Bill Moss predicts up to 30 percent price reduction under Labor's negative gearing, like old versus new car

The former head of the property division of Macquarie Group Bill Moss has said property prices could see a 30 percent price reduction should negative gearing change under the property Labor opposition plans.

Speaking to Macquarie Radio broadcaster, Ross Greenwood on Money News yesterday, Moss said it will be like a brand new car and a second hand car.

"It's going to be like buying a brand new car, as soon as you take it on the road the value drops," he said.

"It'll be the same in real estate.

"What's the difference going to be?

"Well its going to depend on interest rates, the economy at the time, it could be 30 percent, it could be more," he said.

Moss said that negative gearing just seems to work and like other commentators clearly feels it shouldn't be tampered with.

"We've seen it have a bit of oversupply, a bit of undersupply, but ultimately there are plenty of people out there putting their own equity into buy real estate so others can rent.

"If you start playing with it you can have some major consequences," he said.

"You can see property moving outwards and I think you could possibly even see a lot of people say 'well look I'm not going to be in that sector of investment'".

Moss said that if you play with negative gearing and reduce it there will be less houses being built, which has a number of effects.

"Number one there will be less jobs in the construction industry," he said.

"We're going to see a major downturn in growth in the economy, a lot more people unemployed."

"Ultimately, if you take it away people aren't going to invest in real estate, it's as simple as that."

To listed to the full interview click here.

Aussie John Symond has warned of a potential recession if Labor's plan to limit negative gearing to freshly constructed dwellings goes ahead, calling it "frightening" in an appearance on Seven's Sunrise program on Sunday. 

"Who knows? I don't know whether prices will drop 10 percent, 20 percent or more," he said.

The property tycoon and founder of Aussie Home Loans predicted a slide in home prices under Labor.

"It is frightening and it will frighten others . . . and it creates this stampede. And that's my concern that there could be a glut of properties come on the market, force the prices down, and then all of a sudden it could be Armageddon with the housing industry that's propped up the Australian economy the last four years."

Symond joins another industry leader, Stockland boss who expressed a similiar recession fear last week. 

Mark Steinert, chief executive of Australia's largest residential property developer, Stockland, believes Labor's housing policy has "the potential to destabilise the entire economy" – to the extent of "risking a recession".

"At the end of the day, house prices are unlikely to adjust so much that it would really change that affordability equation anyway," Steinert told the Australian Financial Review.

"And if they do, believe me it won't be a recession. It will be a depression."

Steinert told columnist Jennifer Hewitt property is such a major force driving Australian growth and activity, that even a small change in the market and in sentiment flows through the entire economy. 

"Housing represents $6.5 trillion of the Australian people's wealth," he told The Australian Financial Review.  

{mijopolls 142}