Housing affordability continues to make headlines with hints that the capital gains tax laws may be tightened. The Financial Review reported that Liberal politician John Alexander had confirmed plans were being made to change the laws in this area, but this was rebutted by Malcolm Turnbull. Alexander is then reported to have said they are “making plans to make plans” to change the laws. Sounds like Yes Minister.
As I have said repeatedly it is impossible to stop the housing boom in an environment where interest rates are dropping, and many people do not trust either shares or superannuation.
The situation is not helped by a recent article In a Brisbane paper headed “Nice earners, no sweat” in which it claimed that some Brisbane houses were gaining $670 a day which was “double most workers pay!”
It reminded me of the person who once asked me if I could arrange for them to invest in some of those managed funds that “are doing 36% a year”. They did not understand the difference between “doing” and “done”. If you have a bank deposit you could say it is “doing 2%” but growth assets do not work like that. Capital gains are historic – they have happened – and the fact that any managed fund goes up 36% in one year is a warning signal that it could go down the next year.
Property and shares are capital growth assets – this means if there is a chance of capital gain there is a chance of capital loss.