Saturday, 28 May 2016

90,000 vacant homes in a housing crisis - Sydney's negative gearing lunacy

How completely, utterly, stupendously ridiculous. A new study has estimated there are 90,000 vacant homes in Sydney, whilst we have some of the most expensive and unaffordable housing in the world. Negative gearing pays the 10% of landlords who do so, to leave the property vacant. With the other 90% of taxpayers paying for their loss. It's absolute tax lunacy!

Well now things are in a pickle aren't they. What happens if a gov comes along and completely kills negative gearing? Suddenly there's 90,000 available properties to rent as the landlord then has no choice but to rent them to get a return on it. Rents will fall with a huge amount of new housing stock to chose from.

Or the Landlord may decide he has to sell it rather than deal with the rent return. Suddenly there's a whole bunch of new properties on the market. House prices will fall.

Housing isn't meant to be for speculative investment funded by the taxpayer in a distorted market. Housing is to provide shelter for the population, not lining the pockets of the rich.

No wonder Labor is treading carefully in reducing negative gearing rather than an all out cancellation of it. Such a sudden end, with such a bent market, would surely lead to a sudden and steep housing crash. Probably the best option to fix this fuck up is a slow deflation of the bubble over time rather than a big bang. 
Sydney's housing affordability crisis is being artificially inflated by up to 90,000 properties standing empty in some of the city's most desirable suburbs, experts say. 

Vacant properties were among the "perverse outcomes" of tax incentives that encouraged some investors to favour capital growth over rental returns, according to the analysis by the UNSW's City Futures Research Centre. 

"Leaving housing empty is both profitable and subsidised by government," researchers Bill Randolph and Laurence Troy said. "This is taxation lunacy and a national scandal." 

According to 2011 census, in Sydney's "emptiest" neighbourhood of the CBD, Haymarket and The Rocks, one in seven dwellings was vacant. 

Close behind were Manly-Fairlight, Potts Point-Woolloomooloo, Darlinghurst and Neutral Bay - Kirribilli, which all had vacancy levels above 13 per cent. These neighbourhoods, together with central Sydney, account for nearly 7200 empty homes. 

The analysis of the 90,000 unoccupied dwellings across metropolitan Sydney compared the number of empty homes in a suburb against the rate of return investors made by renting out a property. 

It found that properties in neighbourhoods with lower rental yields and higher expected capital gains were more likely to be unoccupied. 

Gordon-Killara on the north shore had the highest share of vacant apartments, with more than one in six unoccupied on Census night. 

By contrast, only one in 42 dwellings (2.4 per cent) in Green Valley-Cecil Hills, in Sydney's west, was unoccupied. 

The results suggested property investors in some of Sydney's most sought-after areas were focusing on growing the value of their properties, with losses offset by tax incentives such as negative gearing and capital gains concessions. 

This could leave investors indifferent to whether the dwellings were occupied, Dr Troy and Professor Randolph said. 

"If you choose to accept that there is a housing shortage in Sydney, then the sheer scale and location of these figures strongly suggest that this is an artificially produced scarcity," they said. Sydney Morning Herald