Despite negative gearing being used by fewer than 1.06 million Australians (4.1 per cent of the population) in the latest available data, it is a hotly debated issue, with many people at odds with the government. Both parties consider themselves political Kryptonists.
One of the main battlegrounds in the negative gearing debate over the past seven years has been the suicide of current Prime Minister Anthony Albanese.Appearing on Channel 9 today’s show In November 2016, the then Leader of the Opposition said of the impact of negative gearing and capital gains tax discounts:
“We are at risk of becoming a society where some people can buy their sixth, seventh or eighth home, but those who are entering the market to buy their first home cannot afford to buy at all. I’m exposed.”
Looking at ATO data, 1% of taxpayers own almost a quarter of investment properties nationwide. ATO statistics covering the period up to the end of June 2021 reveal that there are approximately 20,000 individual property investors who own six or more investment properties. Note that this figure does not include investment properties held through various trusts and corporate structures.
Assuming very conservatively that these individuals own just six properties each, and no more, this group, representing 0.07 percent of the population, would own assets representing just under 5 percent of the total rental inventory. You will own the . In a snapshot taken in June 2021, his 41.4% of real estate investors in this group were in total negative gear.
As of June 2021, the average interest rate paid on outstanding investor mortgage loans was 3.22%. According to the latest data from the Reserve Bank, the figure for this measure currently stands at 5.82%, with interest costs up 80.7% compared to just under two-and-a-half years ago. Therefore, the number of negatively geared real estate investors is likely to increase significantly in this financial year’s data.
back to the future
The Prime Minister now has a very different perspective on negative gearing.
At the second leadership debate in the run-up to the 2022 election, Mr Albanese triumphantly declared that negative gearing was a good thing.
This remains the Albanon Government’s policy stance to this day, despite increasing pressure within the Federal Labor Party for negative gearing reform.
But who was right about the impact of negative gearing and capital gains tax cuts: Opposition Leader Anthony Albanese, who passionately called for reform, or Prime Minister Anthony Albanese, who supports both policies?
To get a quantitative perspective on this issue, we’ll look at some metrics that compare the challenges faced by homebuyers in November 2016. At the time Albanese argued, many first-time home buyers simply couldn’t get into the market. – And today.
The repayment burden is
Based on the benchmark 3-year fixed mortgage rate (typically the lowest of the benchmark rates on most long-term schedules), the median home price in the metropolitan area with a 30-year mortgage as of November 2016 The repayment amount was $26,876 per year, or $35.9 per year. Cents of national median household income.
Based on these same settings, your repayments in 2023 would be $50,154 per year, or 52 percent of the national median household income.
Time to save your deposit
Data from the ANZ-CoreLogic Home Affordability Report shows that in 2016, at a national level, it took the median household approximately 8.7 years to save a 20% down payment on a median-priced home.
It takes approximately 9.3 years to complete a similar task in the capital city and 7.3 years in the rural areas.
Fast forward to 2023, and it will take 9.8 years to save up a savings at the national average level, 9.6 years in metropolitan areas and 9.7 years in rural areas.
It’s worth noting that these numbers are from March, before real estate values rose significantly in the following months.
However, going back to 2001, when the ANZ-CoreLogic data set for this metric was launched, the time taken to save deposits across all metrics evaluated has decreased significantly.
Change in urgency
In what some are calling the worst rental crisis in living memory, the urgency with which first-time homebuyers want to buy a home has also changed significantly.
When Albanese appeared today In November 2016, the national rental vacancy rate was a very healthy 2.6%, one of the highest in SQM Research’s 18-year history.
Meanwhile, asking rents at a national level increased by just 1.31% over the previous 12 months, reflecting the strong supply of rental properties overall.
Today, the situation is almost exactly the opposite.
The national rental vacancy rate is 1%, and multiple real estate providers say this is the lowest sustained vacancy rate in the history of their data sets.
Asking rents for all homes nationwide have increased by 9.2 per cent in the past 12 months, according to SQM research, and by 15.2 per cent in the metropolitan area.
These difficult conditions mean that even those with full-time jobs are unable to access rental accommodation, with 1,600 Australians becoming homeless each month, and in some regions fleeing extremely difficult rental conditions. There is a sense of despair in purchasing real estate.
According to data from research firm Digital Finance Analytics, the number of households planning to buy a rental home has increased by 14.7% compared to the same indicator in 2016.
In nominal terms, this means that at any given time, over 58,000 renter households are planning to buy property, compared to the same proportion of renters planning to buy as in 2016. Masu.
This may not seem like a big deal, but in a housing market where fewer than 480,000 properties sold in the past 12 months, this is a significant increase in total demand.
Tarric Brooker is a freelance journalist and social commentator. @AvidCommentator