Proposed changes to negative gearing are short-sighted and would be extremely damaging to Australian renters, REIV President Geoff White said today.
Commenting on an announcement by the Federal ALP in recent days, Mr White said that a policy proposal by the Federal Opposition to limit negative gearing to newly constructed houses had not been fully considered.
Mr White said that a “double hit” would occur as fewer investment properties became available – driving up rental prices – and a crisis of affordable rental properties would quickly become apparent. Further to this, the Government would need to fill the void by providing state-subsidised and built housing.
“The proposal lacks insight, in that it will not only affect the property sector but renters nationally.
“Already we are seeing a relatively low vacancy rate – that is, the level of available rental housing – at around two per cent in some areas of Melbourne, particularly areas further from the CBD, where families are looking for a rental property they can afford.
“If investors withdrew from the established home market in this vital property belt, it would cause a significant shortage in rental supply and impact heavily on the Government of the day.
“More importantly, it will ‘hit’ those who most need help in the housing market,” he said.
He added that Melbourne has experienced a significant population boom in recent years, and available housing is critical to fuel the state’s economy.
“With more than 100,000 new residents moving to the state in the past 12 months – and interstate migration at its highest in 40 years – an ongoing, high level of available housing is essential to meet this demand.”
He added that with about half a million rental properties statewide, much is at stake in tinkering with negative gearing.
“A small percentage shift in the number of available rental properties in the state would, quite clearly, impact and undermine the lives of tens of thousands of Victorians,” he said.