Wednesday, 10 May 2017

Silver bullets needed to slay property market blood-suckers

Extract from ABC News


Contrary to the Treasurer's belief, Australia's housing problem is severe, decades in the making, and does require a silver bullet for its long-term solution.
You see, when a vampire is your problem, a silver bullet is your best solution.
Who is the vampire?



Property investors, real estate agents, developers and banks — all those who feast on the blood of young (and not so young) Australians forced into a lifetime of debt servitude to clamber onto the property ladder.
What is the silver bullet?
Removing or limiting negative gearing would drive a stake through the heart of many property investor strategies that rely on dangerous levels of debt, borrowed on the back of price rises in their existing houses, to purchase yet more.
With no interest-payment deductions, these investors simply could not afford to sustain as much debt, and therefore buy as many properties or pay as much for them.
A reduction in the capital gains tax discount would not be as devastatingly potent, but would cut or eliminate the tax avoidance aim that motivates many high-income property investors.
The only problem now is that the vampires have become so numerous that they have consumed the host, become the host.
A silver bullet now could be perceived as killing the victims too — through the job losses and economic chaos of a potential housing crash.
But inaction, or inadequate action, now will be as surely fatal as a quick shot to the heart, with continued house-price increases strangling the life out of the economy until the vampires finally run out of hosts to prey on.

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