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Investors warned against ‘knee-jerk’ portfolio reaction
Despite the proposed reforms to negative gearing and CGT, a seasoned investor has warned consumers to fight fear and uncertainty while holding firm to their property strategies.
As the new financial year approaches, investors have been encouraged to remain firm in their portfolio management strategy rather than react impulsively to government policy changes.
Right Property Group managing director Victor Kumar said the market’s fear-based reaction to the federal government’s proposed tax changes could cause more damage than the reforms themselves, pushing rents higher nationally.
Kumar said that panic was clouding investors’ judgment across the country at a time when strategic thinking mattered most.
“People making this knee-jerk reaction is crazy,” Kumar said.
“It might not even see beyond two or three years, and it’s not even law yet.”
According to Kumar, investors often underestimated what long-term planning could achieve and overestimated the impact of political noise on their portfolios’ performance.
He said that with every major political shift since the 1990s, panicking around their portfolio planning had never been a winning strategy for investors.
While prospective property investors were waiting for less noise and more clarity, Kumar said that experienced investors were not fearful but were making the pivot to more strategic choices.
“The savvy investors were positioned anyway to pull the trigger on developing new supply via new homes and townhouses on their existing holdings.”
“They’re adjusting, they’re planning, and they’re positioning for the next decade, not the next headline or policy pivot.”
According to Kumar, it was vital that once investors had made a decision, they stuck to it and held themselves accountable.
He said that the more savvy investors had already begun repositioning their portfolios to target the next opportunity.
“We have shifted our investing strategy for the next six months to focus on properties with potential for multiple incomes, prioritising houses already built but less than 12 months ago, bringing forward subdivision and development opportunities.”
He said that any attempt to address the housing supply across the nation required policy settings that would attract new developments, not trigger a retreat from the market.
“This might include allowing homeowners to upgrade or subdivide their family home with tax incentives, which was a system once used in parts of the United States that effectively applied negative-gearing-style benefits to owner-occupiers.”
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