What is the answer to affordable home ownership?
Here in Australia the tax incentive called negative gearing introduced during Paul Keating’s reign – to make rents cheaper has not really made rents cheaper and has caused residential property to be out of reach for young people.
It is a divisive issue as ‘investment’ buyers get a tax break and so outbid a family who wish to live in the home. Property in Melbourne, Sydney is now at insane levels……the prices of homes is an obsession…..
The USA seems to be more family friendly when I see what good prices older homes can be bought for. It seems to be an endless argument – is residential property an investment or a place to survive and wash, sleep and eat. The CBD of Melbourne has only just exposed all the empty high rise apartments that sit there owned by foreigners….
Shouldn’t home ownership be encouraged…
It would be great if they were the last thing on the minds of Australian’s instead of what we have now.
ANSWER: Politicians consistently screw up everything. Bill Clinton cut all the chains off the bankers and then signed off on what led to the housing bubble burst in 2007.
WHAT is causing the problems? All of this insanity is created by DEBT & TAXES. Governments have grown way too big and consume way too much as a proportion of GDP. They keep trying to pretend they are helping, but can never get anything right because they get in the way. Raise taxes on the “rich” and they will direct money to the least taxed area. As government debt grows, it competes for money from the private sector. This raises the cost of capital for small business and then decisions are made, NOT because of the best return, but (1) to get the best return AFTER taxes, and (2) to park money in assets off the grid.
If we eliminate income taxes and public debt, capital will gravitate to the best return and that means greater economic expansion and more jobs for the youth. Under the present system, capital is being herded into areas like real estate, which is the LEAST productive center for money as it provides an economic return from business rather than capital appreciation from inflation, which is really a hedge against the cost of government.
Property should be a sanctuary for people. Property should not be TAXED at all, for you should be able to retire and stay in the home you had for your whole life. People are forced to sell their homes because taxes are driving them out. More people in the USA flee the northern states and head to Florida or the south because taxes are generally 50% of those in the north. Capital migrates to real estate to PARK for the same reasons.
This type of political manipulation of the tax code is very detrimental to the broader economic trend that impacts everyone regardless of class status. We NEVER look at the system as a whole. It is always playing with one ball on the pool table with no concept that there are other balls that may be influenced by hitting just one.
We are all connected. Capital would not rush into housing (outside of apartments for rental income and office buildings) if there was no income tax. The capital would actually “invest” for the first time because it made economic sense and created jobs. Additionally, governments also deprive the middle and lower classes of their right to invest by creating mandatory pension contributions and then stuffing them with government debt, whereby the “rich” make money from investment — not wages.
When I tried to help take the U.S. Social Security and turn it into a wealth fund that was invested, the Dow was 1,000. All that money taken from people for their entire lives is stuffed in government bonds and the whole fund goes negative in 2017. We just cannot afford career politicians any longer.