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Old 19-04-2017, 12:05 PM   #4
zipping
FF.Com.Au Hardcore
 
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Join Date: Jul 2009
Location: melbourne
Posts: 4,639
Default Re: Australia housing bubble

Negative gearing is where a loan is used to buy an asset and there is a loss because the income generated is lower than the interest repayments. It's often used to explain a property purchase but it can equally apply to a share purchase or other investment.

It's been with us for a long time. In 2010 there were 1.2 million Aussies with a negatively geared property which is 14.3% of individuals that lodged a tax return owned investment properties while a greater 19.2% of individuals that reported a taxable income owned investment properties.

http://blog.corelogic.com.au/2013/05...inancial-year/

Whilst some pressure comes from negative gearing when people speculate on prices going up is it really the driver behind the sharp rises we are seeing?

Some more recent info here

https://www.businessinsider.com.au/s...the-rba-2016-2

Good article

http://theconversation.com/policyche...g-reform-58404

It does provide an incentive for people to invest in property just on balance it seems to me unlikely to be the driver behind the last 4 years price expansion.
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