The Australian Labor Party have announced their negative gearing and capital gains tax changes will come into effect on 1 January 2020, if elected.
Real Estate Institute of Australia (REIA) President Adrian Kelly said REIA remained concerned about the impact the policy would have on Australia’s housing markets, buyers, renters and economic activity.
“This concern is magnified in the current market. There is almost truckloads of analysis and reports showing the adverse impacts of the policy on mum and dad investors, home owners, renters, the construction industry, state governments and the economy.
“The latest was last week when SQM Research showed that house prices would drop between five per cent to 12 per cent on a weighted average for the capital cities for 2020 to 2022 over and above any other falls being experienced, while rents are expected to increase by between eight per cent and 15 per cent on a weighted average for the capital cities for 2020 to 2022,” Mr Kelly said.
The SQM Research report also showed housing construction activity will fall by 25 per cent to 30 per cent from 2019 levels, which; will have employment and GDP impacts; property sales turnover is forecast to fall by a further 12 per cent to 15 per cent, resulting in; a drop in state stamp duty revenue of approximately $2.3 billion.
“For first home buyers, who according to Labor, should see improved housing affordability by a ‘levelling of the playing field’ will now face a faltering economy, lower employment prospects, the possibility of higher interest rates under a Labor Government and higher rents whilst they save for a deposit,” Mr Kelly said.
For more information about REIWA’s position on negative gearing and capital gains tax, visit whataboutwa.com.au.