Since about , owner-occupation has been sliding. The latest figures themselves some years old put it at 66 per cent. Among those aged 35 to 44, it has fallen to 63 per cent. Over that time the cost of buying a home has shot up from two to three years' household after-tax income to three to four years' income.
What appeared to set things off was a decision by prime minister John Howard in to halve the headline rate of capital gains tax. Not that the committee he asked to investigate the idea recognised the possibility at the time. The Ralph Review recommended that half , rather than all, of each capital gain be taxed, rather than the portion above inflation as had been the case since capital gains were taxed.
The rationale was that this would "encourage a greater level of investment, particularly in innovative, high-growth companies". The review was right about the change encouraging investment, but wrong about the sort of investment.
Rather than buy shares in innovative companies, Australians bought rental properties like they never had before. If they bid enough, they could borrow enough to negatively gear; to make sure their interest charges exceeded their income from rent, giving them annual losses they could offset against wages that would otherwise be taxed at high rates. There was nothing new about negative gearing.
It had been permitted from the beginning. What was new was the opportunity to later sell the property at a profit, knowing only half of the profit would be taxed.
Investors could offset all of their losses and be taxed only half their eventual gain. Pretty soon, more than a third of the money lent for housing each month went to landlords. For several dizzying months during it was 45 per cent. First home buyers struggled to compete. In , then treasurer Scott Morrison raised the prospect of winding things back, saying negative gearing had led to " excesses ".
Labor went to two elections promising to do just that and the Coalition came out in support of the practice in public. Behind the scenes , the Australian Prudential Regulation Authority was using its power over lenders to force lending to landlords down, getting it down ahead of COVID to 27 per cent of new housing loans.
But that's far from the whole story. There are other more deep-seated reasons why house prices are climbing, and they too have little to do with demand for accommodation. Prices took off again from about , shifting up from three to four years' household income to between four and five years.
That time it was Australians getting richer after years of mining booms and being able to borrow more cheaply. Thousands of tourism operators are in town trying to figure out how to increase their sales. Then you decide to look into what you can get in Australia. You do the math. The problem is this: A lot of us will never see Australia. I love this sunburnt country. What do you think? Is Australian accommodation completely overpriced? Share this:. Pin It. Where were you when you had the worst hangover of your life?
Welcome to Berlin: The land of beer, bratwurst and bizarreness by Anna Taylor. Related Posts. Tourism operators making the most of high demand, bumping up their prices for December and January.
According to wotif. Anything left will be pricey as holiday operators hike their prices amid unprecedented demand. In the tourist towns of Coffs Harbour and Ulladulla, people can expect to pay around 50 per cent more for a three-and-a-half-star holiday.
There are some destinations that are yet to book out and while they may not seem like the obvious choice, they could prove to be a more affordable option for Aussies looking to get away over summer. The other tip for saving on holiday accommodation costs is to travel outside the New Year bubble with lower prices and more availability in late January and February.
0コメント