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Andrew Bell’s Market Wrap: Facts You Didn’t Know About Negative Gearing

By Chelsea Gates

Issue 10 |  May 9th |  Facts You Didn’t Know About Negative Gearing

Hi, Andrew Bell here with a real treat for you today as we have a look at one of the Gold Coast’s most unique and magnificent homes.

Today I am sharing with you some interesting numbers that I am sure you would not have heard of yet. These numbers relate specifically to this whole question about negative gearing. I will provide those as we look over this magnificent home which is most definitely a one-of-a-kind here on the Gold Coast. We are at 101 Commodore Drive, Paradise Waters which we have just listed for sale.

The home is in one of the Gold Coast’s most prestigious suburbs and is on over 1,129sqm with a wide 30m frontage to the main river with extensive water outlook. A 5-bedroom home including a self-contained au pair’s quarters, office, library, 8-person home theatre, a grand formal bar room, 6-bathrooms, a gourmet kitchen with double island benches, an enclosed sun-set entertaining area with BBQ and sink, and even pillarless basement garage parking for up to 7 cars. What makes this home truly one-of-a-kind is that it is the only property with a Council Approved waterfront helicopter landing pad on the Gold Coast. This is a one-off feature that provides an incredible lifestyle opportunity and value for the increasing number of people who now own private helicopters.

Most people who debate the pros and cons of negative gearing cannot factually quote any of the numbers and so often argue about whether negative gearing is favouring one group of people against another. Well, here are some interest numbers.

There are 9 million dwellings in Australia. 7.2 million are held by owner residents and 1.8 million are held by investors, so 20% of Australian households hold an investment property and 80% do not.

The top investor age groups are: 25% are aged between 55 and 64 years, 24% are aged between 45 and 54 years, 22% are aged between 35 and 44 years, and just 15% are aged under 34 years.

When it comes to investment property values in today’s terms, the break up is that 35% are worth between $250,000 and $500,000, 18% are worth less than $250,000, 18% are worth between $500,000 and $750,000, and just 6% are over $2 million.

Here is the real interesting piece. A massive 73% of all those with investment properties hold just one property. 17% hold two investment properties, 6% hold three investment properties, and just 4% of investors hold four or more investment properties.

Applying that to numbers of people that means: 1,309,000 people hold one investment property, 302,000 people hold two investment properties, 104,000 people hold three investment properties, and just 85,000 investors throughout the country hold four or more investment properties.

What is missed here is that without this small group of Australians investing in investment properties, we would not have the rental accommodation necessary to house the people who can’t afford real estate. Governments or us taxpayers will never be able to provide public housing and so there is an enormous dependence on the private sector to supply rental accommodation. I noticed in an advertisement in the current election a constant reference to negative gearing helping people own six or more properties when the truth is that the great majority of investors own just one, and it is a very small percentage of Australian’s who own six or more.

By taking away incentives for people to buy an investment property, this means there will be less investment properties purchased. I am one of the few people who were around when last time negative gearing was eliminated. Within 2-years, it had to be reinstated because investors stopped buying and that resulted in massive rental increases as there was fierce competition among renters for a very limited supply of property.

The argument has been that the taxpayer has been subsidizing property investors, but this is not the real story. The real story is that the taxpayer is subsidizing Australian tenants. If it wasn’t for negative gearing, there would be far fewer rental properties available and there would be significantly higher rents. This is the high risk of what will happen if negative gearing was eliminated. Sometimes you have to support one part of our community by incentivising another part and that is what negative gearing does.

Onto another topic and that has been the incredible activity in the marketplace. Last week was the most incredible week with 24 Contracts coming into our office in a 48-hour period, with our auctions last Thursday seeing a 64% success rate on the day with 14 of the 22 properties selling prior to or on auction day, and now a further 4 having sold since. There have been huge numbers at our open homes and the fundamental feedback we are getting from people is that they are disengaging from the whole political landscape. They believe all political parties are as bad as each other and they are fed up and plan to get on with life. Most are saying they are not reading anything about the election or watching anything on TV. I have never seen so many people completely fed up with politics.

By the way, all that incredible sales activity has come off the back of some remarkable tailored marketing that we are doing at present. We have found a sweet spot where we have uncovered buyers that most other companies have not connected with. Sales ranged from $200,000 odd through to $2.5 million.

Back to our property here at 101 Commodore Drive and I am sure as you wander through, you will be as amazed as I am in the quality and the finishes of this home. It truly is a one-off on the Gold Coast and, as I said, it has so many unique features that it truly does make it a one-of-a-kind home. Details of our marketing Agent, Robbie Graham0403 737 788 and he would be more than happy to answer any questions you might have in relation to the property.

That is all for this fortnight. I look forward to being back with you in 2-weeks’ time, at which stage we will have elected a new Government. With all our major distractions out of the road and the likely drop in interest rates, I think we will see a very busy real estate market as buyers are already telling us they believe the revised prices are now representing great value in the marketplace.

Stay safe and be kind to one another.

Kind regards,

Andrew Bell, OAM
Chief Executive Officer
The Ray White Surfers Paradise Group


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