Negative fears for negative gearing

Negative fears for negative gearing

Construction is a clear sign of a booming economy. Australia is currently putting a strong focus on growing the housing supply. Whilst the population grows and our emigration policy is looking at allowing up to 190,000 permanent migrants in this year alone, the government is pushing for more housing to accommodate the masses.

Sydney and Melbourne saw the repercussions of a tight housing market in 2015, as house prices soured uncontrollably, houses and units were selling for a sizable amount more than the asking price and it became a bidding frenzy at the auctions. This saw many first time buyers unable to raise the money needed to get onto the property ladder.

Whilst the government is promoting growth in the construction sector, they are also creating a little uncertainly with their position on whether there will be any changes to the negative gearing policy. Investors are holding their breath as they wait to hear the government’s stance on the topic. The government need to tread carefully to ensure they don’t scare investors in the market as 2016 has seen the property market hold strong, whilst Sydney and Melbourne growth has stabilised the weekend auctions are still seeing good selling statistics and a more balanced rate of growth.

If there is a change to the negative gearing policy the rental markets will be hit hard with the rental pool closing in again if investors are too scared to buy, this will have a ripple effect, rents will rise and those saving for a home will struggle to raise the deposit and the market will find itself going backwards.

Let’s hope the government don’t forget their end game when dealing with the negative gearing policy and confidence in the real estate market continues to grow.

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