LABOR’S proposed changes to negative gearing tax policy could see property prices fall by as much as 12 per cent over three years, according to new research by Australia’s most recognised property investment research house.
SQM Research managing director Louis Christopher predicts the best-case scenario will see housing prices ease by 4-8 per cent over a three-year period from 2020 to 2022, assuming an interest-rate cut of 50 basis points by next January.
SQM Research believes market rents could jump between 7 per cent to 12 per cent from 2020 to 2022, assuming the same 50 basis points interest rate cut.
Brisbane and Perth are likely to record the largest rises in rents.
Property sales turnover is predicted to fall another 8-15 per cent by 2022 from 2019 levels with most of the declines in sales to occur in 2020, which would see the flow-on effect to state and territory governments with an aggregate fall in state stamp duty revenue of $2.3 billion.
But if there were no changes to negative gearing, average capital city prices could rise 8-14 per cent over the three years.
Ray White Group managing director Dan White welcomed the SQM report and said it was unsurprising to the leading group, as it confirmed anecdotal evidence from the last time negative gearing was changed in 1985 by the Hawke Labor Government.
“Many of our members, and in fact my own family, witnessed the disastrous impact of radical changes to negative gearing in 1985. Since Chris Bowen first introduced Labor’s negative gearing policy at the last election, there has already been a significant correction in many of the country’s key property markets,” Mr White said.
“It’s difficult to understand why anyone would seek to add additional pressure to an already softened market.
“How far do they want to see prices fall?”