Real estate bodies are urging Australians to vote cautiously at this weekend’s federal election, saying the heavy focus on negative gearing is purely “political ping-pong” that is distracting them from more significant issues affecting the property market.
REIQ CEO Antonia Mercorella said the hype and public debate concerning reasons to get rid of negative gearing were all focused on Sydney and Melbourne’s house prices and on affordability issues.
“The list of economic experts who are lining up to tell us that those housing markets are hot right now is lengthy and includes organisations such as the IMF, The Economist and AMP chief economist Shane Oliver,” she said.
“But the Queensland market is far from overheated and the REIQ is concerned that Queensland voters will be swayed to vote on the negative gearing issue without fully understanding the impact it will have on the Queensland economy and Queensland home values.”
Ms Mercorella noted the Labor Party’s stance on negative gearing does not take into account how it would negatively impact the Sunshine State.
“Our economy is fragile right now and negative gearing serves valuable economic purposes – it encourages investment, it contributes to driving economic growth, it contributes to asset accumulation, [and] it encourages entrepreneurship,” she said.
“If we lose negative gearing, the impact in Queensland will be felt first by renters, with weekly rents going up by as much as 10 per cent according to some studies.
“Next, the state government will lose, with research released last week from SQM [Research] finding that sales turnover will fall by 17-20 per cent. This will result in a loss of stamp duty revenue of around $3.1 billion to $3.8 billion – a substantial loss in anyone’s language.”
REIA president Neville Sanders echoed this sentiment and said abolishing negative gearing will have a far greater impact on national house prices, economic activity and state revenues than was previously thought.
"What SQM [Research] have done is examined Labor's proposal and in detail assessed the consequences so there can be no claims that it doesn't represent the stated policy as we have seen happen with other commentary, including that the industry has been accused of bias", he said.
"The analysis covers prices, rents, sales turnover and state revenues from stamp duties and the modelling suggests that the consequences are more dire than many have suggested."
The research found that house prices, on a national basis, could fall by as much as 16 per cent over three years, with some areas, such as Sydney, dropping by up to 20 per cent.
HIA chief executive for industry policy and media, Graham Wolfe, labelled the heavy focus on negative gearing in the election campaign as “misguided”.
“Negative gearing is a sideshow to addressing the housing affordability and home ownership challenge facing younger and future generations of Australians,” he said.
“Political ping-pong over negative gearing is distracting from the policy reform focus that is required to address rising regulatory costs and highly inefficient taxation of the housing industry, especially new home construction.
“A focus on housing policy needs to be led by the federal government through a policy reform strategy, a federal housing minister within cabinet, and a clear path for cooperation with state and local governments,” Mr Wolfe said.