A report has claimed negative gearing changes won't destroy the nation's property market... Auction market hits best mark in four weeks...
Negative gearing changes won't destroy property market: Report
​While the decision by the Turnbull government to retreat from the idea of altering Australia’s negative gearing arrangements have been welcomed by some, others have claimed the decision will result in billions of dollars worth of lost revenue.
After earlier signalling that the upcoming Federal Budget could contain changes to the tax break, the Coalition last weekend announced that it would leave it as is.
That announcement was welcomed by a number of property interest groups, but a report released this week by think-tank the Grattan Institute - Hot property: negative gearing and capital gains tax reform – claims the government would be sacrificing a significant amount of revenue and backs the proposal of the Federal Opposition to quarantine negative gearing to new builds only from 1 July 2017 and reduce the capital gains tax discount to 25%.
Report authors John Daley and Danielle Wood claim those changes, along with not allowing negative gearing to be deducted against regular wages, would generate an additional $5.3 billion a year in revenue.
Daley and Wood also claim the changes would not destroy the nation’s property market.
“We estimate property prices would be up to 2% lower under these reforms than they would be otherwise,” Daley said.
“Contrary to urban myth, rents won’t change much, nor will housing markets collapse. The effects on property prices would be small compared to factors such as interest rates and the supply of land,” he said.
“These two sensible reforms won’t hurt private savings much but will save the government a lot of money.”
Auction market hits best mark in four weeks
While volumes may have been down as a result of the Anzac Day public holiday, Australia’s auction market put up a solid showing last week.
Figures from CoreLogic RP Data show there were 1,542 auctions held last week with the preliminary clearance rate currently sitting at 70%
That figure is up from the previous week’s final result of 67.4% and if there is no downward revision it will be the highest mark recorded in four weeks.
Sydney was the nation’s strongest auction market last week, with the city holding 626 auctions and returning a preliminary clearance rate of 78.5%.
