Bullock’s Christmas Present

By Bailey Compton 10 Nov 2023

 

A woman’s touch + unintended gift?

 

Somebody suggested to me over the weekend that, maybe the new governor being a woman would better understand the needs of families.

However, where was the empathy usually associated with the female psyche, when New Reserve Bank governor, Michele Bullock, saw fit to punish family once again?

Instead of any nurturing, we are being treated like naughty consumers for purchasing goods to improve the GDP of Australia.  Instead of being rewarded, we are slapped with higher interest rates.

I’ve never quite understood increases in interest rate as an economic benefit to the government.

As noted in a previous edition, it is not the investors who will suffer from a rate increase. Investors are enjoying the increase that gives you negative gearing. Neither result seems to have any positive benefit.

If an investor sells, this reduces the number of properties in the rental pool. It diminishes supply and therefore increases the market price of the property due to increased demand. This is the Reserve Bank contribution to the rental crisis!

If rates are increased, negative gearing will allow this increased interest rate to be a tax deduction. This means that, the government will earn less tax due to the new interest rate.

But to every crisis there is a silver lining!

Because investors will need to sell, there will be more property on the market for the real estate agents. Remember, it is not the price of the property that matters for a real estate agent, but the fact that people are either buying or disposing of their assets.

Michele Bullock: the real estate industry thanks you!