After spending hundreds of thousands of dollars delivering a scare campaign direct to your email inbox, Australia’s top real estate agents are plotting their next move against Labor’s plans to reform negative gearing. From The Australian:
A group of 19 real estate agencies, including Ray White, McGrath, LJ Hooker and Raine & Horne, spent hundreds of thousands of dollars on the campaign called Negative Gearing Affects Everyone in a bid to fight Bill Shorten’s plan to limit gearing to new housing.
The group, which includes high-profile executives including John McGrath and Brian White, will discuss whether more cash needs to be contributed to push the campaign forward amid uncertainty over the election result. “We’re not saying the job’s over and it’s all finished. It’s really important we continue to stick with the message because no one seems to remember the carnage that happened back in 1987,” Ray White chairman Brian White said, referring to the Hawke Labor government’s 1985 decision to abolish negative gearing, which triggered soaring rents in Sydney and Perth…
Internally, the industry has regarded the campaign as a success, with some early data indicating that areas with a high proportion of investment property owners delivering gains to the Coalition, or experiencing swings to Labor that were smaller than the broader average of 3.7 per cent.
Seriously, that the property lobby can continue to run the lie that Labor’s temporary abolition of negative gearing between 1985 and 1987 triggered soaring rents beggars belief.
In case you have been living under a rock, here are the charts showing the impact on real (inflation-adjusted) rents at that time (shown in red).
Rental growth remained either flat or fell nationally:
In Melbourne:
In Brisbane:
In Adelaide:
In Hobart:
In Canberra:
And in Darwin:
With only Sydney and Perth registering increases, due to very low vacancy rates at the time:
Surely, if negative gearing had any impact on the cost of renting, its abolition in 1985 would have caused rents nationally to explode? Yet, the evidence shows absolutely no impact.
ABC Fact Check has also previously debunked the property lobby’s claim around rents.
Second, why would Labor’s policy force-up rents this time around given that it would channel negative gearing towards new builds, thus boosting construction activity and jobs, in addition to rental availability?
Just look at the Coalition’s own policy towards foreign investment, which restricts foreign buyers to newly constructed dwellings and is virtually identical to Labor’s negative gearing policy. This ‘new homes only’ policy was deemed by the chair of the foreign investment inquiry, Liberal MP Kelly O’Dwyer, to be good for the economy, housing supply and renters:
“Currently the framework seeks to channel foreign investment in residential real estate into new dwellings in order to increase the housing stock for Australians to build, buy or rent. Foreign investment is encouraged in new dwellings whether they be apartments, units or homes because in addition to creating more supply, it also creates more jobs for the building and construction sector – all of which helps to grow our economy”.
Swap the words “foreign investment” for “negative gearing” and the arguments are identical.
The property lobby’s claim that its scare campaign has been a success also doesn’t pass the laugh test. The fact that it fired its best shot, and yet the Coalition is within a whisker of losing the unlosable election, suggests otherwise.
