Proposed changes to negative gearing will not help housing become more affordable, the president of the Real Estate Institute of NSW warns.
It will instead lead to a flurry of panic buying in the short-term and a shortage of rental properties in the long term.
John Cunningham, who is also managing director of Cunninghams Property on the northern beaches, says Labor’s election plan to limit negative gearing just to new properties would not improve housing affordability.
Negative gearing gives property investors tax breaks. Any losses on a property investment can be used to lower tax.
![Granny_killer_house_John_cunningham](data:image/svg+xml,%3Csvg xmlns="http://www.w3.org/2000/svg" viewBox="0 0 550 350"%3E%3C/svg%3E)
John Cunningham, president of the Real Estate Institute of New South Wales
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The Labor Party wants to restrict negative gearing to new property, taking effect from July next year. It is part of the party’s election platform to make housing more affordable.
Cunningham says the change to negative gearing would see a flurry of investor buying before the July deadline followed by a steady decline in rental property coupled with a sharp rise in rents.
“Labor hasn’t identified that the property rental market of 33 per cent hasn’t changed in 20 years and it is a good balance because it works,” he says.
Aerial view of Stockland village in Balgowlah which won an Housing Industry Assocition award for development design.
“Most investors are mum and dad buyers who don’t want to buy new apartment miles away but something close,” he added. In addition the first home buyers wanting to get into the market will take longer to save their 20 per cent deposits, because their rents would be so high.”
“And Labor is basing its policy on data that is three to four years old when interest rates were much higher.”
Cunningham says property will become more affordable if the right sort of property is built in the right areas.
“I love the concept of medium density,” he adds.
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Just sold in Stockland, Balgowlah, a ground floor one-bedroom unit sold for $745,000 in April 2016.
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“Inner city living is vibrant and alive with medium density developments giving people options.”
He pointed to the award-winning Stockland development in Balgowlah as a model for northern beaches living.
“We need more Stockland developments in my view,” he says.
This story was originally published by the Daily Telegraph.