We’ve already explained what negative gearing is and how it works in a previous post. It’s a significant topic for Australians right now, particularly Australians interested in buying (or continuing to profit from) property.
The increasing difficulty of entering the property market is already a concern for prospective homeowners, so it makes sense that something with such heavy implications for it is being watched so closely. People are keen to get a foot in the door when it comes to property, and changes to the tax laws that allow negative gearing to work could shake things up.
Rental rates
For the first time since they began tracking rental levels in 1996, Core Logic RPData has tracked a decline in the growth of weekly rental rates across the country.
Growth declined by 0.2% over the year leading up to March 2016. Usually, this happens due to increased house supply.
But if limits were imposed on negative gearing, experts speculate that rental rates would rise. As it stands, negative gearing provides an incentive for investment property buyers to purchase homes and rent them out. This creates options for people seeking rental arrangements.
Dwelling completions and approvals
Although the rate of building (or dwelling) completions is still higher than ever, the rate of growth is beginning to decline. The Northern Territory is the only state to see a flat decline in completions.
New South Wales and Victoria make up a full half of all completions, although Tasmania and Western Australia’s completion rates have risen the most since 2014.
Dwelling completions and approvals are a great indicator of future development activity, an important factor for both current and prospective homeowners to keep track of.
Investing
Entering the property market is still difficult in Australia under current conditions. There is good news however the average loan continues to fall, and is at its lowest since March 2015.
Investor lending is down significantly. Over the past year, lending to investors lowered by 13% and is at its lowest since April 2015.
If there are any changes to negative gearing in the form of limits or restrictions, they will likely result in fewer investors and fewer investments.
Mortgage House
At Mortgage House, we’re no strangers to the homeowner’s journey. It’s a long (but rewarding) one.
But don’t worry, we can help with that.
If you’re thinking of buying a home, you can contact us for advice about the best options for you when it comes to your mortgage. The cost of your mortgage can drastically affect your financial planning, so it pays to speak to the experts about it.
Click here to speak to us!
