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20 Advantages Australian Property Investors Have; Housing vacancy rates don't include those held empty by speculators
Topic Started: 27 Aug 2013, 11:21 PM (556 Views)
Admin 27 Aug 2013, 11:21 PM Post #1
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20 Advantages Investors Have

by Karl Fitzgerald on August 27, 2013

Investors now constitute 36% of all housing loans, up from 12% in the 80's, 19% in 1993

First Home owners borrowed $80K on average in 1993. Today it is $292K

Baby Boomers own 47% of household wealth

14,000 people own more than 6 homes

Self Managed Super Funds – residential & commercial investment is now capital gains tax free for those in their pension phase, only a 10% cap gains tax for SMSF's in general

Self Managed Super Funds – it's now legal to borrow within the super entity!

60% of investor loans are interest only – facilitating speculation upon rising prices

Housing vacancy rates don't include those held empty by speculators. Our Speculative Vacancy reports find vacancy numbers at three times the REIV's figures, promoting a false sense of scarcity (90,000 empty homes) → higher rents

Land Tax is barely $400 on a $330,000 block. Most don't pay (under $250K threshold)

Land Tax thresholds: Over the last decade in Victoria, Land Tax thresholds (the value at which Land Taxes kick in) has increased from $85,000 (2001) to now $250,000. This sees a once affordable piece of land, now valued at $330,000, pay barely $400 in Land Tax. This encourages land speculation, delivering low risk, high profit returns for
investors. This is a national trend.

Housing tax exemptions are a $30 billion black hole in the budget → more taxes on productive activity

1.1 million investors have claimed $33.5bn in Negative Gearing deductions (since 93)

Only 8% of Negative Gearing loans are invested in new supply → crowding out FHO's

Stamp Duty hits the poor hardest – 15% of such revenues come from supposedly affordable housing areas (on the sprawl). SD also impedes the transfer of property

Land is fixed in supply. No matter how much investment, it will only push prices up

“Your taxes fund the infrastructure that makes investors' land more valuable. Cheers”

Land accounts for 70% of a property's value, but yet we call it a housing bubble

Council rates set on Capital Improved Valuations (CIV) or NAV see the family home paying 30% more than a neighbouring land banker (rates are set on the improvements, the house). Perverse incentives – why are we charged higher CIV rates for putting solar on our roof?

Foreign investor's ability to buy real estate has not led to lower prices – due to hoarding incentives

Location, location is a crucial real estate strategy but ignored in neo-classical economics.

Read more: http://www.prosper.org.au/2013/08/27/20-advantages-investors-have
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