Friday, October 19, 2007

My thoughts on tax cuts and investing

For a while now, I've been reading that tax cuts are precursors for interest rate rises. Why this is good or bad for property investors is hard to justify in my opinion, but most people think its a negative. For one, if people have access to more cash via tax cuts, does that mean that perhaps rental increases are also in order, as affordability increases? Does it perhaps mean that the long awaited rental equalisation is on its way? One way or another, what is for certain is that tax cuts will impact on the economy and hence the way property creates income. What I am seeing as a greater issue facing property investors, is the major parties' upcoming "policies" to counter the affordability issue. Housing, or at least govy housing, is counter productive for prices and for suburbs. It keeps prices below average, is primarily utilised by people who fall into the low socio economic status group and, perhaps more importantly, adds to the every crowding suburban corridor. What I would like to see is more concessions for first home owners and the "spreading out" of people to utilise our country areas. For example, no stamp duty (is this already the case?), increasing the first home owners grant AND, educating the masses about IPs...people simply are just kept in the dark regarding "real" housing affordability, are some of the solutions. My two cents....

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