Labor’s proposed taxation changes have already resulted in poor investor sentiment, which is likely to fall even further should it come to power, one expert has said.
RiskWise Property Research CEO Doron Peleg said that Labor’s position on negative gearing and CGT has and will continue to impact the broader economy and, in particular, GDP growth.
Mr Peleg was invited to join a roundtable discussion in Canberra in February with the PM, the treasurer and assistant treasurer and other property heavyweights, including Yellow Brick Road, the Real Estate Institute of Australia, Property Investment Professionals of Australia and the Property Council.
He said that there were many concerns expressed.
“I attended the roundtable discussion to talk about our research and insight but also to listen to the concerns of the others and join in a dialogue with them. The attendees expressed their concerns regarding the impact of the proposed taxation changes on housing prices, dwelling commencements and GDP growth. In particular, it was very interesting to hear the concerns that were raised by the development lobby groups.
“Their interest is clear: to increase new development, and this does actually align with Labor’s stated objectives which is to shift investor demand to new dwellings and, therefore, to increase new dwelling supply from developers.”
Mr Peleg said that Labor’s reforms were unpopular at the roundtable.
“When these developers, who are having difficulties meeting pre-sales and sales targets, have clear evidence that dwelling commencements have fallen due to poor investor sentiment and will further fall under Labor’s proposed taxation changes, it follows that they are opposed to these reforms.
“In fact, new independent economic modelling commissioned by Master Builders Australia shows [the reforms] will not increase the supply of new housing or create new jobs in the building industry.”
Mr Peleg said that the developers felt at risk.
“The ALP has proposed limiting negative gearing to new housing and reducing the discount on capital gains tax from the current 50 per cent to 25 per cent to increase housing affordability; however, this solution will only be temporary.
“Frankly, it’s time for Labor to have an open discussion on the consequences of these proposed reforms and what they think they will really mean to the property market in this country.”