Negative gearing is set to be a key issue in the upcoming federal election.
If elected, Labor intends to reform the practice with the aim of improving housing affordability.
The Coalition intends to leave negative gearing as is.
The problem is Labor’s proposed policy will affect every Australian home owner and all property investors is designed to put downward pressure on home prices and improve affordability, particularly for first home buyers.
But will it really be as bad for property prices as some media commentators suggest?
Watch the first of our regular Property Insiders chats where Dr Andrew Wilson and I chat about how the proposed negative gearing and CGT changes will affect our property markets
Watch Andrew and I and you’ll learn about Labor’s tax grab and what it could mean to you.
We also talk about:
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- How the proposed negative gearing and CGT changes will affect our property markets
- Is there really a debt time bomb ticking away
- Are migration levels too high
Here are some of the other things we’ll discuss
The Labor Party’s proposed new policy abolishing negative gearing for established properties has been roundly criticised by many as being a potential significant negative for housing markets.
The policy is designed to reduce high-levels of activity from investors putting downward pressure on home prices and improving affordability, particularly for first home buyers.
The policy is also designed to increase demand from investors for new housing by maintaining negative gearing for this class of property.
The policy was primarily designed as a significant boost to government incomes through savings from removal of the negative gearing tax concession
But market conditions have changed markedly since the policy was developed
- Investor activity has collapsed through APRA actions and sharp decline set to be reinforced by sharp decline in prices
- Investor market share has also declined sharply
- First home buyer numbers have soared recently due to state government incentives and tax reductions with growth to be reinforced through lower prices
- Home prices are now falling across the board with rising affordability
- Yields are rising with higher rents and lower prices which will improve gearing
- Interest rates are set to fall which will also improve gearing
- Interest only loans declining so investors have higher equity positions in borrowing