Economy cannot withstand labor’s experiment on negative gearing: REIA

Economy cannot withstand labor’s experiment on negative gearing: REIA
Economy cannot withstand labor’s experiment on negative gearing: REIA

Implementing the Labor government's policy on negative gearing will risk economic recovery as Australia moves from resource investment to other growth drivers such as housing investment, according to the Real Estate Institute of Australia.

REIA president Neville Sanders said a change in negative gearing arrangements will put that at risk economic growth and cut the asset base of Australian households at a time when we need to facilitate further sustained growth in the housing sector.

“Australia’s property industry is the main driver of economic growth and increased employment in the transition away from a decade-long reliance on mining, and whilst it is expected that the weakening Australian dollar will provide a much needed stimulus to a number of sectors, the impact of this is still some time away," he said.

“Providing a stimulus to economic activity outside the mining sector, including the housing and building sectors, was amongst the main reasons for the RBA to keep the official cash rate at record low levels since August 2013.

“The value of building stock owned by Australian households is $5.6 trillion1 (million million). It has been predicted by SQM Research that on a national basis as much as 16 percent could be wiped off this over the three years 2018 to 2020 under the Labor policy."

Laing + Simmons managing director Leanne Pilkington said it is somewhat academic to debate whether this is a price drop of 16 percent or whether prices growth will be 16 percent lower.

"The stark fact remains that household assets across Australia will be devalued by $900 billion," she said.

"This amount is wiped from spending in local economies and off nest eggs."

Tags: 
Negative gearing Residential Property

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