Back to Negative Gearing, page-38

  1. 5,532 Posts.
    “New housing won't help as investors do not want to purchase new builds in areas that are not where the renters want to live”

    When the level of demand from renters, in areas where they want to live, cause rents to rise to levels where it generates a good positive cashflow relative to the investment/capital value, will investors be enticed to invest in new builds in those locations? Will investors buy up large blocks or amalgamate several blocks with old detach houses on them, knock them down and build new low, medium and higher density dwellings (that can be negatively geared) on those sites?

    This is what we talk about when we talk about improving supply response. Under the current system, a lot of speculators/investors buy up establish properties on large lots and use negative gearing to sit on them, reducing the efficiency of supply side response to rising housing demand.
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