Will negative gearing reform spike house prices?

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The Australian thinks so:

The political fight over housing policy appears set to trigger a price rise before the next election as Labor considers raising $3 billion a year by toughening the tax rules on negative gearing.

…Bank of America Merrill Lynch chief economist Saul ­Eslake said Labor would have to consider this as it outlined its ­policy because of the prospect of a surge of investment leading to a price spike.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.