445 karma · joined January 30, 2020
I'm not sure how common this regulation would be across industries in Australia or whether it's something that is common in other countries as well.
Interviewers shouldn't be aggressive, antagonistic or clickbaity but they should put opposing views to their guests so that the guest can respond. Testing ideas like this is a fundamental way of learning and establishing an understanding of a topic.
However, there are a few other factors that can increase borrowing capacity significantly. First, personal incomes tend to increase over the course of your lifetime as you get promotions. Second, when in a falling interest rate environment your borrowing capacity is increasing at the same time property prices are being pumped up. This is exactly the time when people tap into that equity. Third, you can get a slightly better rate at lower LVRs, which can help a little bit as well. Finally, a lot of the people who use this strategy have very high incomes to begin with and their borrowing is constrained by their available capital, not their incomes. This is why every neurosurgeon has a negatively geared property by the time they reach 30.
The reason this has been a popular strategy for a long time is that interest rates have been falling for the last 30 years. It's not so attractive right now as interest rates are increasing.
The main benefit is to individuals who have a high income but not a lot of capital. Generally this benefits early or mid career professionals who are high earners but may not have come from really wealthy backgrounds.
Continually "upgrading" your primary place of residence is not something that anyone does. Unless you live in the ACT you would be forced to pay stamp duty again too.
It's important to understand the risks so that one can make informed choices. That is probably where there needs to be more research.
Would there be opportunities for further efficiency by fully closing them and renting space a few times a year? Possibly, yes. But that doesn't mean the current model isn't an improvement on the previous one.