Negative Gearing Here To Stay - May 2011

By webmaster 11 May 2011 | 1 minute read

Speculation that the federal government would use the Federal Budget to make changes to negative gearing arrangements has proven unfounded with such modifications left out in last night’s delivery.

Real Estate Institute of Australia (REIA) president David Airey described Wayne Swan’s fourth budget as a “mixed bag” with both positive and negative implications for the property market.

While he welcomed the government’s decision to maintain negative gearing arrangements Mr Airey said the government had failed to address housing affordability.

“It is disappointing that the government has not realised the value of implementing long-term solutions to address housing affordability. We need to look at practical measures to give first home buyers the opportunity to realise the dream of owning their own home,” he said.

Mr Airey also expressed concern about the lack of measures to help first time buyers.


“This is a market segment that desperately needs assistance to fund home purchase[s].”

Housing Industry Association (HIA) senior economist Andrew Harvey expressed similar sentiments.

“Unfortunately, the Budget fails to deliver any dedicated policies to alleviate Australia’s chronic housing shortage, which at around 200,000 dwellings and growing, continues to place pressure on the household budgets of home buyers and renters,” he said.

But despite such concerns one industry figure believes first time buyers will return to the market without further government intervention.

Robert Mellor, BIS Shrapnel managing director told Smart Property Investment the dramatic drop in first home buyer numbers was part of a bigger balancing act.

“First home buyers were quick to buy in 2009 to take advantage of the government incentives. As such, the drop in demand that we have seen since then is simply a correction. Once this has all balanced itself out, we will see a return to more normal activity, especially as interest rates continue to increase at a moderate rate.”

Negative Gearing Here To Stay - May 2011
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