Why is property so expensive in Australia?

Channi770711 · 2012-10-14T08:08:31+02:00

Explore insights on the high property prices in Australia, discussing factors affecting accommodation costs and sharing personal experiences.

Channi770711 Member

Member since 25 September 2012

Channi770711Member14 October 2012 06:08:31

I was browsing through some property websites on the internet last night and couldn't understand why buying a home or renting is so expensive in Australia!聽 I've never seen anything like this before.聽 What are your answers and opinions?

Guestposter14 Guest

Guestposter14Guest16 October 2012 10:39:46

Hi, it has to do with how the tax laws are written here. I'm not an expert but there is something in the tax law here called 'Negative Gearing'. From what I understand-- and this may be an over simplification as I'm NOT an expert-- IF you can afford to pay the currently huge sum for a house, and then rent it out at a loss, then the government covers this loss through tax deductions. It's really weird and it seems like no matter how many more houses or apartments are built, the prices won't really go down unless the tax laws are changed

So... if you bought 10-20+ years ago when homes were cheap, and then your property increased in value (that's how they get the big money to afford a home today-- unless you're rich)-- you could buy additional homes using your equity (the value of your property) and then use the tax law to make various tax deductions.聽 If you're entering the market now and you don't have the same money as these 'established' people, its really tough to find something affordable.

There's an informative article on Wikipedia if you want a more general idea about the concept-- look up 'Negative Gearing (Australia)' or do a Google search for more info.