The yield on properties is generally pretty low in my experience , around 4 or 5% gross. Of course , the longer you hold the property , the better the yield but as an initial investment , they're not particularly attractive.
If property prices fell 30% then the yield would increase , possibly making them more attractive initially . Maybe that would stimulate the industry but I'm not so sure ? It looks like it didn't happen the last time they tried it.
Also , if property prices fell 30% , what would that do to ordinary home owners ? Some would be underwater straight away in terms of their finances. Lots of people rely on the capital growth in their homes in order to help finance their retirements or transition to aged care. I like to think of house payments as a bit of compulsory saving.
If houses were cheaper to buy , would people be disciplined enough to put the extra money away into super etc . Would investors be still interested in providing housing for the low income sector if the rewards were less ?
The more I think about it , a change to negative gearing would have to be part of a much bigger thing with regards to the property industry in order to be a success.
I wouldn't worry about being the shot down in flames , your post simply initiates a good discussion. :)
