Where there's smoke, there's burning questions!

The media love to fan a fire, and the tug-of-war on property lending has given them plenty of hot air to blow! I’ve been flooded with questions from members on many of these. Questions are good – without them you won’t get answers.

So here’s my view on some Property Club member’s questions that might also be on your mind.

“What do you think of the media, finance sector and the Government’s current press stories about the property bubble and investors driving up house prices and forcing first home buyers out of the market?”

Rod, (BM Roger Galway)

The Media: They’re a dangerously uneducated lot! They love to perform with sensational headlines but create an irresponsible beat up.

The Finance Sector: I believe this is a Rudd inspired monopoly in a feeding frenzy of massive margins. Just look at the profit reports!

The Government: APRA and its chairman, Wayne Byers are dangerously uneducated on historical property movements. Byers is enjoying the limelight and aiding the banks at the expense of investors who are trying to avoid the pension. Investors are helping new construction jobs and converting national short fall, leading to the next property boom spreading from Sydney and Melbourne, to around the nation.

Hockey is simply asleep at the wheel making no comment on Byers. This, in my opinion, is stupidity. If Hockey and Byers did have historical knowledge they would know that there is no Sydney property bubble.

The price rises of 2001- 2004 in Sydney were higher than the current uplift. Then there were no Chinese to blame. Then there was no reaction from APRA. Then we had nothing stopping the huge supply that came through in 04, 05 and 06. That helped to contain price growth. Now we have Byers, whose ignorance is halting the supply, guaranteeing a rise in prices going forward.

Do they really think that APRA’s lending squeeze will stop the flood of Chinese investors who do not borrow over here?

Thank you Mr Byers for driving up prices; It is the investors seeking new supply which helps put more properties on the market to contain prices, not driving up prices.

First Home Buyers; Why would you want people to be first home buyers? Everyone knows they are the worst hit when Stevens makes a grab for the limelight and pushes up interest rates. The modern day well educated first home buyer, in fact doesn’t. Hockey, Byers and Stevens WAKE UP!

We have educated these same young people to buy investment properties first instead of their own home. They know their own home will send them bankrupt (via Stevens) or at best keep them beholden to a bank for the first 20 years of their married life. The sensible thing is to be an investor and keep adding to the supply of properties coming into the market to help everyone.

Swan lost his job when he did nothing about Steven’s stupidity in rapidly raising rates (but he then had to admit he was wrong and quickly lower them). Will Hockey be next to lose his job, this time because of Byers?

“Is Negative Gearing and the current 50% capital gains tax discount safe or will the future Shorten lead Federal Government havoc with property investors and taxation rulings?”

Also from Rod, (BM Roger Galway)

While Byers is playing havoc with the economy, I don’t believe Shorten will do the same with negative gearing. If he does, the new rule will only apply to properties bought after it has passed the law (the Grandfathering clause).

So it’s highly unlikely to apply to all of my properties and your properties. I think it’s time we buy up and enjoy the tax deductions coming off our income before this happens - if it happens!

My personal opinion is that negative gearing should only apply to brand new properties, not older properties. This would direct investors to create new construction jobs and reduce the competition for existing houses. This would lessen price growth of existing stock.  A move towards more new stock in itself would bring more bananas into the store and help contain price rises of “bananas”. Can someone please tell Byers??!!

A fantastic set of questions, thanks Rod!

Kevin Young |Club Founder & Director

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