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1.Market Observations, 2.Economic forecasts, 8.Was Sticky

1 Dec 2016 (AFR) – Low interest rates not negative gearing to blame for house prices

(1 December 2016, AFR, p26, by Philip Baker)

‘. . . In short, house prices have to go up all the time to ensure that negative gearing is a sensible strategy.For sure the net loss on a negatively geared investment can be used to reduce your total income, which may mean you receive a tax refund, but in the end the price of the house, or asset, has to go up. In Perth, however, house prices are falling. Two years ago the median house price in the capital city of Western Australia was $600,000 but according to BIS Shrapnel it’s going to fall to $535,000 over the next two years.’

Read more at AFR.com (might need AFR login access, or try: AFR.com/trial)

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