Economist Leith van Onselen disputed both Mr Hockey’s claim about rents and Mr Morrison’s argument that negative gearing helped build housing supply.
Renters would be turned into owner-occupiers, thereby reducing demand for rental properties and leaving the rental supply-demand balance and rents unchanged.
“This is exactly what happened between 1985 and 1987 when negative gearing was temporarily restricted by the Hawke government,” Mr van Onselen wrote on the Macro Business website.
Congratulations to the AFR for headlining LVO’s demolition of Joe Hockey’s negative gearing lies this afternoon:
Using housing finance data from the Australian Bureau of Statistics, the former Treasury officer argued negative gearing did little to boost housing supply with investors piling into established homes rather than new construction.
“Blind Freddy can see that negative gearing does nothing to improve rental affordability or availability, precisely because it does nothing to boost housing supply.”