Economy Cannot Withstand Labors Experiment on Negative Gearing

June 27th,2016

Especially in light of the unexpected Brexit, to implement Labor’s policy on negative gearing will put at risk Australia’s economic recovery as it continues to transition from resource investment to other drivers of growth of which housing investment has been a significant contributor according to the real estate industry.

“Australia’s property industry is the main driver of economic growth and increased employment in the transition away from a decade-long reliance on mining, and whilst it is expected that the weakening Australian dollar will provide a much needed stimulus to a number of sectors, the impact of this is still some time away, “said Mr Neville Sanders, President of the Real Estate Institute of Australia.

“Providing a stimulus to economic activity outside the mining sector, including the housing and building sectors, was amongst the main reasons for the RBA to keep the official cash rate at record low levels since August 2013. A change in negative gearing arrangements will put that at risk economic growth and cut the asset base of Australian households at a time when we need to facilitate further sustained growth in the housing sector.”

“The value of building stock owned by Australian households is $5.6 trillion[1] (million million). It has been predicted by SQM Research that on a national basis as much as 16% could be wiped off this over the three years 2018 to 2020 under the Labor policy,” added Mr Sanders.

[1] $2.2 trillion in New South Wales, $1.5 trillion in Victoria, $0.9 trillion in Queensland, $300 billion in South Australia, $544 billion in Western Australia, $73 billion in Tasmanian, $92 billion in the Australian Capital Territory and $31 billion in the Northern Territory.