What has been in the news this month? There were some interesting articles in the Australian Financial Review recently. On Labor’s proposed changes to negative gearing, Robert Harley states that one real estate analyst, SQM, estimates that in the four years needed to return to balance, housing turnover would fall 17-20 per cent, and prices drop 4-15 per cent depending on whether the Reserve Bank cuts rates to compensate. In essence, investors would need a higher yield to compensate for the loss of negative gearing and the increased capital gains tax. Prices have to fall, or rents to rise, or a bit of both. In the short term, housing would become more affordable to buyers, though not to renters.
Articles in the Australian Financial Review:
Why I am negative on Labor’s negative gearing (24 June 2016) by Robert Harley
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