Ahead of the impending Federal Budget, the MP who led a parliamentary inquiry into housing affordability has admitted that negative gearing has driven up house prices, ensuring an increasingly difficult market for first-home buyers.
Liberal member John Anderson told the ABC that negative gearing has created a housing market “dominated by speculative investors”.
“Negative gearing has worked very well when it has provided affordable rental properties,” he said.
“The moment that it intrudes on the marketplace and stops young families from buying the house, that's not ideal. And that's what's happened in this moment when interest rates have gotten so low.
Prime Minister Malcolm Turnbull has indicated there will be no changes to negative gearing in the budget, yet debate about the practice has raged in recent weeks, with Turnbull engaging publically with Grattan Institute CEO John Daley following a Grattan report that recommended changes to negative gearing.
The parliamentary inquiry into housing affordability is published later this year.
Sydney-based mortgage broker Graeme Salt of Origin Finance has experienced the exasperation of first-home buyers when faced with the consequences of negative gearing.
“Many would-be first-homeowners have vented frustrations to me,” Salt told Australian Broker
. “But there is a multitude of fingers to point – it’s not just negative gearing, it is also under-supply of properties and investors, both domestic and foreign.”
Though changes to negative gearing appear a remote possibility, Salt added that brokers who deal with responsible investors should not be adversely affected should any reforms eventually occur.
“I can’t see it having much impact on my business,” he said. “Sensible investors don’t use the availability of negative gearing to determine if something is a good investment or not.”