Comment of the Week goes to Observer

by AB01 Nov 2013

This week’s winning comment comes from ‘Observer’ and relates to Wednesday’s article on the property market debate between John Symond and Steve Keen (aka: ‘Mr Bubble).

In the debate, Symond argued that house price growth across Australia is continuing at sustainable levels, while Keen claimed a crash is imminent. Reader comments on the story were polarised, though most appeared to support Symond. Observer made some particularly articulate points – here’s what s/he had to say:

 Sooner or later Keen will be correct. A broken clock is correct twice a day.
However there can be no doubt that overseas investment is driving up prices in Sydney (in particular) and that investors are crowding out first home, buyers particularly since the NSW First Home Buyers Grant was limited to new dwellings only. This is coupled with ridiculously tight development controls and NIMBY attitudes to new development in established areas which is limiting the supply of new homes in the areas young people want to live.
Even at the periphery of Sydney, land prices are ridiculously high, driven by high infrastructure contributions to councils. Even then the supply is constrained by development controls and when land does come to the market there are many more buyers than blocks available, again driving up prices.
Negative gearing laws should be amended to restrict the setting off of losses against future profits on sale and not against other non-property income.
I do agree with Keen on one thing - the ability of SMSFs to gear property investments is a risky one and is already leading to some shonky selling practices a la Westpoint etc
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Thanks to everyone who contributed comments over the last seven days and keep an eye out next Friday to see if you're the author of Australian Broker's next top 'Comment of the Week'!

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