Will the budget affect investment property prices?
Like every federal budget we have ended up with a few winners and a few losers but our main interest is will the budget affect investment property prices?
Mr Turnbull in Canberra
Tuesday night did not really give us any surprises as nearly all measures announced had been flagged in the previous few weeks. We knew there will not be any changes to capital gains tax or negative gearing while we still have the Turnbull Government. We have a few commentators who do believe that the crackdown on superannuation tax concessions for the rich, coupled with a budget day cut to interest rates, could increase the flow of funds into negatively geared investment property.
On the other hand, with only the top 4% of earners affected by the caps now placed on superannuation, in the unlikely event that they do decide to park their ‘extra’ funds into negatively geared investment property, it is still unlikely that this would have much of an effect on the Australian property market. With all the arguments on the topic of negative gearing we’ve been hearing pre budget, with more to come as we lead up to the election, we should all now be aware that negative gearing is a general investment strategy which just happens to work for investment in property as well as all other investment assets.
We may see some of the 4% of high earners look for some tax relief in negative gearing through property, but it is highly unlikely that this will generally affect investment property pricing.
Of course, another group to ‘miss out’ on the budget were first time property buyers. Had we seen some greater incentives on assistance for this group, then we may have seen small differences at the entry level of the property market. However, again the first home buyer has been ignored so no changes there.
Two links here for those interested in further media comment: http://goo.gl/9aWnlW and
