Love it or hate it, the issue of negative gearing continues to rear its head in any discussion about Australia’s housing industry.
This week was no different, with the Real Estate Institute of Australia (REIA) warning that the Greens’ demonising stance could prompt investors to abandon the market, ultimately leaving renters with limited options and potentially leading to further rent hikes.
REIA President Leanne Pilkington suggests that disincentivising investment into housing for mum and dad investors will just make a bad situation worse.
“Adam Bandt’s agenda continues to exacerbate Australia’s housing issues. Last year, it was rent freezes and controls; this year, it’s negative gearing and capital gains tax”, Pilkington stated.
“With over 2.2 million family investors supplying 97% of rentals, they are part of the solution, not the problem.”
Pilkington believes that proposals to phase out negative gearing would primarily benefit large-scale property investors, neglecting the impact on everyday Australians.
“Furthermore, removing incentives like negative gearing will make it harder for renters saving for a home deposit,” she added.
According to the REIA, approximately 70% of rental property owners own a single negatively geared property. The repercussions of disincentivising investment include:
1. Renters: reduced supply could lead to rent increases of up to seven to 12%.
2. State Governments: decreased stamp duty revenue due to diminished housing supply.
3. Small businesses, including builders: a potential decrease in work opportunities, with 10,000–42,000 dwellings potentially shelved.
The peak body reiterated the urgent need for policy measures that support investment and housing affordability while cautioning against short-sighted solutions that could further strain the housing market.
