Tracey Chandler - Buyers Agent

Your Exclusive Buyers Agent -

Specialising in Sydney's Eastern Suburbs 

and Lower North Shore

0416 100 839

tracey@tcba.com.au

  • Home
  • Why use Tracey?
  • Buyers
    • Buying a home
    • Buying an Investment Property
    • Overseas Buyers
  • Services
    • Full Property Search
    • Evaluate and Negotiate only
    • Auction Bidder
    • FEES
  • Testimonials
    • Video – Past Clients
    • Video – Real Estate Agents
    • Written Testimonials
  • News
  • About
    • About Tracey Chandler
    • How It Works
    • The Process
    • FAQ
  • Contact
  •   0416 100 839

March 23, 2016

Labour’s Negative Gearing Proposal Raises Storm

March 23, 2016
share
share
tweet

negative gearing proposalJack Needham writes an article for The Adviser where he talks about the possible impact of changing negative gearing policy. The changes mentioned could result in a hike in rent and at the same time cause a decline in property values and a fall in overall new construction and the GDP.

Possible effects of changes to the negative gearing policy

BIS Shrapnel forecasts that an alteration in the negative gearing policy could see rents (for units) moving up by as much as 10% in 10 years’ time. The Economic Impact of Limiting the Tax Deductibility of Negatively Geared Residential Investment Properties predicts that tenants of apartment units in Melbourne and Adelaide could be exposed to rental jumps to the tune of 9.6% and 10% respectively. The effect of negative gearing will be most badly felt by Sydney, with unit values coming down from $873,000 to $820,000.

New home construction industry

The same report estimates that the new home construction industry will suffer, too. BIS sees a fall to the tune of 4%. Furthermore, it feels that 175,000 fewer jobs will be up for grabs and GDP will take a plunge of $19 billion/annum. At the same time, government revenue will be squeezed by $1.65 billion per year.

Why the Labour party comes into the picture

The BIS Shrapnel report is modelled on the alterations to investor tax concessions. Here we mean concessions proposed by the Labour Party. The BIS Shrapnel estimate has drawn its share of criticism from the industry, with some citing the reports as being inconsistent with the Labour’s proposals, and others feeling that it won’t stand up to scrutiny. The report is laden with wild assumptions and can be torn to shreds if properly scrutinised.

For its part, the BIS has been very discreet, denying disclosing the identity of the commissioning body of the report. Of course, as can be expected, Labour has raised doubts over the report’s independence.

REIQ’s stand on the gearing issue

The Real Estate Institute of Queensland (REIQ) has re-emphasised that it will oppose the changes in negative gearing policy proposed by the Labour Party. The ‘Shrapnel’ report mirrors what the REIQ has long believed, and it is that property as an asset class may be coming to the end of its tether and will be left alone by investors. This is because the investors will become increasingly wary of rising rents and questions of housing affordability.

You can read the original article here.

With the level of supply coming down, it would be fair to assume that rents will rise. While there is a good chance that the proposal of the Labour government will be limited to new home construction, negative gearing, even if not applied to established housing market, can have its impact.

What changes in the negative gearing policy may mean for the established housing market (despite reports to the contrary)

If Labour has its way, we will see a rise in capital gains tax. The cumulative effect of negative gearing and capital gains tax will result in higher tax on investor-owned properties and hence their shrinking demand. The natural fallout will be shrinkage of the housing market. Labour can deny it all they want, but there is a good chance that those owning rental properties presently (and hence the “established housing” market comes under the radar, too) will feel the cramp, given the fall in property values and subsequent decline in the selling price of their properties.

Related posts:

  1. Reforms to Negative Gearing Proposed
  2. Myth About Negative Gearing Busted
  3. Malcolm Turnbull Puts Negative Gearing Changes Off The Table
  4. Should Negative Gearing Stay?

Get Your Dream Property Sooner

This field is for validation purposes and should be left unchanged.

Most Popular Articles

  • auction tips Pre-Auction Tips: 9 Things To Do BEFORE Auction Day under Features
  • 5 Key People To Ask for Real Estate Investment Advice under News
  • hiring a buyers agent 10 Important Questions to Ask a Buyers Agent Before You Hire Them under Features
  • property auction 7 Dos and Don’ts Everyone Should Know About Property Auctions under Features
  • how to prepare for a property auction How To Prepare For A Property Auction 101 under News
  • two bedroom apartment in Sydney Here’s Why it’s Better to Buy a Two-Bedroom Apartment in Sydney under News

Recent Articles

  • 7 Tips for Buying a Home in Sydney’s Eastern Suburbs

    7 Tips for Buying a Home in Sydney’s Eastern Suburbs

  • How To Avoid Emotional Attachment To Property

    How To Avoid Emotional Attachment To Property

  • Why Are So Many Sydney Homes Sold Off-Market?

    Why Are So Many Sydney Homes Sold Off-Market?

  • Should you engage a buyer’s agent for an auction?

    Should you engage a buyer’s agent for an auction?

Topics

buying property during COVID-19 financial freedom first home buyers forecasts home inspection home owners home prices home renovation home valuation how to buy a home interest rates lifestyle mortgages overseas investors property auctions property investing property investment property negotiation property valuation real estate real estate agents real estate industry sydney eastern suburbs sydney property market taxation

Feedback from Clients

Areas Served: Eastern Suburbs | Lower North Shore | Inner West

Copyright © 2025 by Tracey Chandler - Buyer's Agent in Sydney. All Rights Reserved.

339 Oxford Street, Paddington NSW 2021, Ph: 0416 100 839

recommended buyers agent award

WINNER

"NSW Highly Recommended Buyers Agent Award"

sydney real estate logos

Privacy Policy | Terms & Conditions | Disclaimer

Connect with us on:

google reviews
4.9 ★★★★★
Based on 61 reviews
google reviews
4.9 ★★★★★
Based on 61 reviews