Recently there has been a lot of political talk in relation to the Liberal and Labor election promises but none are more imposing than Labors plans to ax negative gearing and their attacks on the personal wealth of current PM Malcolm Turnbull.
I did laugh at the Labor and which attacked Malcolm Turnbull's plan to generate additional jobs in the Australian marketplace through a business tax cut.
“Turnbull has millions invested in funds which hold shares in dozens of big businesses that would benefit from the tax cuts. Why is former banker Malcolm Turnbull so keen to give big business a tax cut instead of properly funding our schools and hospitals? Who exactly is he looking after?”
In fairness, the Shorten bench is not on poverty street either. Parliamentary records show that many of the Labor frontbenchers are multi-millionaires courtesy of bulging property portfolios. So why is the opposition ramping up its attack on property investor millionaires and what does this mean to you as a property investor?
Well, the opposition leaders already hold substantial property portfolios and the axing of negative gearing has provisions for “grandfathering” for those already in the market. This means that the removal of negative gearing will only affect new investors.
Therefore, this will reduce the flow of new investors into the market causing two major effects in the Australian property market. Firstly, squeezing new investors out of the market will diminish the demand for new developments. The current market climate has already seen several large builders across Australia shelve or cancel their developments coupled with the current population growth forecasts and we can clearly see supply is not keeping up with the demand.
Secondly, with fewer investors and subsequently less available rental properties, the demand for rental properties will increase driving up the price of rents, which we are already beginning to see on the Gold Coast and Sunshine Coasts of Queensland.
However, this is not bad news for those of us who have grown or even just started developing our portfolios. With these proposed changes we can expect, not only increased rental returns, but as the supply drains from the market increased property prices. You know my banana story about supply and demand!
I must stress though, if you have not started building your portfolio - you have not missed the boat but now is the time to be taking action. I urge you to speak to your Property Mentor today and reap the rewards in the future. Or email bananas@propertyclub.com.au for us to get in contact with you!
Kevin Young
Founder
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