The next federal election is expected to happen in the next few years—probably 2019—and with the changes in the government also comes changes in the Australian property markets, which are considered one of the key parts of the country’s economic stability.
Smart Property Investment’s Phil Tarrant and Momentum Media’s Aleks Vickovich and James Mitchell discuss how politics can affect the property investment landscape in the coming years:
What changes will come with a change in government?
James Mitchell: I think it'll be the tax policies from Labor. Negative gear, capital gains tax … You go on Labor's website [and] that's still their policy, you know? In 2016, when we had the election … that was a big thing that was on the table. That and the Royal Commission into banks.
It's a game of politics. The coalition had to come up with something to meet Labor's policy … So, they've done this little inquiry into the banks and hauled them in front of [the] camera every now and then to be accountable.
Aleks Vickovich: And a big tax on the banks as well—that's real … Labor's been saying that for 20 years, or 30 years, or even longer when they're in opposition though: It's very difficult to do away with negative gearing once you're in power.
Will negative gearing benefit property investors?
Phil Tarrant: I go down to Canberra for the budget every year and I was down there this year and, obviously, they thought there'd be something [that] would happen around that. And all they did was levy the banks on a big tax and remove some depreciation benefits that people get … They didn't really touch negative gearing.
The challenge you have in negative gearing is that I think a lot of people in the halls of Canberra don't really understand is that negative gearing isn't just for the rich.
How would you explain negative gearing to non-investors, then?
Phil Tarrant: It's not the wealthy, it's not the guys and girls sitting in the fancy offices here … It's ... good everyday Australians who are using property as a way to generate wealth and plan for a nice retirement.
Aleks Vickovich: I think it comes back to that discussion around a lack of understanding of economics. I mean it's very easy to paint it as people who own property portfolios are [like] Scrooge McDuck and they're hoarding this money. But, very often, who are those people? They're also the people who are running businesses and employing hundreds of people. So, there's [a] direct relationship between people having large property portfolios that they can live off [and economic growth] … And they invest that back into the business. They use that as an income source. That's where jobs come from. Jobs don't come from government. They come from people who negatively gear and own properties.
What’s your advice for both budding property investors and the seasoned ones?
Phil Tarrant: Ask the questions make sure you're getting the right advice.
Aleks Vickovich: Do your own research. Listen to people like the [ones in] Smart Property Investment Show. There are people that are on your side, but all too often, a lot of people aren't on your side.
Tune in to Aleks Vickovich and James Mitchell’s episode on The Smart Property Investment Show to know more about politics, power poverty, rebalancing mortgage books and interest rates, as well as the recent policies by major banks hurting the property market, current monetary policies, and the reasons why there is a disparity in rates.