The Housing Industry Association , the voice of Australia’s residential
building industry has warned that restricting access to negative gearing for
residential property would reduce investment in housing, erode housing
affordability and put upward pressure on rents.
The new research paper titled ‘Economic Impacts of Negative Gearing of
Residential Property’ was commissioned by HIA and based on a study conducted by
According to Graham Wolfe, HIA’s Executive Director, Industry Policy and
Media, the research indicates that changing residential negative gearing would
reduce housing affordability, and consequently, lower Australian living
Observing that new housing was already one of the most highly taxed
sectors in the economy, Mr Wolfe noted that the removal of negative gearing
would only discourage investment. This would in turn reduce housing supply and
increase the cost of renting.
Mr Wolfe dispelled the notion that negative gearing was the domain of
so-called ‘wealthy investors’. Official taxation statistics for 2011/12 show
that over 79 per cent of those with a rental investment property have a total
income of less than $100,000; around three quarters earn less than $80,000.
Mr Wolfe said that housing tax reform should begin with abolishing stamp
duty on residential property conveyances, making housing more affordable for
both renters and owner-occupiers. He added that discounting residential
negative gearing in isolation was a retrograde step for tax reform, in terms of
both efficiency and equity.
Pointing out the advantages of negative gearing, he said it promoted
private investment in the rental market, thus stimulating economic activity and
taking the pressure off social housing and the public purse. With an ageing
workforce and future pressure on services, policy settings such as negative
gearing that promote wealth creation and self-sufficiency in retirement should
Mr Wolfe concluded that private investment in residential property
should not be seen as a cash cow to fund the supply of affordable housing.