Labor election win puts Aussie home values at risk: John McGrath

Labor election win puts Aussie home values at risk: John McGrath
Labor election win puts Aussie home values at risk: John McGrath

The value of every Australian home is at risk if Labor wins the Federal Election, given their negative gearing policy, according to John McGrath.

He warned it would affect every single person who owned or rented a home, not just investors.

Property values would drop and rents would go up, he said.

Mr McGrath, on the Gold Coast for his 19th Australasian Real Estate Conference, warned of the “clear danger of curbing negative gearing and the capital gains tax buffer”.

“It will affect every single Australian who owns a home, their biggest asset is at risk.

"People are saying numbers like 20-30 percent falls in value.

"I don’t know what number is right but there will be a material drop in value to the downside by 5-10-15-20 percent, of that I am sure,” Mr McGrath told News Corp papers.

“This is a not a political statement.

"But Australia will go to bed one night and wake up on July 3, and someone’s property will have gone from being worth $600,000 to $540,000 in value and that’s a horrible thing.

“The other 30 percent of people (who are not owners or paying off a home) are tenants will be in trouble too.

"If they think the current supply is short it is going to get worse and landlords are going to be focused on getting better returns as the CGT will be of less benefit so negative gearing will no longer be a deduction so rents will rise.

“Property prices will drop materially and rents will skyrocket materially, and whether or not that’s 10 to 30 percent, only time will tell.”

Under Labor, negative gearing will be restricted to “newly constructed homes”, and capital gains tax discount reduced from 50 percent to 25 percent.

Both measures would come into force from July 2017.

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

Negative gearing Capital Gains

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