past 50 years and why they have all been dead wrong! My snout’s been in the trough for the past 30 years yes and I’ve grown a vast layer of fat in the form of an equity buffer. I am not uncomfortable at all because I know my sage investments and nous means I’m at the top of the pecking order and the very last to suffer any hit to my wealth should your doomsday scenario eventuate. But it’s just wishful thinking and it’s hilarious to think people still think that way.

Sam,
Don’t know where youve got the idea I think about doomsday scenarios or believe they will happen, I’m just talking about reality.

Defaults will increase when interest rates rise in the next few years. Inflation is already rising significantly and the only reason the RBA haven’t already pulled the trigger is because of the tenuous nature of the economic recovery made more precarious by people promoting views like yours.

“My snout’s been in the trough for the past 30 years yes”

Thanks for admitting what we already knew.

And it just highlights the problem that people with such little investment knowledge have gotten rich through luck and exploiting/promoting bad government policy and tax settings.

Some of these people are so deluded they think what they’ve done involved skill and high levels of intelligence.

“ Some of these people are so deluded they think what they’ve done involved skill and high levels of intelligence.” Reminds me of the saying it ain’t stupid if it works! Very arrogant of you to think investment in housing doesn’t involve intelligence or skill. I can assure you whatever the tax settings are in this country, I’d still be top of the food chain. But we are not talking about individual genius and intellect. We are talking about housing affordability for the majority of Australians and with 66% home ownership and high saving rates during COVID the vast majority of owner occupiers and investors alike have built comfortable buffers like me.

“I am … the very last to suffer any hit to my wealth”
Sam Oak’s response to questions of housing affordability for new buyers is that Sam Oak will be OK.

I noted on the way through that Sam Oak not once addresses tax system distortions other than to pretend they do not exist. That is why Sam Oak keeps trying to answer any question other than the one asked, for example responding to new housing affordability by talking about existing owners, not new buyers, or saying people other than white Caucasian males can get loans (impressive) without addressing what or whether you can buy. There are other examples of this misleading approach.

Phydeaux,
I too noticed that Sam’s instant response to what he thought was me saying the house market would collapse was an instant response that he personally would be fine.

Perfectly highlighting the selfish attitude to this issue and why the problem has been so pervasive.

Phydeaux and chewy,
So you think only those that are directly impacted by an issue are entitled to voice and opinion? If the press came out with a sensationalist tile of “will longer jail terms help the crime epidemic in Canberra” only victims of crime are allowed to comment while those that have never been subjected to a crime in years cannot disabuse them of the fact that Canberra is a safe city? Similarly, the vast majority of Australians find housing affordable and only a minority through laziness or having too high standards, cannot afford the house they want.

And regarding the mention of interest rates / loan affordability, Chewy, 30 years ago mortgage interest rates were 8.4%. Someone with a $ 1.4M loan currently at 3% may wish to contemplate how they would manage that.
In the 1990s with high inflation and still higher wage growth, problems were inflated away for those able to hold on. Now, wage growth is below inflation. Severe mortgage stress would happen now as it did then, as ratiometrically only small rate rises have big impacts when rates are so low.
Diversion of economic resources to housing has insidiously limited investment in productivity growth over time, limiting wage growth while inflating assets, a vicious circle for housing affordability or social wealth as a whole. And that, I believe, was your original point.

Sam Oak, your presumption is vast, and of course wrong.

@assiduous, and how do house prices in Singapore compare to Australia?

@phydeaux, as part of APRA’s responsible lending requirements, banks are required to assess mortgage applications to check that you can afford a 3% increase in interest rates. This is far above what the market expectations are for interest rates in the next 5 years. Are you saying the banks are so incompetent they are oblivious to defaults of half their loan books in the coming years? The reason the RBA hasn’t moved on interest rates is they believe inflation is transitory. Yes we will see it spike in the coming quarters when petrol climbs above $2 /L but unless next year it is $4 /L, it’ll eventually fall out of the wash once supply chain issues are resolved.

There is an issue with being too cautious when it comes to investing. You are compensated for risk. If you think the only time a new home owner should purchase a house is when they have a 50% deposit and borrow a principal 2 times their annual gross income then you are being far too conservative, stupidly so. Not saying they need to leverage to the hilt but most are borrowing within their means and can afford within their means and most investors have in fact built very large equity buffers during COVID, evidenced by money flowing into offset accounts rather than being spent on holidays.

Phydeaux,
Spot on.

Congratulations, Sam Oak. That is 226 words and not one on topic of new home affordability. That might be a Personal Best for you.
I note you mention “…and most investors have in fact built very large equity buffers during COVID, evidenced by money flowing into offset accounts rather than being spent on holidays”.
Good to know. Relevance?
I am now taking it from your comments that you have complete faith in the efficacy of APRA and of government action to avoid any sign of any economic difficulty, at any time, knowing that all borrowers make only the most sophisticated judgement of their financial affairs, and none are ever surprised to lose their job, to rely on one income, or get injured in any way (I know, I know, those ones forgot not to be unlucky).
Still, given your asserted faith in government, I expect you will be fully supportive of any sober government decision to wind back tax distortions to ensure housing affordability for more people, and over all economic benefit.

Comparable 3-bed apartments are one third the price in Singapore compared to Canberra.

To put it more briefly to Sam Oak, if loan conditions were so stringent that a tripling of interest rates meant still no defaults, then what has this to do with the price, other than to imply inaccessibility?

haha I’m talking about houses not apartments. Families in Canberra seem to all want houses with large backyards. If their were happy to live in high rise apartments the whining would stop.

Sam Oak’s argument is analogous to saying that if you can afford to be robbed, or are unaware you were robbed, then there’s no problem.

Phydeaux, as I have explained to you at length housing affordability has nothing to do with price but the ability for new home owners to access credit and service their loans. The tax laws relating to property only assist the ability to service the mortgage as negative gearing allows you to claw back some of the interest bill for investors. Therefore it’s not a “distortion” but helps with affordability.

But I don’t try to convince you as there will always be those that will never be convinced no matter what the tax settings, every advanced country in the world has a small proportion of their population complaining about house prices in their respecting countries. I am simply pointing out it is false propaganda to be claiming there is a housing affordability problem in the country as most who want to by within their means can.

Assiduous, as I mentioned it may be a problem for the individual but not a widespread problem for society – see my analogy of a crime problem in Canberra. We can make all sorts of sensational claims such as “health system disaster”, “education crisis” and “transport system nightmare” but it cheapens the debate on those issues and detracts attention away from the most important issues in society.

You are all missing the point – as long as Sam Oak is OK there is no problem…. the land market genius has spoken. Does not take rocket surgery to see that 🙂

Sam,
“If interest rates were to rise, wages would grow offsetting the increased interest bill”.
The Reserve Bank sets interest rates based on a broad range of factors, but ultimately their charter is to keep inflation within a set range.
So, if the economy is growing too fast, if inflation is surging, the RBA increases rates to slow things down. IE to take money out of the economy.

Wages are linked to cost of living increases AND productivity improvements.

Sam, Singapore is a city with the population of Sydney on an island with 10% of the land area. Do i need to explain further?

Sam talks about housing affordability relates to new owners having the ability to service their loans.

Then strangely goes on a tangent that the tax settings that distort the market benefitting investors some how means those new owners can service their loans better.

Ah, the new owners aren’t investors Sam, they aren’t negatively gearing the house they live in. They suffer because they have to pay ever higher prices because of the exact benefits to investors you reference.

So yes, we agree the tax setting that incentivise investors and drive up prices benefit those investors at a cost to everyone else.

Thanks for providing the exact argument disproving your own point once again.

Chewy, guess you never heard of rentvesting huh? Wouldn’t have thought so given those struggling to get into the market seem to lack the creativity to imagine anything other than buying a house outright with their deposit.
As I’ve explained before there is no tax “distortions” and your narrative is completely false. Capital is taxed differently to income and property is taxed the same as any other asset class whether that be shares, Lego kits or antique toilets. Home ownership was highest in the 1960s when the capital gains tax was 0% and since then it has only become more and more stringent. Population growth and changing demographics has driven most of the long term growth in prices and if you aren’t prepare to deal with a bigger Australia and a dual income society you better shack up elsewhere.

Kenbehrens, thanks for explaining monetary policy to me and proving my point. With MP so accommodative currently this has allowed many to get into the market and improved housing affordability. When interest rates rise there is no guarantee housing will still be affordable as it is tied to people’s capacity to borrow not house price inflation. Those that have entered the market recently are fairly well protected because they have been assessed against a 3% interest rate buffer. Even if inflation (key word RBA uses is “sustainable”) gets out of control, there is no scenario where you can have thousands defaulting on their loans without it smashing the economy and therefore inflation falling back down again.

https://www.cnbc.com/amp/2021/08/31/how-much-it-cost-to-buy-real-estate-in-sydney-seoul-singapore-taipei.html
Yes please explain further, I’m not seeing where the one third of the price comes in…

Sam,
You must have me confused with someone else.

I’m not looking to buy my first house or struggling to “get in to the market”.

I already own property both individually and through investments.

I suppose it’s hard for someone like yourself, who only considers how an issue will affect them personally, to understand that others can look objectively at an issue.

Even when the changes I propose would have short term negative impacts on my own finances, I can recognise how they will benefit everyone over time.

It truly is hilarious that you think “rentvesting” is a good and reasonable outcome for people trying to purchase their first home. Highlights perfectly the wasted capital being used on unproductive assets that we’ve been talking about. Capital that would be far better utilised in other areas of the economy, which would benefit our economy and society significantly more in the long term.

Sam Oak wrote: “…housing affordability has nothing to do with price but the ability for new home owners to access credit and service their loans”.
Fatuous.
Assume my surplus income can afford a $1.4M loan at 6% so would be comfortable at 3%. According to S Oak, it now makes no difference at all whether the the item I am purchasing costs $1M or $10M. S Oak thinks price does not matter, avoiding as usual the point that tax distortions affect price, advantaging some some classes of buyers over others.
S Oak wrote: “… negative gearing allows you to claw back some of the interest bill for investors. Therefore it’s not a ‘distortion’.”
S Oak, please state current rate of mortgage interest deductibility for own home buyers in Australia. Please state also the current rate of mortgage interest deductibility for housing investors in Australia. Answers of “0%” and “Up to 100% depending on income” will be marked as correct. Apparently, there is no difference between zero and a hundred. There endeth the gospel according to St Oak.
I guess S Oak is unable to see past their nose because it is, as S Oak said, stuffed too deep into the trough.

We know there are price impacts from advantageous-for-some differences in loan accessibility through interest deductibility. However, I am not arguing against investment cost deductibility as such. Distortion builds when taxation of forms of income is considered. S Oak glossed over the CGT regime, which gives a 50% reduction (for tax) on gains held more than a year. This is wildly generous in a low-inflation environment. It is also wholly superfluous when it is now possible to hand an ATO computer portal the problem of tracking and calculating inflation-based reductions based on exactly the same four user inputs as we have for the current “50%-off” regime. In my view it would also be sound to restrict deductions to investment gains, ending negative gearing. This is already done for capital gains and losses so is a straightforward, accepted concept.
The effect of the distortions S Oak cannot see in their magic mirrors is to shift investment to low-productive capital assets, largely trading existing assets, not encouraging new investment in housing let alone investment in productivity gains we have so badly been lacking in the last decade or so. A small factor among the reasons wage growth has been lacking is the position so blindly defended by S Oak.

https://www20.hdb.gov.sg/fi10/fi10221p.nsf/hdb/2021/assets/ebooks/key-statistics.pdf

They don’t have the space for detached housing so it’s a meaningless comparison. 80% of Singaporeans live in HDB apartments and thus didn’t buy in the private market referred to in the CNBC article. Notice how afforable HDB flats are? Puts Canberra to shame considering how much space there is.

chewy14 wrote: “Even when the changes I propose would have short term negative impacts on my own finances, I can recognise how they will benefit everyone over time.”
Yes.
Timer Smith wrote somewhere above: “… if you were a landlord, you would understand why [negative gearing should not be abolished].” Jostling with S Oak in the trough I guess.
Why do some people think it a great argument to say that they personally are affected short term? It says nothing for their analytic ability. I think chewy commented on this also in this now extended sub-thread. It is fair comment.

chewy, I didn’t ask about your personal situation as I know it would pointless to ask. Even if you really were a struggling first home owner you’d come up with some sanctimonious story of how you’re a property magnate but want equality for all. Just as you can’t verify that I have multiply investment properties, we both will need to assume there are always vested interests at play. You and phydeux need to swap details as it’s sounding like an echo chamber in here with how many cliched and hackneyed arguments there are.

phydeux, CGT is levied at the top tax bracket as you are not able to spread your capital gains over multiple years. Therefore the discount only means an effective tax rate of about 22.5%. But I guess that doesn’t help your narrative that all investors are getting some sort of tax rort. Throw on top of that the rates and land tax we have to pay levied off a fictitious assessment of the unimproved value of the land and there are multiple hidden costs of property ownership. Property is taxed far too stringently in this country, any comparison with other developed countries in the world will show that is true.

assiduous, I don’t know what HDB apartments are. Are they there equivalent of Geocon over in Singapore? This is like reading some sort of brochure and should be flagged for spam. I’m talking about the median dwelling price in Singapore compared to the median dwelling price in Australia. I don’t care to compare small segments of the market. “One-third of the price” is laughable. It is more believable that Australia is one-third the price of Singapore!

I rest my case.

Sadly you had no case to begin with my dear.

S Oak wrote: “phydeux [sic], CGT is levied at the top tax bracket as you are not able to spread your capital gains over multiple years.”
No shit, Sherlock.
And S Oak continued: “Therefore the discount only means an effective tax rate of about 22.5%.”
That is, half the 45% applied to non-capital income at the TMR, which fact was a significant part of my point, the favourable treatment of capital assets in taxation compared with other forms of income, and unnecessarily so given the ease today of accounting for inflation so as to tax fairly the above-inflation gain. I note there is no immediate objection to quarantining investment losses with investment gains, excluding other forms of income from the equation.
“there are multiple hidden costs of property ownership” Angels weep. And you know nothing of that subject that I do not so try something on topic of the demonstrable and widely recognised property market distortions, not matters of personal [in]convenience.
S Oak also wrote: “chewy, I didn’t ask about your personal situation…”
Yet S Oak has been keen on more than one occasion to claim and indeed boast about their property investments and snout in the trough. It fits the pattern with other self-centred claims in lieu of argument.

Sam,
You said:
“Wouldn’t have thought so given those struggling to get into the market seem to lack the creativity to imagine anything other than buying a house outright with their deposit”.

Its the second time in this thread that you’d tried to pigeon hole my position completely incorrectly.

Of course we all know why you would try to do that because then you could discount my points as being as self interested as your own freely admitted position is.

So no, we don’t have to assume that vested interests are at play, at least not from me.

As for your latest comment, Phydeaux’s point around the CGT discount was that it is meant to cover inflation effects, which could just as easily be directly calculated now rather than providing such a generous discount method.

And no, property taxes are not too high in Australia. As one of the most efficient areas to tax, that comes with significant secondary benefits, government’s should rely on land taxes for more of their revenue.

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