The Real Estate Institute of Western Australia (REIWA) is calling on all political parties competing in the federal election to commit to no blanket changes to national property tax policies, such as negative gearing and capital gains tax.

The industry group said that meddling with one component of a broader tax system could significantly impact everyday Australians and make the condition of Western property market worse.

“Changing one component of a broader tax system is irresponsible. History has already shown us that removing negative gearing and capital gains tax for investors has wide-ranging implications. In the 1980s when negative gearing was removed, the impact was so significant across the country that negative gearing was re-introduced just two years after it was removed,” REIWA President Damian Collins said.

A total of 330,000 West Australians own at least one investment property, and of those, 215,000 rely on negative gearing to help offset losses incurred through owning a rental, according to data from the Australian Taxation Office (ATO).

“The myth that property investors are wealthy moguls with extensive investment portfolios is simply not true. The vast majority are ‘mum and dad’ investors with less than two rentals who are utilising property investment to help secure their future. Without such a mechanism available to prospective investors to help them afford the ongoing costs associated with owning a rental, many will reconsider if property is a financially viable investment choice, causing them to withdraw from the private rental market or seek alternative investment options,” Collins said.

The value of investor loans has dropped 69% since 2015 due to soft market conditions and moderate consumer-confidence levels. Potential changes to tax policies will only pull investment away from the state’s property market, according to REIWA.  

In addition, the local vacancy rate has slid to 2.3% from a peak of 7.3% in a little over 18 months. If landlords were discouraged from injecting funds into the WA property, tenants would likely face higher prices and reduced affordability because of a shortage of rental supply—  repeating what happened in the 1980s when negative gearing was removed.