The federal Labor opposition’s proposed changes to negative gearing would lock first home buyers out of new homes, according to a property advisory firm.
The Australian Labor Party’s (ALP) policy proposal to limit negative gearing to purchases of new homes has come under scrutiny from various segments of the property industry, with Crave Property Advisory the latest to weigh in.
The firm’s managing director, Debra Beck-Mewing, has claimed that the policy would restrict access to new homes from first home buyers (FHBs) by placing upload pressure on prices.
“Current commentary on this issue is missing the point in that most economists are focusing on how the changes will impact existing property values,” Ms Beck-Mewing said.
“However, the proposed changes will see first home buyers bear the brunt of the change, which will push the price of new property up.
“New property prices will be hyped as the only way investors can utilise negative gearing, and property spruikers will be in their element as they draw in unsuspecting buyers.”
Ms Beck-Mewing added that the proposed changes to negative gearing would “carve out” a new property classification that would “slant” profits to developers and spruikers.
The managing director’s comments follow the recently released Housing Finance data from the Australian Bureau of Statistics, which revealed that, in seasonally adjusted terms, FHB market share increased to a six-year high of 18.3 per cent of the mortgage market in November 2018.
Further, Ms Beck-Mewing warned that amid the entrenched slowdown in housing market conditions, changes to negative gearing could further “destabilise” the market.
“Applying negative gearing only to new property will energise spruikers who receive massive commissions from developers. The spruikers target inexperienced investors and entice them to buy property simply because of the negative gearing treatment,” she said.
“Areas or developments where investors outnumber home owners are prone to instability because investors have a greater tendency to react to changing market forces. Therefore, Labor’s proposed changes will have another negative flow on by putting unsuspecting investors at risk.”
[Related: FHB market share rises to six-year high]
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