Industry responds to ‘ball and chain’ property tax reforms

Property Council chief executive Mike Zorbas said that the impact of the changes would reverberate across the property industry.

“According to the government’s numbers, these new laws are a tax ball and chain that shrinks housing supply by 35,000 homes,” Zorbas said.

While the retention of the new housing carveout was a positive result for the industry, Zorbas said the overall package of reforms would undermine investment confidence across the development pipeline

“The tax hikes impact investment in all projects, including housing, commercial and industrial assets that support jobs and productivity.”

“The property sector already pays $130 billion in taxes each year, and that impacts all buyers because four in every ten dollars spent on a new home is blown away by taxes and charges.”

Similarly, Housing Industry Association (HIA) chief executive, industry and policy, Simon Croft, said the reforms would tighten the leash on Australia’s already critical housing supply shortage by undermining confidence and restricting investment.

“These changes send exactly the wrong signal at the worst possible time and represent multiple own goals in the national effort to boost housing supply,” Croft said.

“Australia is in the grips of a housing supply crisis, yet these measures will dampen investment in new housing and make it harder to deliver the homes Australians urgently need.”

Croft warned that changes to the CGT and negative gearing policies would weaken measures that have historically supported the delivery of new housing stock.

Additionally, he said the changes to the SMSF lending policies would further strip an important source of funding from the housing market.

“These reforms should have been red-carded. Australia needs policies that unlock housing supply, not restrict it.”

While much of the response has centred around the impact on housing supply, PRD chief economist Diaswati Mardiasmo said the agents and investors would be forced to adapt to new market conditions.

She said that in the newly shaped property market, it was vital that consumers and professionals understood exactly what the rules entailed, and precisely when they would come into effect.

“For agents, this is key to advising your investors and ensuring they have the correct information,” Mardiasmo said.

“While investors are grappling with the new legislation and figuring out their financial plan and investment strategy, this signals less competition in the market.”

She said the drop in competition would be particularly prevalent in the established homes market.

If agents could convince hesitant buyers to act, there could be a significant opportunity for them to achieve strong results, according to Mardiasmo.

“This means now is the time to make your purchasing decision, while there is less competition and cash rates are still on hold.”

While it looked to be a buyer’s market, Mardiasmo said it was not all doom and gloom for sellers.

“With less competition from investors, there is now more room for first home buyers and other owner-occupiers.”

“Further, not every investor would be looking to negatively gear; some investors will still play in the established market, especially if investment criteria such as rental yields or vacancy rates stack up.”

Tags:

• Latest
• Reforms
• industry

Share