Federal Labor’s proposed changes to negative gearing will result in house prices falling by more than $80,000 coupled with soaring rental costs for Queenslanders. That is the troubling assessment of Real Estate Institute of Queensland (REIQ) CEO Antonia Mercorella following the release of a new report by SQM Research.
“SQM modelling clearly shows if Labor’s proposed changes are implemented the far-reaching economic impact will be significant,” Antonia said. “Renters will bear the most immediate economic cost, with rents potentially rising up to 22%. The median rent for a three-bedroom house in Brisbane, according to the latest REIQ QMM report, is $435 a week. If SQM’s modelling is accurate this means renters will have to find at least another $95 a week … it will cause housing stress in many families.”
Under Labor’s controversial policy ahead of the 2019 Federal election, the benefits of negative gearing would be restricted to people who invest in new properties. The new eligibility rules won’t apply to owners of existing rental properties. However, Antonia, citing SQM’s report, declared the changes would see house values plummet, affecting all Queensland homeowners.
“Under Labor’s changes, house prices nationally could fall up to 12%. This could equate to the average Brisbane house, valued at $675,000, losing as much as $81,000 in value. This could push new homeowners into a negative equity situation,” Antonia, who added the policy could slash Queensland’s stamp duty revenue by up to $2.3 billion, said.
The troubling assessment echoes a dire warning from Angus Raine, Executive Chairman Raine & Horne, of the pain Labor’s negative gearing policy and their plans to slash capital gains tax concessions (CGT) would inflict on investors, owner-occupiers and tenants across the country.
“Federal Labor’s proposed changes to taxation arrangements for investment properties will prove cataclysmic for Australia’s $7 trillion real estate market and the broader Australian economy keeping in mind property and the building industry are the largest employers in the country. The ripple effect from these tax changes will be more like a tidal wave,” Angus warned.