With Sydney vendors now asking for over $1 million for a house, a 10% deposit on a Sydney home, if raised through super, would erode almost entirely the retirement savings of most people in that age group [20s to 30s]. Is Hockey even familiar with house prices and average super balances?
We are of the belief that the less government intervention there is in the property market, the better. Governments all round should be doing more to promote housing affordability, not unaffordability.
Reducing negative gearing, a highly distortionary policy, would have a far more beneficial effect on promoting housing affordability. If negative gearing was repealed or altered, investors who are now gobbling up property would back off buying houses, which is what those who are demanding lower dwelling prices want to see. We know Joe was at least looking at negative gearing last year and we strongly encourage him to reduce or eliminate negative gearing. For starts, he would potentially save over $5 billion a year on the budget!
According to the Australian Bureau of Statistics (ABS) first home buyers accounted for just 14.5% of total owner occupied housing finance commitments in December 2014. This compares to around 50% for investors. It’s investors who are doing the heavy bidding at auctions, and with interest rates falling, that trend will continue through 2015.
So, if anything needs to be done, it is to eliminate existing distortions, and not introduce more.
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