According to the Housing Industry Association (HIA), the Australian dream of home ownership is at risk from the Labor party's planned rollback of tax breaks for property investors.
Recent research conducted by the HIA has revealed that rental costs will likely increase while the supply of available rental properties decreases.
This has troubling implications for the future.
“Changes to existing capital gains tax and negative gearing arrangements on residential investment properties proposed by the federal opposition will dampen first home buyer capacity to save for their first home,” explained MD at HIA, Graham Wolfe.
He continued, “We know that more than 90% of renters aspire to own their own home. Unfortunately, less than half believe they will achieve this dream.
“Any increase in rental costs will impact capacity to save a deposit, extend the savings’ period and dampen home ownership aspirations.”
The grandfathering provisions that have been proposed to encourage investors to retain existing investment properties will also have a significant impact on decisions about new investments in residential housing.
According to Wolfe, this is due to the “higher taxation grab on investment returns and uncertainty about subsequent sales of new properties and future tax changes.”
The September quarter of 2018 marked the first time in more than a decade that rents in Sydney declined in a significant way.
However, changing the tax treatment on residential investment properties “risks undoing the good work,” through raising prices and making home ownership an increasingly distant dream for renting households.
“Australia needs to reverse this trend, renew our national commitment to home ownership and adopt measures that support first home aspirants. That includes support while saving for a deposit,” concluded Wolfe.