Negative gearing changes ‘disastrous’ for Sunshine State

Negative gearing changes ‘disastrous’ for Sunshine State

by 0 comments

The REIQ has warned that Queensland would be hit hardest if Labor’s controversial new negative gearing limits were introduced, with many towns that are still reeling from the resources downturn likely to take an additional hit to housing affordability and supply.

Mackay leads the country for negatively-geared properties, with 5,755 property owners who negatively gear their investment. Gladstone and Cairns each have about 4,000 investors who negatively gear their property, according to ATO figures reported today.

“Mackay and Gladstone are still struggling, years later, to regain their equilibrium. Another hit, like these changes to negative gearing – would be absolutely disastrous for these communities,” REIQ chief executive Antonia Mercorella said.

“Without negative gearing and CGT benefits, and with no new building going on, investors will desert these towns,” she said.

Ms Mercorella questioned why Labor wanted to “punish this one asset class” and make it less attractive compared with other investment opportunities.

“Labor is only guessing at the outcome of its policy, hoping that it will stimulate new dwelling construction, but it’s equally possible that investors will simply abandon property altogether,” she said.

Ms Mercorella said investors made up about a third of all property owners in Queensland and only 7 per cent of those owners accessed negative gearing in new-builds. She warned that if investors abandoned property in significant numbers, it would spell disaster for the state budget.

“Stamp duty is the cash cow of the Queensland state budget, and if investors are driven away from established property ownership it would leave a huge hole in the state’s budget,” she said.

Ms Mercorella said the Labor strategy of driving investors to the new-build market would also make a mockery of the state government’s Great Start Grant. The grant is designed to drive first home buyers to the new-build market and free them from competing with so-called “deep pocket” investors.

“Why are we giving first home buyers a $15,000 grant to buy off-the-plan or build, but then forcing them to compete with investors who have been driven to the new-build market to access negative gearing and CGT benefits?”

“It’s a very confused strategy,” she said.

Ms Mercorella said Labor’s policy preyed on the commonly-held misconception that negative gearing benefited property barons.

ATO figures have revealed about 70 per cent of property investors accessing negative gearing own just one property and earn around $80,000.

“These measures target mum and dad investors who are simply trying to get ahead and create a reasonable retirement package,” she said.

“The property investor is tired of being the ATM for the government – whenever they want to fund something they go to the property sector for a cash injection.”

[Related: Negative gearing isn't evil: Deloitte]

promoted content
Recommended by Spike Native Network
Listen to other installment of the Real Estate Business Podcast
reb top 100 agents 2017

With a combined sales volume of over $14 billion in 2017, the Top 100 Agents ranking represents the very best sales agents in Australia. Find out what sets them apart and learn their secrets to success.

featured podcast

featured podcast
Marnie Seinor on structure, database DNA and connecting with her local community

There’s no such thing as an “off switch” in real estate – so says McGrath agent Marnie Seinor, who came in at number 78 in this year...

View all podcasts

Does the benefit of being part of a branded group outweigh the cost?

Depends on the group
Do you have an industry update?