Housing

Negative gearing changes could see prices fall by 6%

By March 8, 2016 No Comments

Changes to negative gearing policy could push rents up dramatically, while simultaneously putting a dampener on property values, new building and GDP, according to a new report.

The report from BIS Shrapnel, predicting that changes to negative gearing could push unit rents up by as much as 10% by 2026, has reignited fears that proposed policy changes will be detrimental to the property market, and, whilst I don’t disagree that changes will cause shockwaves, I’m seriously not sure how any economists can be throwing figures and dates around like at this, at this point in time, I mean how accurate can they be??

A study known as The Economic Impact of Limiting the Tax Deductibility of Negative Geared Residential Investment Properties estimates that unit renters in Melbourne and Adelaide will bear the brunt of any rental increases, with rents to jump by up to 10%, that’s according to figures reported by Fairfax, not me.

Sydney would cop the largest reduction in unit values, falling from $873,000 at what the company terms “full negative” to $820,000 at “limited negative gearing”.

The BIS report also telegraphs a decline in new home starts, 175,000 less jobs and a reduction in GDP and government revenue, but lets face it, that won’t be a problem, as usual, middle class Australian will foot that bill and keep doing it until there are not enough middle class Aussies left to kick the can, but that’s for another day.

The report was apparently compiled using modelling based on changes to investor tax concessions, changes that resemble proposals by the Labor Party.  Shadow Treasurer Chris Bowen released a statement last Wednesday saying “the report is full of incorrect and quite frankly bizarre assumptions”……….I think he meant it’s a crock.  Now bizarre, that is not the adjective I would use when discussing property or negative gearing changes.  Although, odd, freakish or unusual, may work, but na, not bizarre.  But, then again I have no desire to be a deputy treasurer or a polly of any type.

Negative gearing will be an ongoing saga as we approach a federal election, more to come. Until next time.  Troy.

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