Speculation the Real Threat to Housing Affordability
Higher interest rates are the surface issue
“The Great Australian Dream is being threatened by speculative forces rather than interest rates” said Prosper Australia spokesman Karl Fitzgerald today.
The Howard Government’s expansion of negative gearing in 1996 put the blow-torch on young people’s hopes. The halving of Capital Gains Tax in 1999 added fuel to the fire. This has seen housing prices double in just ten years.
Further, constant lobbying by the real estate sector sees an unending attack on State Land Taxes. State governments have consequently cut land taxes to abide by their campaign contributors.
“Are speculator’s rights to profit greater than future generations hope for a house of their own? Land is a unique asset that should not be speculated upon.”
“Trends in taxation policy nation-wide have given the market the ability to tee off on property speculation. Now institutional money is seeing the long-term returns from property as too good to pass up. Their entry into the property market threatens the essence of the Great Australian Dream.” Mr Fitzgerald said.
“At the heart of this argument is the constant propaganda that more housing investment is needed. Ask any agent how many vacant houses are in their suburb and they may sheepishly tell you ‘quite a few’.”
“With capital gains leaping ahead at 9 – 10% p.a and rentals returning barely 4%, why would a wealthy property investor care if 20 – 30% of his portfolio of housing stock is vacant?”
“Because these properties aren’t on the rental market, the real vacancy rate is much greater than reported” stated Mr Fitzgerald.
“Land tax is the mechanism to encourage property onto the market. Rental income must then be earned to make property investment economic. This added supply pushes down prices. It is the one tax the wealthy can’t avoid. Economists are unanimous in calling it the simplest, fairest and least distortive means of public revenue raising.”
Prosper Australia calls on the government to limit speculation in this unique asset by reforming Land Tax and reducing handouts to property investors via negative gearing & capital gains tax.