People buying properties based on what capital gains they expect to get have always seemed strange to me, at some point the value must stop increasing, and then what?
It will also be interesting to see what effect the interest rules have on rents, I suspect long term it will mean less properties being bought as rentals, having an upwards pressure on rent costs.
Not only are they expecting endless capital gains, they are expecting to not be taxed on the income they receive when they realize said gains.
Property values have never stopped increasing. Temporarily they'll dip, but then they'll go right back up a few years later.
Usually not by enough to make them a worthwhile investment though.
The current rules allow tax deduction of interest for new builds, but not existing houses. It has pushed a lot of investors into buying new build rentals, which I think is a great middle ground that increases demand for new builds while reducing demand for other houses.
That's actually a great idea, especially since the supply of new build properties can be increased to meet demand.
If National intend to keep the rules this way, it actually sounds like a good policy.
They don't intend to keep it this way. Their stated policy is to reinstate full interest deductability for rental properties.
National isn't going to keep this policy. Their intent is to raise house prices.
People buying properties based on what capital gains they expect to get have always seemed strange to me, at some point the value must stop increasing, and then what?
That's the nature of investment. Whether it be shares or property or art or classic cars or whatever. You invest because you think you will get a return. Sometimes you win, sometimes you lose.
But also less houses being bought for rents mean more houses available for people to buy. Removing those people from the rentals pool ?
Assuming those people are in a position to buy, which a lot of people aren't.
But a lot are. More houses means competition hopefully and pushing house prices down. Not up
Because the property market is overcooked because it's oversaturated with speculators trying to rake in those sweet sweet tax free gains rather than doing something productive with their capital
Sounds like it's working then
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