THE Real Estate Institute (REI) of NSW Orana Division acting chairman Bob Berry has declared the strength of the real estate market in Dubbo is luring investors in, more so than the benefits associated with negative gearing.
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With the real estate market in Dubbo going gangbusters, highlighted by the fact the average price for a house at Dubbo has increased from $260,000 in January 2012, to $320,000 at present, Mr Berry believes negative gearing is not a high priority for investors looking to invest in property in Dubbo.
"Investors have been very strong in Dubbo as they have proved to provide good capital growth and rents increasing," he said.
"Investors in Dubbo would be looking at those benefits and not just the tax benefits (of negative gearing), which is not to say they don't take advantage of negative gearing.
"There is about 12,000 dwellings (in Dubbo) and from memory there is around 3500 rental properties and around 1000 Department of Housing dwellings, so that is around 60 per cent owner-occupied," he said.
"With interest rates really low people who are either mum and dad investors or small super fund investors see a return in residential real estate over five, seven or 10 years as a better option than a long-term deposit."
Following the Reserve Bank of Australia's (RBA) suggestion negative gearing should be considered in the context of the wider tax debate, Mr Berry moved to affirm his support for it, believing it helps strengthen the market.
"It plays a role in encouraging investors into the market," he said.
"The view of the REI is also the view held by a lot of stakeholders in housing and in the economy.
"But there is a view due to capital city prices and with investors such a high percentage of the market it needs to be looked at."
Negative gearing is where rental income is less than the costs of owning the property, loan repayments, rates and other expenses.
It allows investors to use losses made on property investments to reduce their overall taxable income, but it has its critics.
Following the RBA suggestion, Mr Berry is adamant it will be an issue that has to be addressed, however he put no time frame on that.
"I think all options are on the table when it comes to negative gearing," he said.
"Following the RBA call, we will see it looked at by politicians and other government officials but I would not know if or when there would be any announcements.