overwhelming support to axe negative gearing, page-168

Acorn,

I dont think I'm contradicting myself at all.

Maybe i just don't explain myself very well. the NRAS is set up to help alleviate rental affordability for a certain group of renters who seem to have temporarily been hit hard by an increase in rents in certain place, Perth is an example.

Despite the all talk about Neg Gearing being the reason or the benefit it was put in place to do it had not done its job to the required level..

Now the shortage of affordable rentals could be blamed on a number of reasons..a few of them are; stronger than average pop growth income growth for certain industry sectors, inadequate building commencements/completion, slow release of land for subdivision.

Certain groups of the population who would have otherwise been able to comfortably afford a rental property (they had in the past prior to the resource investment boom and resultant strong pop growth (interstate, 457's, skilled migration) were outbid by higher income bracket renters and hence the group that was outbid increasingly found it hard to find appropriate rentals at the price they could afford. This resulted in them increasingly seek government housing assistance together with existing/increasing low income earners and no-income earners. This emerging demand from this group had put alot of pressure on non-for-profits and govt emergency accommodation..since govt housing is slower to react to demand..the govt need to do something about it otherwise they faced a large increase in actually homelessness. NRAS was born..it is meant to take the demand for emergency and govt housing from lower middle to middle income households who had been temporarily priced out of the market.

IT (NRAS) was NOT meant to provide accommodation for no-income to low income households..these households will generally always require govt housing. NRAS is a subsidy scheme/program not a Govt housing program. Taking the demand from lower to middle income demand mean less pressure on Govt housing..thats was the idea i believe.

"I reckon that FHB's will be priced out of downtown New York, London and Paris."

Well you wont find mean agueing against that...unless i see NY, LDN, Paris start building numerous getto style blocks..but i bet you there are still FHB who have still bought in the locations you mentioned. There are certain locations that will always be out of reach of the 'average' FHB..how many FHB you hear of looking to get into Vaucluse or Mosman, this i'm fully aware of thats, why i mentioned some of the extremes like tax havens (e.g Monaco) etc...

"The returns ( rental ) have been low because they have been offset by the capital gain. I'm not sure which particular " other forms of property investment " you're referring to . If it's commercial you might find that the capital gain isn't there so therefore the rental income has to be greater proportionally."

Well if you would like to ask someone who owns a 'real' commercial property who had bought in Perth say prior to 2006 they will tell you that they have made a motza in capital gains. They will also tell you that they made a motza in rental income as well..~7.0%+ pa, what has residential been averaging?

lexcorp, thanks for the quick simple lesson on return mathematics.