Levelling the playing field
One of the key reasons why property in the “inner” suburbs (i.e., those where there is any reasonable public transport) is so expensive is the negative gearing system we have. In simple terms, if you buy a property as an investment by borrowing, any interest paid is tax-deductible.
The idea is that it encourages people to buy investment properties to increase the rental pool.
The hitch is that there is no such tax deduction for owner-occupied property, so essentially the same level of income provides far greater buying power as an investor than as an occupier.
Making interest paid on a mortgage on your primary residence tax deductible, with various limitations — e.g., a cap on the amount/year deductible, some sort of limits to stop people simply re-drawing on the mortgage to effectively live tax-free forever — would rebalance this without causing the problems that made the Federal Government run scared last time they tried to take away negative gearing.
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