Newspaper article The Chronicle (Toowoomba, Australia)

Changes to Negative Gearing Not the Answer

Newspaper article The Chronicle (Toowoomba, Australia)

Changes to Negative Gearing Not the Answer

Article excerpt

ONE of the key issues raised by Australians in response to the information campaign currently under way with the real estate industry is housing affordability, based on Labor proposing that any affordability problems can be resolved by changing current taxation arrangements, negative gearing on existing properties and capital gains tax.

This suggestion is quite simply not true, according to the President of the Real Estate Institute of Australia Neville Sanders.

"With large increases in house prices, particularly in our two largest capital cities, there have been many claims that the current tax treatment of negative gearing and capital gains of residential property is exacerbating housing affordability issues," Mr Sanders said.

"It is supply that is the critical factor in resolving the affordability problem.

"Changes to current taxation arrangements as proposed will do nothing to address affordability.

"If anything it will exacerbate the problem."

Mr Sanders said the public interest was being served and advanced through the current taxation arrangements.

There is ample research that shows that negative gearing and the CGT discount are not driving excessive, unproductive and speculative investment in housing but instead they are adding to housing supply with currently $7 billion a year invested in new dwellings.

"One of these, the Henry Review, initiated by the current Opposition when they were in Government and released in 2010, recognised that the current tax arrangements placed downward pressure on rents," he said.

"The answer to addressing affordability lies in tackling the supply side issues and the deposit gap for first home buyers."

Ray White Group director Dan White said "most lenders now require a 20 per cent deposit due to APRA requirements designed to mitigate against the kind of bad loans that helped trigger banking collapses in the US and UK during the Global Financial Crisis; the few lenders who will lend more than 80% of the purchase price also require the upfront purchase of mortgage insurance, which in itself can run into many thousands of dollars". …

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