Houses should not be mothballed
I'M NOT a commentator but...
MY edition of the Oxford Dictionary defines the noun form of "house” in eight subcategories.
The first defines a house as: "a building made for people (usually one family) to live in”.
And so, does it not seem odd that anyone should embark upon an investment strategy that involves buying up houses and making them unavailable for anyone to live in?
What is this madness of which I speak?
Well, a report I came across this week suggests that there are some in the Australian property investment market who are doing just that.
They buy up housing stock, not to derive a rental income from but rather, to hold and hopefully make a profit on resale at a later point.
Now, people are entitled to invest their hard-earned cash whichever way they wish.
This is a democracy, after all.
But surely, at a time when we have an affordability crisis not only in respect to young people trying to buy their first homes but also in respect to the struggle by so many to find affordable places to rent, there is something very immoral in a practice that deliberately removes perfectly good houses from being lived in.
This practice might of course have a flow-on advantage to landlords in regions where demand outstrips supply but just how sustainable is this practice in the long-run?
There appears to be no definitive data produced to assess how many houses are out there that are being left vacant, so there probably isn't any data available to suggest how the practice is artificially inflating the cost of rent.
But what is clear, particularly in the large cities, is that if this investment strategy is widespread, then it is contributing to future economic problems, as inner-city workers have to go even further out to find somewhere to live; thus putting even greater pressure on governments at all levels to provide transport and other community infrastructures.
If the intention of negative gearing incentives in the Tax Act was to encourage investors to the housing sector; especially as governments began to pull back on investment in public housing, then aren't these investors gaming the system if they have no intention of releasing houses onto the rental market?
Perhaps this is an issue Treasurer Morrison should be considering as he puts the final touches to next week's 2017/18 Budget.
Negative gearing reform has been a political hot potato they've all been unable (or unwilling) to deal with in recent years.
Perhaps, if reform was first directed towards ending that particular investment strategy, it wouldn't have the disastrous effect on the market that some politicians keep warning about.
If houses are being bought up with absolutely no intention of releasing them to be lived in by anyone, then any action to remove such investors from the sector isn't going to have a detrimental affect at all.
Without any official data available to identify who is engaged in this investment strategy, it is impossible to probably target them.
I suspect the practice is probably widespread among mainland Chinese investors in the Australian market, so any patriotic appeals by Australian authorities would probably fall on deaf ears.
So firm action to discourage the practice might be necessary.
The recent revelation that quite a few of our MPs own multiple investment properties is, in itself, not something to be discouraged.
Property is a good investment and good luck to them.
As long as they make full disclosure on the Pecuniary Interests Register, no one should have a problem with that.
However, let's hope that none of them are engaged in hoarding properties and making them unavailable to rent.
At a time when battling Australians can't find affordable housing, it might however suggest why some politicians' views on the subject seem conflicted.