A report released by the Housing Industry Association (HIA) shows the majority of Australian voters do not understand Labor’s proposed changes to capital gains tax and negative gearing.
“Changes to existing capital gains tax and negative gearing arrangements on residential investment properties proposed by the Federal Opposition will dampen first home buyer capacity to save for their first home,” says HIA’s Managing Director, Graham Wolfe.
Wolfe says these changes will also see rental costs increase for landlords.
“HIA has always said that changes to negative gearing and capital gains tax for housing are bad policy,” says Wolfe.
“Rental supply is crucial. The September quarter of 2018 marked the first time since December 2006 that rents in Sydney declined in real terms.
“The recent additional supply of rental properties has underpinned the improvement in rental affordability. Changing the tax treatment on residential investment properties risks undoing the good work and lifting rental prices.
Research backs up HIA's claim
Research commissioned by HIA and conducted by JWS Research surveyed all age groups, political persuasions and socio-economic backgrounds to find out what Australians really think about the proposed changes to capital gains tax and negative gearing.
Wolfe says the results show twice as many voters oppose the changes than support them.
“This report shows that many Australians have little understanding of how Labor’s changes would affect them,” he says.
“According to the research, only 34 percent of Australians are aware of the proposed changes and understand it at some level. Others have no understanding.
“Australians are being asked to make a decision on a policy that will harm them directly, without fully understanding the consequences, or the policy objectives.”
Because of this, Wolfe says, 74 per cent of those surveyed believe there should be a review of the policy before any changes are made.
Rents will rise and investment will fall
Wolfe says the report shows 52 per cent of people surveyed believe rents will rise as a consequence of the changes.
“And with 92 per cent of renters aspiring to buy their own home, Labor’s proposed changes will weigh heavily on their savings’ plans,” he continues.
“If these changes are made, rents will rise as supply dries up due to a lack of investment in new housing. This will make renting a home less affordable.
“If rents rise, renters saving for a deposit for their own home will take a backward step.
“These changes are anti-investment. They fail to recognise that private rental accommodation provides homes for almost three million families and reducing the supply of private rental homes will only lead to an increase in rents.
Wolfe is adamant the housing affordability challenge cannot be solved by taxing housing.
“Yet this policy seeks to do just that,” he says.
Impact on property managers
In an already tense and heavily-regulated industry, Michelle McLean, Senior Property Manager at Leah Jay and Chair of REINSW's Property Management Chapter Committee, says changes to capital gains tax and negative gearing will put even more pressure on agents.
“It appears the Government is looking at yet another deterrent for people to invest in the property market and consider other viable investment options, such as shares, managed funds and superannuation,” she says. “This is only going to create a tougher market for any tenant looking to rent with the possibility of higher rents and a longer wait to get into the market themselves.”
With Gladys Berejiklian taking the Coalition to an historic third term as the State’s first elected female premier, the NSW property market has achieved some stability in the last month. However major changes at the Federal level could upset that.