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And yet the tens of thousands of new investment properties in Sydney and Melbourne that sit empty while waiting for a capital gain – labelled “speculative vacan

by jfoster 11y ago

And yet the tens of thousands of new investment properties in Sydney and Melbourne that sit empty while waiting for a capital gain – labelled “speculative vacancies” by non-profit lobby group Prosper Australia – or which are rented to tourists at highly inflated rates, indicate that the market is not always a panacea for affordability. Is that not just a glut that hasn't yet taken hold? If there really is over-supply, the investors will eventually end up competing with each other once they try to realize their capital gain. I don't mean to suggest that a growing glut of empty properties ending with a bust is the best way for this to go, but it does seem to me that on a long enough time scale, supply & demand principles will still hold true.

darkr 11y ago
"Empty" doesn't necessarily mean that it still owned by the developer and not yet sold on. It can mean that it has been purchased, but that whoever has purchased it has no use for it other than as an investment. We've had this problem in London for years now, mainly in the west towards Vauxhall and beyond, but there are pockets of it all over, and it doesn't seem to be going away any time soon. Large new tower blocks containing "luxury apartments" are built, purchased by and often marketed solely to foreign investors and offshore companies as a way of parking large amounts of money into what is seen as a relatively safe investment, with several tax loopholes: Unlike many other investments, property in the UK is not subject to capital gains tax, inheritance tax etc. Also, if the property is owned by an offshore company rather than an individual then stamp duty (5% on £675k or more) is not payable. AFAIK this last loophole was closed last year, but only for properties over £2 million (and, I think the tax is only payable on the remainder that exceeds that). As well as adding to an existing under-supply in the market for actual houses in which actual people can live in, the speculative feedback loop caused by this only drives up property prices further.
mahyarm 11y ago
A punitive (%3 ?) long-term unused property tax is the solution to this.

by jfoster 11y ago

darkr 11y ago

"Empty" doesn't necessarily mean that it still owned by the developer and not yet sold on. It can mean that it has been purchased, but that whoever has purchased it has no use for it other than as an investment. We've had this problem in London for years now, mainly in the west towards Vauxhall and beyond, but there are pockets of it all over, and it doesn't seem to be going away any time soon. Large new tower blocks containing "luxury apartments" are built, purchased by and often marketed solely to foreign investors and offshore companies as a way of parking large amounts of money into what is seen as a relatively safe investment, with several tax loopholes: Unlike many other investments, property in the UK is not subject to capital gains tax, inheritance tax etc. Also, if the property is owned by an offshore company rather than an individual then stamp duty (5% on £675k or more) is not payable. AFAIK this last loophole was closed last year, but only for properties over £2 million (and, I think the tax is only payable on the remainder that exceeds that). As well as adding to an existing under-supply in the market for actual houses in which actual people can live in, the speculative feedback loop caused by this only drives up property prices further.

mahyarm 11y ago

A punitive (%3 ?) long-term unused property tax is the solution to this.