In agreement with the Real Estate Institute of Australia (REIA), one real estate director has said history has proven the abolition of negative gearing severely impacts society's most vulnerable.
Fletchers director Christopher Stear said he remembers clearly the effect the removal of negative gearing had on the market when it was done away with in 1985.
“It was a very simple equation for landlords, and that was, ‘we are not getting it from the tax office, so the only other place we can subsidise our investment is the tenant’,” he told Residential Property Manager.
“History shows us that the abolition of negative gearing impacts severely the most vulnerable in our society.
“It is normally not the rich that are negatively geared in property, it is ‘Mr and Mrs Average’ who are trying to build a financial security for themselves and their children and their grandchildren,” he added.
Mr Stear said any assertion, normally by the left of politics, that negative gearing benefits the rich is “crass and incorrect”.
“The abolition of negative gearing would, in thousands of cases, be a disaster for Australian families,” he said.
“There are thousands of properties that are currently negatively geared that are rented by Australian families.
“An increase of 30-40 per cent in their rent the week after negative gearing were abolished - if that were to be the case - would force many of them onto the street,” he added.
Mr Stear said the Hawke government’s abolition of negative gearing was one of the “worst blunders in Australian political and social history”.
“The uproar from those who formed that government’s supposed heartland, forced them to reinstate it,” he said.
“You don’t need to be a genius to predict the future if it is abolished again; it will be the same result.
“If we repeat that process expecting a different result, we are proving Einstein’s definition of insanity correct,” he added.