Are the Negative Gearer’s really heading for the exits?

Late last month we reported on news of the Gillard Government considering the scaling back of Negative Gearing in Australia. (See Negative Gearing Rort added to Endangered Species List)

The Australian has today reported on a couple trying to sell an investment property after the uncertainly brought about from these discussions. Jo Studdert of the Australian writes :

Amy and Wes Rogers are 32-year-old parents of two young boys and the owners of four investment properties, one of which they are selling because they are frightened the government may abandon negative gearing on investment properties.

“What I’ve read and heard about new taxes on property investments and the abolition of negative gearing makes you question what you’re doing,” she [Amy] says. “We’re not sure what to do now. We’re worried about this negative gearing talk and if there are changes we’ll be in real trouble.”

We are surprised someone would be so open and frank that they are in real trouble. The article is accompanied by a photo of the family and the caption “Will, Wes, Lachie and Amy Rogers, whose investments have been compromised because of talk that negative gearing may end. ”

After endless news articles of real estate agents masquerading, undisclosed as first home buyers who have just brought, and all of which are now looking for investment properties, we are naturally cautious.

But negative gearing isn’t the only problem the Roger’s family has. They can’t sell their Oakdale property in Sydney’s southern outskirts either.

But the market is working against the Rogers. The house has been on the market for more than 180 days and, although there have been many viewers, there have been no real offers and the agent has already persuaded them to drop the price by $20,000 to $290,000.

“And now they want us to drop it by another $35,000,” she says.

Now, we first found out about the Negative Gearing discussions towards the end of April, but the Rogers have had their property on the market for six months now.

It does sounds more like a propaganda campaign in support of Negative Gearing, although it could easily have the opposite effect as we all know property investors have a lot in common with lemmings. What do you think?

» Changing gears may see family going backwards – The Australian, 14th May 2011.
» Talks test the water on negative gearing change – The Age, 21st April 2011.


  1. Exactly what about the working couples who can’t even afford “1” to you know… actually live in?

    The MSM seems to forget the forgotten.

    Also, in my mind everytime I hear of a property hoarder with 3-4 IP’s I can only think that there are 3-4 working people who have had their dream of a modest homeownership stolen from them so someone with more homes than they need can get an unfair taxpayer funded middle-class handout from the government.

  2. I hate to say this but you got to not over capitalize on your investments. Housing, stocks etc…….. To many Aussies out there have really stuck their necks out and now they are going to pay for it.

  3. Well all I can say is lets amend the Negative Gearing rules, and about time ! I understand and mostly accept the reasons for NG the beginning, but now the situation is different. Sure, have an IP and good luck to those people taking responsibility for their financial destiny and doing so I say. But like what AverageBloke says, being a hoarder of multiple properties I don’t feel is fair to much of the population trying to achieve a modest property of their own. And I don’t accept that rents will go up, just because these multiple property landlords may end up selling up. In fact I think it will work in favour of new/first homebuyers. And yes as you can tell, I am not a fan of my tax payer dollars directly or indirectly subsidising a tax break for induviduals, that many other western nations are bamboozled by

  4. Quote for the article sums up my thoughts on the REI: “”Investing in property is good fun, you know, but it’s hard work. Sometimes we wonder about just selling the lot and putting it in the bank.””

    For over ten years I”ve been looking at IP’s and I could NEVER get the numbers to add up. Even on positively geared properties, the return didn’t justify the risk.

    Owning properties is time consuming. Have expensive transaction cost. Have many costs often forgotten about….and above all, have tenants that are hard to monitor/evaluate. Any damages are costly, again time consuming and cause much stress and heartache….The returns just don’t cover the risk IMHO

  5. Future consideration for property purchase should be on rental yield first and foremost.
    Only with acquisitons at 50c in the dollar is there a hope of postivie yield.

    Capital Gains on property held now is falling each day, so the amount of stock up for sale will contiue to grow.
    Yeah for affordability.

    Wealth destruction is a bitch, but especially when government policy over the years has driven this eventual outcome.
    Owners are finding out how illiquid their wealth is. Caboolture region in Qld has over 2500 listings ATM, with only 4 sold last week. Oh my, is there some pain to come or what.

    Yoda say negative gearing failed strategy going forward.

  6. After a useless budget which had a leak about NG being watered down, don’t expect to see the taxpayer funded enrichment of landlords changed.

    Too many pollies and public servants are feeding at that trough. They will only lose when there are no more buyer mugs to keep the ponzi going and no more taxes to be ripped out of the productive parts of the middle class and some landlords investments sour.

  7. Oh noes! The realities of Capitalism and market mechanisms don’t work unless tax laws are skewed in our favour! We only did it for FUN! For FUN YOU HEAR!!!

  8. Down down down down we go, how far things will fall no one knows? but I can tell you one thing a NG property is bad news for at least the next 5 to 10 years.

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