Negative Gearing

This week the Federal Government tested the temperature on changing negative gearing for property investors. There are two things to point out here. Firstly, removing negative gearing will reduce prices as many mum and dad investors won’t be able to afford to keep their properties and will sell, which is good news for first home buyers as it will make it easier to become an owner. On the other side of this, there will be less investment properties available to rent and as such more competition for properties for longer term renters, which will force rental prices up. Not good for renters. Also not good for housing supply.

If the aim of changing negative gearing is to help first home buyers that is great. If it is to be part of the solution to our current housing shortage, it falls well short of the mark.