The product of the decision was the creation of a Ponzi scheme where the fastest way to a quick buck was through capital gains on housing. House prices are now more than 10 times the average annual earnings. This investment in housing was not for income from rent but capital gain, and the tax advantages it provides.
In the years before September 1999, when negative gearing existed, house prices tracked along at about three times average annual earnings . On September 20, 1999, John Howard discontinued indexation of the cost base and introduced a 50 per cent discount on the capital gain for individual taxpayers.
To make housing more affordable, unwind the Howard legacy with grandfathering. Those holding property for capital gain will sell because they know all future capital gains will be taxed, as before 1999. This will bring more houses to market. Those selling can realise their gains and move to other investments.
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