Turnbott goes house price mad

By Leith van Onselen

The transformation of Malcolm Turnbull into Tony Abbott has continued, with the Prime Minister ruling-out any reform to the capital gains tax (CGT) discount and placing the sovereign directly behind house prices. From Domainfax:

Facing his first opinion poll pressure since becoming Prime Minister, a newly aggressive Malcolm Turnbull has warned that house prices would fall steeply under a Labor government, harming personal wealth and smashing confidence.

Accusing Bill Shorten of indulging in a “soak the rich, politics of envy” approach, Mr Turnbull ruled out any increase in capital gains tax and declared the government would make its own “full tax proposal” when it is ready.

“We will do so after we have considered all of the considerations — all of the matters — and I can say to the honourable member opposite that increasing capital gains tax is no part of our thinking whatsoever.”

Mr Turnbull went on to tell Labor’s Chris Bowen directly that the shadow treasurer’s place in Parliament would be at risk under the opposition’s changes.

“I will leave the Member for McMahon with this sobering thought,” he said across the dispatch box. “There are nearly twice as many people in his electorate that are negatively geared as votes needed to change hands for him to lose his seat.

“In December, 34.7 per cent of all new housing loans were made to investors,” Mr Turnbull said.

“So what the Labor Party proposes to do is, from 1 July 2017, remove from the buyers for established property over one-third of the demand. And these economic geniuses want us to believe that is not going to have any effect on prices.

“We know that there would be nothing more damaging to confidence and growth than smashing housing prices. Every single Australian recognises that the bulk of most families’ assets is in their home. It is well over 65 per cent across the board, so you knock that price down; you knock that value down.”

Pathetic. In his 2005 tax paper, Turnbull labeled the CGT discount along with negative gearing a “sheltering tax haven” that is “skewing national investment away from wealth-creating pursuits, towards housing”, and has caused a “property bubble”.

Last week, Turnbull also attacked Labor’s negative gearing and CGT policy because they would not raise enough Budget revenue:

“As far as Labor’s announcement is concerned, I will make a couple of observations: one is that it raises relatively little money in the near term, over the next four years, and they acknowledge that. So it doesn’t address the big deficit…”

This criticism by Turnbull came in spite of independent analysis from the Parliamentary Budget Office (PBO), which estimated that Labor’s proposed changes to negative gearing and the CGT discount could save the Budget some $32 billion over 10 years once they come into force. In a similar vein, independent modelling from the ANU’s Centre for Social Research and Methods estimated that Labor’s policy could save the Budget $6 billion a year, with $2 billion per year coming from the proposed halving of the CGT discount.

And therein lies the stupidity of Turnbull’s position: he initially opposed Labor’s policy because it wouldn’t generate enough revenue, but then has ruled-out any changes of his own, thus raising zero revenue.

As noted in Deloitte’s “Mythbusting Tax Reform” report, released in October, Australia’s CGT discount is overly generous and has hurt the economy by driving too much investment into unproductive established housing:

ScreenHunter_9922 Oct. 26 11.12
Table 1 shows there are really big incentives for some taxpayers (such as high income earners) to earn capital gains, versus little incentive for others (such as companies)

The discounts Australia adopted back in 1999 assumed inflation would be higher than it has been – and so they’ve been too generous.

By the way, ‘overdoing it’ on the CGT discount doesn’t just come at a cost to taxpayers. It hurts the economy too. As the discount does not target particular sectors or types of assets, it provides stimulus to invest in both productive and unproductive assets. That’s part of the reason why Chart 6 shows an enormous leap in investor activity in housing markets since the discount was introduced.

ScreenHunter_9923 Oct. 26 11.15

It is also part of the reason why Chart 7 shows that those who earn more than $180,000 a year account for a much bigger share of net capital gains…

ScreenHunter_9924 Oct. 26 11.16

Our conclusion? The current CGT discount is too generous, to the extent that it undermines the very principles of this nation’s progressive personal income tax system. It’s time for a change. Reform of the concession is long overdue.

Analysis released last year by the Australian Treasury also noted that high income earners have been the main beneficiary of CGT concessions, with around half of all net capital gains income reported by those earning above $180,000.

The Australia Institute has also found that the lion’s share of concessions flow to richer, older Australians:

ScreenHunter_11536 Feb. 16 08.10

Turnbull clearly does not have the ticker for policy leadership and would prefer to follow Tony Abbott’s path of opposing reform for short-term political gain, and keeping the rorts flowing to his property industry mates even if this means taking the perfectly insane step of placing the sovereign directly behind house prices.

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Unconventional Economist

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

Latest posts by Unconventional Economist (see all)


  1. Perhaps he is resigned to a housing crash and would prefer to see investors, foreign and local suffer rather tham first home buyers.

    • He’s doing exactly the right thing, which is nothing. I suspect he knows it, too. Any attempt at reform now is doomed. A crisis must first hit the country, and whoo, boy is it coming. Economic wrath of an angry and vengeful God type stuff, coming to the modern day Gomorrah, ‘straya! Ha ha ha ha ha!

      • “A crisis must first hit the country, and whoo, boy is it coming. Economic wrath of an angry and vengeful God type stuff”

        Human sacrifices, dogs and cats living together, mass hysteria level bad? I’ll get the marshmallows..

        Bad nerd jokes aside, I fear you’re right on all counts. It’s a shame that we need things to fall apart so completely, but we had many chances to reform over the years and we didn’t. Now it looks like we will all have to pay for this country’s lack of leadership, lack of understanding of risk and lack of foresight. But yes, hopefully some good will come from it.

      • The Fog of the crisis is the banks favourite part. “Never waste a crisis” is the mantra, just ask Commonwealth Bank after they managed to add Bankwest to the stable at the height of the GFC. It’s not a bad racket when you can push leverage to ridiculous levels on the way up and then can rely on the taxpayer bailing you out on the way down.

      • I’m with LD on this one.
        Only a fool would touch the poisoned gobbet of Negative Gearing while the economy is teetering. I say let it crash with the all stupidity in place, create yourself a real crises born out of policy status quo, rather than a half crises that can be blamed on clumsy tinkering with the mystical NG machine.
        Aussies collectively need to learn a hard lesson and this just wont happen if we provide everyone with a ready made explanation (NG Tinkering) for the first recession in over a quarter century.
        I say let it fail AS IS so all can see the insanity of our Policy, I got a feeling it wont take long now!

      • Hope you’re right LD – I give it a 5% chance, even though it’s completely fair, welcome and required. I’ve been shafted and disappointed too many times over this.

      • If you guys are right then MT is probably smarter than we give him credit. Imagine the ‘investor backlash’ if we change things and house prices go into reverse. They will blame MT for ruining the gravy train and let’s face it most Australian’s don’t want to hear about a mortgage crisis. They have convinced themselves of their exceptionalism and that the rules of gravity don’t apply down under. So many people believe “it won’t crash here”, they say things like “when did housing ever crash in Australia”. Selective memory types I guess…

        They think it will only drop a little bit, and maybe they are right. There certainly isn’t a shortage of greater fools, it will only be changed once bank funding rises and our credit rating is stripped because of this stupidity. Most aspirational types think that buying property is the way to securing wealth in the future, nobody wants to start a business and become an entrepreneur. Be a landlord instead bro..

        Maybe MT knows that it will only be able the dust settles that we can make real change, but then again he’s profited from Real Estate himself, maybe he’s more of a speculator than we think?

      • Yes I have till agree with you guys we don’t want anyone to be able to claim it was the removal of NG that crashed the economy otherwise it will be back to cripple Australia for the next 100 years! Same with Labour loosing this election so the economy crashes on the Liberals watch, that should reset the whole political scene and get us away from nonsense about which party is the government of high taxes or low taxes, the pretty for business etc then we stand a chance in the long term. So assuming we are right about the coming downturn I say go on Turnbull ya good thing!

      • Hey Dud, you really don’t understand how gamed us Aussies are, do you? The do-gooders will win, Labor will install the policy – it will fail. Economy will tumble due to global forces, Aspirational class will blame Labor. Rinse, cycle, repeat. PermaFail… since 1950 (but really from Victorian times… is it a part of Anglo DNA?

    • It looked like theater, and that’s what it was. The goal to take pressure off bank funding which at the current rate will need a IR rise for mortgage holders.

      The message …. the sovereign is behind housing so please rollover those bank bonds cheaply.

      Probable response ……. Fu(k off !

  2. Capital gains is critical for investment purposes. I know you are blind-sided by housing, but CG is critical for other sectors as well. Especially speculative mining and biotech stocks. Most of the time they come to naught, but that is the game one plays… agriculture especially need incentives to invest, which is going to be even more critical into the future.

    I keep remaining that every country is trying to attract capital. Australia has had the easy road over the past decade. The mining boom in capex (not mining profits – a very important distinction) has been the biggest economic boon for Australia since the gold rush days. Those days are now over.

    Be careful what you wish for. Kill the CG baby, and investment in this country WILL COLLAPSE… make no mistake.

    • Gosh I hate automatic spell checkers, it subs words, you re-read and think you read the words you thought you typed, only to find later that something else is present, and makes you look like a tool…

      • I agree with you RT. Its still important to boost the industry sectors that have been smashed by government policy. I think its form related to shelter is outrageous though.

      • RT,

        It is a fair point. Encouraging investment with an attractive capital gains discount has merits.

        That it has mutated in relation to a particular class of assets suggests that the problem lies more there than with the CGT discount.

        1. APRA endorsement of bank reliance on off shore hot money

        2. APRA capital weightings to home loans

        3. First user pays all and constricted supply

        4. Population ponzinomics.

        5. RBA bait rate policies that seem to only flow through to mortgage lending.

        Fix 1-4 and the rate of capital gains on housing will slide back into the pack and other capital investments will have more of a chance.

        Especially when one considers that our inflated exchange rate is the result in part of 1-4 and that kills investment very effectively.

    • Those are great arguments backed up well with facts and sound reasoning – oh wait – nope – just baseless assertions which were all debunked in the actual article you are commenting on.

      As a student of history it is interesting to note that the very same arguments were used for not ending the Atlantic Slave Trade.

      The exact ones.

    • makes you look like a tool

      You don’t have to try RT, it comes to you naturally 🙂

      But seriously, do Labor’s CGT changes apply to all investments or just real estate? The negative gearing changes only apply to investments in existing real estate from 2017 onwards.

      • “But seriously, do Labor’s CGT changes apply to all investments or just real estate?”

        All assets. You’ll be able to deduct investment losses from other investment income (e.g property losses from share dividend income) but that’s it until you sell. The CGT discount reduction will also apply to all assets.

      • “But seriously, do Labor’s CGT changes apply to all investments or just real estate?”

        All assets. You’ll be able to deduct investment losses from other investment income (e.g property losses from share dividends) but that’s it until you sell. The CGT discount reduction will also apply to all assets.

    • I would argue that foreign investment had not been good for Australis at all, especially when we’re looking at NIRP regime from foreign central banks. Too much global ‘saving’ looking for ANY kind of investment is distorting Australia’s economy.

    • Ummm what about the no CGT discount for Companies already! Would you seriously be investing in mining and biotech without the benefits of limited liability?

      • Hell, I wouldn’t invest in any company (unless I personally knew the management) without limited liability. Despite all their whinging, when you stop and think about it companies really do receive special treatment!

    • wasabinatorMEMBER

      What investment are you speaking of? Definitely not in infrastructure, nor in entrepreneurial enterprises. It’s just been property, mining, and other ideas based on flogging off everything we have to the highest offshore bidder. Anyone with sense knows that if they have a brilliant idea, they take it with them overseas.

    • What are you talking about, companies don’t get the CGT discount as it is it’s only on PPOR. A mining company incorporates through the general idea of limited liability, there’s a specific type, but I can remember.

  3. There is no need to reform Capital Gains Tax except to toss it out.

    If negative gearing is removed then Capital Gains will not be nearly so attractive.

    CGT stops capital mobility by taking cash from a seller who cannot then buy another property for the same price. Therefore CGT is an impediment to economic progress. CGT is very much like Stamp Duty only CGT is charged to the seller instead of the purchaser.

    If we stop immigration, or reduce it to a trickle, and stop negative gearing then we will stop most Capital Gain speculation.

    Stopping immigration will also make a lot of property fall to a price where it will be available for new enterprise. There are many other positive results under this scenario. We also need to remove Land Tax as it is a regressive tax that cannot be paid without a concomitant income from the property. Land Tax also reduces capital for business expansion and increases rents among other problems.

    • Income tax stops people spending – get rid of that !

      GST stops people buying – get rid of that.

      Fees and charges stop people using services – stop them too.

      Petrol levy stops people doing business – stop that.

      Do you think past square one ? Or merely think how can I reduce my commitments under the social contract while maximising my blood sucking as a vampire squid leaching off society.

      Go live in Liberia for a few weeks and then get back to me on what its like with minimal government.

      • Perhaps the Monaco model might be a better option than Liberia for Australians?!
        ” All officially residing in Monaco can benefit from zero personal income tax regime. (there’s only one exception: French nationals). To become a resident of Monaco you have to demonstrate that you’re wealthy…..without engaging in any gainful employment.”
        That last requirement must be where Malcolm Turnbull sees the future for Australia. Abundant wealth from property ownership, and so no need to work.

      • You seem to be arguing that all tax is good tax, Peter.

        All tax is not good tax.

        If you like paying tax you might like to volunteer to pay more. That option is open to everyone.

        With Stamp Duty a person’s money is taken when they buy real estate.

        With CGT a a person’s money is taken when they sell real estate.

        With SD they must save to pay before buying.

        With CGT they must save to pay before buying again after having sold.

      • “With CGT they must save to pay before buying again after having sold.”

        Given that PPOR’s are exempt from CGT, I find it hard to care too much about the poor investor who has been taxed on their profit and “must save to pay before buying again after having sold”.

        What about with income tax, where everyone has to work more before buying in the first place?

    • “CGT is very much like Stamp Duty only CGT is charged to the seller instead of the purchaser.”

      Of course it is. With the very minor exception that it’s a percentage of the profit that the seller has made on the investment rather than an upfront-cost. But other than that it’s very similar.

      • Yes AB, you are right.

        My point is:

        Not all taxes are good taxes.

        With Stamp Duty a person’s money is taken when they buy real estate.

        With CGT a a person’s money is taken when they sell real estate.

        With SD they must save to pay before buying.

        With CGT they must save to pay before buying again after having sold.

        Both CGT and SD prevent people from freely moving from one property to another without being penalized.

      • “Both CGT and SD prevent people from freely moving from one property to another without being penalized.”

        PPOR’s are exempt from CGT so it has no effect on people actually moving from one property to another (stamp duty does of course). You’ll struggle to convince me (and many others I suspect) that investors shouldn’t be asked to pay tax on their profit when the sell.

      • +1 @AB PPoR needs to be CGT exempt for this reason, whilst “investments” must be subject to full CGT (indexation is the only fair & reasonable way of accounting for this).

    • Terror Australis

      So you are saying that income earned from the sweat of one’s brow should be taxed at the marginal rate.
      BUT income earned from asset speculation shouldn’t be taxed at all?

      I think anybody in this country concerned about income inequality should have a BIG problem with that position.

      • No, Terror Australis. I am not saying that.

        I am saying that I am strongly in favour of easy and unrestricted mobility of capital for personal and business investment purposes and that taxpayers should not have to pay for poor governance that devalues currency and nominally increases asset values.

        An economy that allows for easy entrepreneurial activity creates higher levels of employment and higher economic activity. Concomitantly their must also be adequate social and environmental safeguards and the result will be optimized living standards.

      • @naturaltrust But there is absolutely nothing entrepreneurial about landlording. The tax treatment of this activity needs to reflect this.

      • “taxpayers should not have to pay…”

        What he means is that rich people should not have to pay.
        85% of Australia’s wealth is controlled by the richest 40% of the population therefore taxing capital gains profits at zero percent hugely benefits the elite at the expense of the plebs.

        btw still no rational answer as to why productive effort should be taxed at marginal rates but asset speculation not taxed at all.

    • The best way to deal with bad taxes, is to replace them with a good tax.

      The best tax is LVT.

      Good to see you endorse LVT.

      • I am not endorsing a Land Value Tax (LVT), Rusty Penny.

        There are a few more insidious and economically damaging taxes than a Land Value Tax. I have previously described the problems with LVT and you are welcome to read my previous posts.

  4. Finally I can a agree with MB on something. While you are very wrong on Negstive Gearing, you are right on this. A reversion to the old indexation system and averaging is the way to go, while leaving NG alone. Your own charts above support this.

    • Australia and New Zealand, almost exceptional to the way the rest of the World run their taxation systems, allows Negative Gearing on residential property speculation when everyone else doesn’t. I wonder why that is? Of course! We know better.
      As for Capital Gains ; where do I start! New Zealanders have mastered the art of disguising and avoiding Capital gains ( we just call it what it is here, Income). They have a well proven, ancient tactic used by all – they lie!
      I’d wager any Aussie property speculator worth their salt could ‘reclassify’ their properties as they are sold to avoid CG Tax, and there are other options available that might require a bit more effort. But you get the gist.

      • NZ and Aust are two of the only countries with imputation as well so maybe they do know better. That said, NZ barely taxes income at all and instead relies on a large and broad GST.

      • Imputation has two sides.
        (1) It encourages the distribution of profits to shareholders rather than investing in the business itself to expand and prosper. That can be viewed as good or bad depending on whether an investor prefers income or capital growth, so it’s debatable as to whether ‘we’ know better, but
        (2) It rightly dictates that income is only taxed, once.
        That’s the problem with negative gearing! Income isn’t taxed at all when it is offset against losses that are taken in anticipation of Capital gains. The tax revenue is lost to the Government system. That, in any light you shine on it, is….bad.

      • @janet “”Income isn’t taxed at all when it is offset against losses that are taken in anticipation of Capital gains”. Almost all IP investments should generate net tax revenue over their life cycle though, because CGT collected should exceed the sum total of investment period losses – if it doesn’t, then the investment would usually have been a failure. The issue with NG is more the deferral of tax rather than it’s outright avoidance. Ironically the big push against NG should have been 5-10 years ago when property price growth was flat, raising the prospect of CGT collections not covering or exceeding successive rental loss deductions.The other point is positively geared properties (or shares), income from which is included as assessable income at the taxpayer’s top marginal rate, therefore adding to the tax system.

  5. Tony V2 is just hilarious. I can’t stop laughing looking at the topic of the article. Everything was on table and now suddenly the table is empty. I think he is betting on the votes of the rorts but he doesn’t know for sure that the votes of the people on the other side are significantly more than the vote of rorts. I wonder what’s left on the table now? May be super? The most stupid thing to do would be to make super optional for low income earners. That would be the biggest rort of all.

  6. GunnamattaMEMBER


    it has come to this…

    In a land which has the worlds most expensive houses
    In a land which has the worlds most completely overpriced economy
    In a land which has the worlds most heavily privately indebted people
    In a land which has taxation system rorts like no other to push housing speculation (NG, CGT, Super, SMSF)
    In a land which has the most expensive land costs in the developed world

    …..we are going to have an election on real estate prices?

    Can Australian electors succeed where Canute failed?

    • “we are going to have an election on real estate prices?” Pretty much, and the policies of the parties on this issue will be the main factor determining my vote. Right now, I’m so irritated by Turnbull that I might even join a party campaigning against him. Two weeks ago, I would have voted for him.

    • Yep and I’m starting to see things the Lord Dudley way more and more, I’m tempted to vote liberal this election just to see them succeed with continuing the rorts. I want to see how big we can blow this bubble, I want to see how entitled people can get. I want to see it all turn to shit.

      I’m sick of older generations condescendingly tell me, oh just buy a small place and get onto the ladder, or stop spending your money on your hobbies, or housing is affordable just move to a suburb that isn’t on your preference list… Even when you point out the affordability problem all you get from most on the ladder already is crocodile tears.

      Let the Turkey’s vote for Christmas, let them vote for high house prices and let’s see what happens…

      • I’m seriously considering voting Liberal for the first time in my life too, and for the reasons you and LD mention.

    • Canute’s only mistake was that he wasn’t living in Adelaide. All he would have had to do was pick a Dodge tide (effect of Kangaroo Island) and: Voila!
      Of course, Dodge tides aren’t that common in Canberra, though dodgers are, of course, two a penny.

  7. Let us rewind a few months….

    …everything is on the table” … “nothing is ruled in or ruled out”


    What a wuss – he ran away at the first sign of trouble.

    • Weren’t you paying attention to Malcolm’s utterances?

      “The Budget will be the whitepaper. ”

      “Did I say that? Actually the Budget will just be a small-target Budget. What whitepaper? I don’t remember anyone working on any whitepaper”*

      *not a verbatim quote

      • Actually Scotty Morrison just came out regarding the budget and said “we don’t discuss under water matters”.

        Fair enough – at least they’re consistent.

    • The paper is there, still white as ever. Wouldn’t want to ruin the whiteness of the paper with any policy.

  8. Hey Leith, I think Turnbull was actually quoting from an editorial in the Oz in 2005, although he clearly agreed with what was being said. A longer extract from his 2005 tax paper…

    Combined with high marginal tax rates, or rates that are too high becoming effective too low in the income distribution causes many distortions in the tax system. The Australian recently editorialised.. our top tax threshold.. is far too low as a multiple of earnings. This in turn, distorts economic behaviour, sending honest taxpayers scurrying towards sheltering havens such as negative gearing, a capital gains tax regime that was halved in 2000, or the 30% company rate and skewing national investment away from wealth-creating pursuits, towards housing. The result- a property bubble (The Australian, 19/3/05: p.18).

    Hmmm. This is the Malcolm a lot of us thought (hoped?) we were getting, but sadly we’ve just got Abbott with a nicer smile.

  9. Interesting that The Conversation is now reporting that Turnbull has clarified his statement to mean that the government is merely not going to make the same change that the ALP is proposing but that it might make other changes. So perhaps indexation is back on the cards.

    • Please refer to the comment from the other Jason just below – if he gets so scared and flustered under the tiniest bit of pressure (a policy from an almost unelectable opponent) – imagine how he will lose his shit if anything “bad” actually happens (eg nominal house price declines + Craig James calls him on the phone). There will be FHOGx7, $9,000 chewers and $5,000bn bank bailout funds….

      Unfit to lead.

    • My thoughts too when I heard that. The weakness of Labor’s plan is the 25% is probably too excessive when you have something like 10-15+ years of compound inflation. Of course at this point I support something over nothing.

      Say the coalition did go for indexation and Labor their plan, it would slap a huuuuge Don’t Buy Now sign over every property market over the nation. The coalition way would just be more discreet than Labor’s more blunt tool.

  10. Turnbull is spooked. That newspoll that put them within 50-50 of Labor has rattled the party. Rather than engage in sensible discussion they’ve resorted to attack politics.

    • TailorTrashMEMBER

      Given the currents in the liberal heart land of the north shore about his stance on housing he should be worried …..a lot of long time liberal voters are muttering about voting for alternatives ……..they may be sitting on “valuable houses ” but they see their kids and their kids friends completely priced out while the entire pacific highway is lined on both sides with apartments their kids cannot afford with out going into ridiculous amounts of debt or the apartments are for sale to foreigners .
      Malcolm’s fixation on “investors ” rather than on addressing the provision of homes is not going down well at all …………..Now Bill, don’t loose your cool
      Stay On message ……it’s the first time people have listened ……don’t blow it !!!

      • Hate to be the pedant Trailor, but my wife once wrote me an elegant departure note which outlined, in quite some detail, my various failings.
        She signed off, “anyway have a good life you looser.”
        Kind of lost its impact…
        Thankfully she stayed btw.

      • TailorTrashMEMBER

        Thanks for that ……when I first went to school back in a simpler time I learned to write on a slate with a piece of chalk …….now the better part of a century later I have an IPad and I never learned to spell in between ………funny how you can look at a word that is misspelt and it looks fine until it’s pointed out to you ……but never too old to learn

      • TailorTrashMEMBER

        Oh …and to reinforce the point …..its Tailor ……..something to do with my love of Lowes

  11. Lay off guys, Tony Turnbull is considering all the considerations…that should give us all a lot of confidence,

  12. If the LNP do nothing and they win the next election – which is highly probable. I can’t see housing dropping in Syd, Melb, Bris.
    Reason being that these areas are not as susceptible to the mining GFC as say Moranbah (lol!) and Perth etc.
    The Chinese will just keep pouring money into Syd/Melb and the population Ponzi feeds these cities as well.
    So I don’t see a drop… sadly

    • “I can’t see housing dropping in Syd, Melb, Bris.”

      Nobody in the inner-city parts of Dublin could see prices dropping there either. But they did by around 50%.

      • ErmingtonPlumbing

        Sure,… but they are the Irish.
        There is a reason we have so many silly jokes about those little, potato loving, leprechauns.

      • “Yeah but did the Chinese lust after Dublin like they do for Sydney and Melbourne?”

        Chinese no, but plenty of wealthy European foreigners were buying in Dublin prior to the crash.

      • That jtepper2 is delusional, hasn’t he heard of Australian Exceptionalism? It’s different here.

      • “It’s different here.”

        Now that he has heard, in many different countries and markets.

        On a related note, I’d highly recommend “This time is different” if you’re looking for some good reading. http://www.reinhartandrogoff.com/

        Throughout history, rich and poor countries alike have been lending, borrowing, crashing — and recovering — their way through an extraordinary range of financial crises. Each time, the experts have chimed, ‘this time is different’, claiming that the old rules of valuation no longer apply and that the new situation bears little similarity to past disasters.

      • @AB re Tepper. It’s curious that 60 mins gave Tepper air time. “gob smacked” was my favourite line as auctioneer sold average house for 1.2 million to the winning Asian family – guess it is like winning when a country turns blind eye to illegal activity on national TV. Does anyone really believe the crowd were made up of legal potential buyers ( call me racist if you will but I don’t) As for Tepoer we need an international scapegoat to blame for causing the crash by pointing out the blindingly obvious – prices will fall by 50% – because housing in Oz is stupid – anyone but the wilfully ignorant or complicit can see that. Why else would 60 mins have him on – it’s not like anyone is allowed a dissenting view. Timing is everything & I reckon it has arrived.

  13. reusachtigeMEMBER

    Seriously, all youse on here are idiots if you think negative gearing will ever be touched. It’s sacred and it’s a major driver of prosperity in this nation. The only people who do not benefit from it are the gutless!

  14. “In despair over the state of affairs, Cicero set out for Greece on July 14, four months after Caesar’s assassination, but, criticized by his friend Atticus, abandoned his journey and returned to Rome on August 31.” – The Death of Cicero

    “In despair over the state of economic affairs, Turnbull set out for rational reform in late 2015, a few months after Abbott’s political assassination, but, criticized by his hard Right, abandoned his journey and returned to protecting the vested interests of the greedy citizens in 2016.” – The Death of Malcolm’s Morality

  15. Looks like PMT is going full-fear (or you could say full-retard). Which is what you have to do if you want to run a successful scare campaign. Will be interesting to see how the polls treat this.

  16. The really truly frightening thing is that some people don’t actually know what the tax regime is before they buy an IP.

    I had some in-laws who were looking to sell their IP and they didn’t realise the CGT discount existed. They wee looking at all sorts of rorts involving change of address and the like. “Just sell the bloody thing and pay your tax” I said. I explained the discount to them.

    BTW this is another reason why IPs are unoccupied- if the cap gains have been substantial, a couple will, for example, “break up” and one will “move into” the IP so that when they sell it it’s “owner occupier”.

    My in laws ended up selling the house and paying the tax.

    • In the same position as your in laws. I bought my place in 2011 in Sydney and it was meant to be my home but personal circumstances got in the way(moved to melbourne) so its been rented a month or 2 since the purchase date… I can still move in and live in it for a while … but it feels like just selling and paying tax is the right thing to do…

    • Guys! Are you nuts? JUST LIE !
      Everyone else does, so why miss out on the perks of the investment?
      No one, no one pays their CGT unless it’s so obvious even their lyng can’t get around it. (PS: A good tax accountant will give you a hand with your words and repeat Malcolm’s after me “I pay my fair share of tax “…..)

  17. Turnbull’s u-turn just demonstrates that democracy is as weak as the narcissists who chase its glory…

    Turnbull knows what he is saying and doing is rubbish and his policies are empty and ineffective. But doing the right thing puts him at risk in the polls.

    No cost is too dear to preserve himself in the top job, no lie too obvious, no policy too harmful, no dishonour too great, all that matters is the edifice of Prime Minister Turnbull must continue at any cost.

    How does this country produce such utter utter c*nts as it’s leaders, it reflects so badly on us all.

  18. “We will do so after we have considered all of the considerations — all of the matters”

    Sir Humphrey Applebee would be most proud.

  19. More great work from the Canberra press gallery…
    Turnbull admits housing is in a bubble and removing NG will crash the market.
    – any questions about what this means for homeowners who must be freaking out now that they’ve been told their wealth is bubble wealth?
    – or why we weren’t told this before? And what about the lie that housing reflected low rates and shortages?
    – or what about asking Turnbull how he thinks a policy of prolonging a bubble is supposed to play out? Note not in the polls or the back bench, but in the economy…
    This whole situation is bizarre

    • And what about the lie that housing reflected low rates and shortages?

      It is not a lie at all. Price reflects ALL factors. Low rates, shortages, credit policies, wealth of immigrants, expectations of rents and future capital gains, tax rates, alternative investments, etc.
      Why would you be so stupid as to deny any of these factors. Why be a shortage-denier?

  20. Just reaffirms my long held belief that the Federal government (of both political persuasions) will bankrupt the country to save the property market….and nothing is really going to get fixed until the IMF arrives (discreetly or publicly).

    It’s just like intersections, back burning, safety laws, ete…someone has to die until it gets fixed…its just the Australian mentality. Inertia will always outweigh preparation.

    • Agree, they will throw the kitchen sink at it, they have to. Housing will collapse or the currency will or both.

      I’m bearish now – starting to feel the fear.

  21. Right. They aren’t going to pop the bubble. They simply wont be left swimming in the worlds most vomitous pile of poverty-inducing cess since the black plague. Who the F would want that, seriously?

    They will keep it going until it goes fukushima-daichi (we all remember the long range video of the roof blowing right off, irradiating half that country and the North Pacific.)

    MB has done a commendable job warning one and all.

  22. Speculation is about fear and greed. I’ve been a housing bull for a long time now because of the policy settings – local/foreign speculation and monetary policy. The speculators have had absolute full policy support for a long time now, they are running ahead of a gale. But turn the heading just a little…

    Once this fear comes in, it is very hard to get out. Especially with the only productive economy we had packing its bags – mining is getting totally f..d.

    It’s about time to become a housing bear. Proud Crashnik.

  23. Mining BoganMEMBER

    Anecdote time!

    Something I’ve noticed happening again with my fellow bogans is contracts falling through due to finance. There is mass confusion. They just don’t understand banks refusing loans because danger.

    One in particular I’ve chipped a couple of times because he keeps on ranting about $350k not being much money. This chap reckons he’s going to pull it off the market…in Perth…and wait now. He just doesn’t see what is happening.

    I told him sell because Perth will be smashed. His response? “What, they’ll go up?”


    • And this is MegaBank that has an almost non-existent danger threshold because its taxpayer backed…

      The speculator boom papered over the mining collapse for a surprisingly long time, but the game is up now. Bogans are in a world of hurt, even talking about negative gearing reform is getting them frothing at the mouth.

      • “And this is MegaBank that has an almost non-existent danger threshold because its taxpayer backed…”

        I think people will be surprised just how quickly credit dries up if things starts going south.

      • something just occurred to me reading your comments aj and mb and correct me if i’m wrong.
        with increasing casualisation of the ‘professional’/’paraprofessional’/white collar/’creative’ workforce does that mean expectations have already been managed down in that cohort. and in the ‘mining bogan’ sector of the workforce changed situations (layoffs) are more devastating in the sense of non-comprehension.
        so i wonder..

      • Mining BoganMEMBER

        Haroldus, the reason the bogan is quite fun to hang out with is brc…oops…because it lives in the moment. There’s no worry about future or repercussions except in a vague Wayne’s World wobble. There’s not a lot of consideration of the big picture besides what that Grimshaw bloke says on ACA.

        They know things aren’t quite right but I’m hearing a lot of “our job will be safe”. There is a world of hurt coming for the unsuspecting.

  24. The PM unadvisedly made the comparison of himself and Barnaby as Thelma & Louise.
    (You think maybe one of minders could have mentioned that they drive off a cliff at the end of the story)

    Anyway, I’m trying to think of a more suitable movie parallel for our government.
    Best I can come up with is “Weekend at Bernies”.
    Central character is dead at the wheel but keeps getting dragged into one misadventure after another by those around him, hoping that nobody notices the flies and the stench of (moral) decay.

    • TailorTrashMEMBER

      I’ll go for Australia as a movie ……..”Grand Torino ” …….old Anglo ex car plant worker Aussies getting f&[email protected]?ed over by newly arrived Asian criminals in their midst taking over their neighbourhoods . ……….sorry but our version of the movie doesn’t have a Clint Eastwood to stand up for the poor and the dispossessed ( and lest I be called racist that includes disposessed Aussie born kids of Asian background of which a know quite a number ) . The politician that takes that role might get some votes …………

  25. I love the way he warned that no-one could start a company unless they have equity in their house. In other words, no-one born after 1985 should ever start a company.