The Labor Party and The Greens are both in favour of changes to Australia’s negative gearing scheme, either through only allowing it to be used on new properties or scrapping it all together, but CoreLogic RP Data senior research analyst Cameron Kusher doesn’t believe those plans would provide a quick fix.
“As someone who works analysing housing markets every day it is good to see that housing policy is back on the agenda especially considering that we currently don’t have a Federal Housing Minister,” Kusher said in a recent blog post.
“While the removal of negative gearing may help improve the Budget bottom line it is unlikely to be the silver bullet which improves housing affordability.”
Kusher believes, like many others, that negative gearing incentivises people to invest in property which results in affordable housing coming on line.
“In my opinion negative gearing is essentially a way in which the Government outsources social housing to the private sector,” he said.
“If we take a look at dwelling approvals data you can see that very few new approvals have been granted to the public sector over the past three decades.
“Typically more than 90% of all dwelling approvals over any month are granted to the privates sector with very few being approved and ultimately constructed by the public sector.”
Kusher believes focusing on negative gearing as the cause for high house prices is too simplistic.
“The housing market has many moving parts that result in relatively expensive housing prices here in Australia.
“Zoning restrictions on developable land which drive up the cost of housing, the tax-free nature of the family home, stamp duty, the mass-centralisation of our population and shortage of jobs away from the major capital cities all conspire to make housing less affordable.
“Any discussion about improving housing affordability shouldn’t solely focus on just one of the issues such as negative gearing rather it needs to look at all of the factors which contribute to high housing costs.”