Negative gearing and house price values to be key election issue

There are 9.6 million dwellings across Australia, whose owners don't really want their own eventual sale price to be cheaper as a result of any government policy to make housing more affordable.

There will be acute interest in the negative gearing policy election debate from the 1.25 million investors, who represent an indisputable spread across low, middle and high income earners.

They thought property investment a relatively safer option than shares.

Already the recent debate surrounding negative gearing has made the market place nervous.

Normally federal elections trigger slightly reduced listings and sales activity as there's typically only lip service to any housing policy.

But this year's election is shaping up with housing as a stark policy debate.

It has already, and will continue over forthcoming weeks, trigger diverse reactions.

Some vendors hoping to sell their established homes as investment property have brought forward their listings to get it out before any adverse policy.

Others have bought an investment hoping there will not be any retrospectivity of any adverse policy.

Ray White Group chairman Brian White said any shift in policy would be a “terrible hit” to the market.

"It has already taken away some of the enthusiasm for property," he said yesterday.

"The debate has created uncertainity which is never good for a market."

“It'll be mayhem,” Century 21 chairman Charles Tarbey forecasts.

Noting most people invest in property for the capital growth benefit not for the gearing benefits, the Aussie Home Loans founder John Symond recently suggested only allowing negative gearing on new homes would trigger a drop by at least 20 percent in value once a new home became an established home that investors would likely pass on.

John Symond says the average Australian understands housing and they try to build up a nest egg for future years.

"But they'll run a mile," he said if their was any tinkering.

"Everyone will be too scared."

"Imagine what that will do to the real estate market."

This article was first published in the Sunday Telegraph.