Labor’s investor tax changes have come under scrutiny, with an Australian property developer calling for the reforms to be axed as new figures suggest a decrease in investor appetite for new builds.
Melbourne property developer and Gurner Group founder, Tim Gurner, has called for Labor’s Capital Gains Tax (CGT) discount and negative gearing changes to be scrapped as new lending data comes under the spotlight.
Gurner said the tax reforms had created the biggest disruption to the investor market in decades, and would need to be repealed to give Australians the chance of affordable housing.
“It is a very bad policy decision that has led to huge pressure in the market and loss of confidence that will reduce supply materially and in turn cause large price increases over time, like we are seeing in rentals now,” he told The Australian.
Gurner’s comments came as new data showed that, despite the negative gearing changes being designed to incentivise investment in new builds, new mortgage lodgements in the sector fell across the year.
According to Loan Market Group’s report, investor mortgage lodgements for new homes fell 10 per cent since January, despite the tax changes partially being designed to direct investment towards new builds.
The data also showed that investor mortgage lodgements for existing property fell 56 per cent since the end of January.
Meanwhile, total investor mortgage lodgements, for new and existing builds, have fallen by 44 per cent.
Additionally, while Labor’s tax changes were designed to level the playing field for first home buyers, the data showed they may have been steered away from the market.
According to Loan Market Group, total first home buyer lodgements fell 13 per cent since the end of January.
The findings came following the federal budget tax changes and four interest rate rises this year, with one more potential hike to come.
Loan Market Credit Expert, Shay Waraker said that as property prices declined and interest rates increased, buyers were continuing to exercise caution.
“With borrowing capacities impacted by increasing rates, buyers may be waiting to see if prices fall further before jumping into the market,” she said.
Waraker said that when rates increased, new loan lodgements usually fell while refinancing increased.
“After a rate hike, mortgage holders tend to look more closely at their loan - whether to see if they can find a more competitive deal or make some changes to free up cash flow.”
The data followed mounting criticism of the tax changes, with One Nation leader, Pauline Hanson, vowing to reverse the changes if her party forms government at the next federal election.
Hanson said her party would restore the 50 per cent CGT discount, replacing the incoming cost-base indexation for assets held for more than 12 months and 30 per cent minimum tax on net capital gains.
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