Changes to negative gearing here to stay.
One of the most fraught issues in property has been the political drama over negative gearing.
It was the bunfight at the centre of the last election with the perverse effect of keeping house prices stuck in limbo despite very low interest rates and a surge in population growth.
That uncertainty was killed off last week with ALP Leader, Anthony Albanese, ruling out any changes to negative gearing or the rules around Capital Gain Tax (CGT).
Negative gearing is now the third rail for Australia’s politicians - touch it and you die.
That is good news for 1.3 million Australians claiming a loss from their rental property and the 900,000 investors who aren’t. It’s also reassuring to millions of home owners worried a change in tax treatment could dampen or drag down prices.
The cementing of negative gearing adds to an increasingly bright picture for the property market. Over the last 18 months, every asset class was sorely tested, yet property has proven a stellar investment.
House prices In Melbourne rose 10.4% in the 12 months to July and are now on track to match Sydney’s growth trajectory.
And while first home buyers drove much of the lift in the market over the last 12 months, increasing it’s the return of investors taking centre stage.
Last week, the Australian Prudential Regulation Authority (APRA) showed the proportion of new mortgages taken up by investors is rising.
Australians are voting with their feet (and wallets) to put their faith in property.
Miriam Sandkuhler
Property Prosperity
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