Via The Australian:
Labor’s policy to crack down on negative gearing and double capital gains tax is a “dog of a policy” that takes an axe to the housing market instead of a scalpel, the assistant treasurer says.
Michael Sukkar told 2GB Radio this morning that a report on the policy measures by property consultants RiskWise and Wargent Advisory — released earlier this week — shows Labor’s policy is a “risk.”
“It highlights exactly what we have been saying and that is, if you enact Labor’s policy you really risk taking a sledgehammer to the market,” he said.
“You risk that, particularly now where housing prices are cooling off in some areas. You will certainly put up rent, 37 per cent of people rent and you should never forget about those people.”
“Never have I suggested there wasn’t an issue with the really rampant growth we’ve seen,” Mr Sukkar said.
“You don’t make a permanent change to hurt the housing market to address a short-term issue.”
“The last thing any economy wants to see is significant drops in house prices,” he said.
Yes, house prices will fall more that they will otherwise. We reckon 10% is a reasonable figure though some of that might also be absorbed by the investor curbs already in place.
That’s what happens when you remove a long term tax distortion and let the free market set prices. It’s also how you repair housing affordability.
One thing that is absolutely certain is that rents will fall as well given negative gearing will be intact on new builds.
