Negative gearing proposal tipped to slow renos, new builds
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Negative gearing proposal tipped to slow renos, new builds

Negative gearing proposal tipped to slow renos, new builds

by Sasha Karen | October 24, 2018 | 1 minute read

Economic modelling of Labor’s negative gearing and capital gains tax policy has revealed that, if implemented, there would be a significant slowdown in new builds and a knock-on impact for property investors. 

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October 24, 2018

Economic modelling prepared by Candice Economics and commissioned by Master Builders Australia indicates Labor’s plans to pullback on negative gearing would result in up to 42,000 less new homes being built, up to 32,000 less full-time jobs and a reduction of up to $11.8 billion in building activity and $210 million in renovation activity, all within five years.

Denita Wawn, CEO of Master Builders Australia, called on the Labor Party to rethink its policies as a result of the modelling.

“Labor’s policies on negative gearing and CGT fails its own test,” Ms Wawn said.

“Australia cannot afford for housing supply, building activity and employment to go backwards.

“The context of Labor’s policies, namely an ‘overheated’ housing market no longer exists bringing, into question the need for reforms to curb investor activity.”

The economic model’s best possible outcome could see 7,200 less jobs and reductions of $2.8 billion in residential building activity and $50 million in home renovation activity.

The results of Candice Economics’ economic model follows predictions from Starr Partners CEO DouglasDouglas, QLD Douglas, QLD Driscoll that Labor’s policies would also harm low-income earners.

“I’m hearing from agents and brokers across markets popular with first-home buyers that approximately 30–35 per cent are rentvesting,” Mr Driscoll said.

“They are often purchasing a property, living in it for six to 12 months, then putting it on the rental market.

“But let’s not forget that many nurses, teachers and policemen are also purchasing investment properties; they make up the investor profile, too. The opposition’s proposed policy could inadvertently disadvantage many of the people it is trying to help.”

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