Harness cash flow. Create wealth.

The Labor policy to end or reduce negative gearing on existing property by Jan 2020 will certainly create a mini rush to for investors to get properties they can write off all the depreciation and interest costs on.

Maybe their last chance. So expect a mini boom, and increase in price.

This will also be fulled by the predicted interest rate drop.

New properties will still be able to write off all their costs, despite the tax position of the investor.

The longer term implications of this change will be greater, and there will be unknown effects for sure.

Investors will have to rely on increasing the rent to cover the loss of he tax deduction for one.

Developers will see more demand from investors for new projects, and houses. However, there will be a lag before they can get supply to the market.

So I think there will be a reduction in the supply of housing in the short term, and a long term increase in rental from existing properties.

I don’t think there is a slow down in demand.

So prices will increase in the short term

Activity will slow down after Jan 2020

Bank shares will drop, the big 4 at least, as all they are really is a whole bunch of home loans.

There will be pressure on State and federal govs to increase the infrastructure spend to support the new housing that will come to take up he investor demand.

Also pressure on town planners to tears down existing homes on big blocks so the rebuild with new.

If Liberals win. We won’t have to worry about big changes. But how First Homeowners will use their 5% deposit guarantee.

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