Landlord investors in australia are currently the beneficiaries of a favourable tax system, an expert has noted.
Writing for the Sydney Morning Herald, economics editor for The Age Peter Martin said the rise of negative gearing has led to a boom in prices, which is good news for those investing on a buy-to-let basis. One reason is that less affordable homes mean more people will rent instead, ensuring a large market. Another is that rising prices mean even those using negative gearing to invest can still make a return when they eventually sell on their property asset or assets.
He noted that the number of Australians aged between their mid 20s and mid 30s who own their homes dropped from 52 per cent at the turn of the century to 47 per cent in the 2011 census, while over the same period the proportion those aged in their 30s and 40s who were homeowners dropped from 70 per cent to 64 per cent.
Mr Martin suggested these figures indicated the 'Australian dream' of homeownership had been replaced with the notion of 'getting ahead', with the latter meaning some would benefit from investment while others were denied the chance to buy homes.
This situation has its opponents, he noted, with those seeking change including Liberal MP for Bennelong, John Alexander. He has proposed limiting the amount of tax relief that can be deducted from wages, which currently runs at 100 per cent. If the governing coalition were to accept this idea, it could mean becoming a landlord is a little less of a surefire bet. However, Mr Alexander was recently removed from the committee he chaired that proposed the change and, as Mr Martin noted, treasurer Scott Morrison has publicly backed those investing in property portfolios.
Landlords will benefit from higher prices and would-be buyers from lower ones, but the latest Essential Report poll on prices shows an even split in public opinion, with 34 per cent wanting them to fall and 32 per cent wishing to see them rise.