Via the ABC comes Opposition finance spokesman Jim Chalmers:
“The housing market is softening in some of the major markets, but we don’t make this policy for one market or another or one set of market conditions or another. You make housing policy as a federal government over the medium to long term. One of the reasons why we are not abolishing negative gearing entirely, we are grandfathering it so that if people are doing it now they can continue to do so, and one of the reasons we are still making it available for new properties is because we wanted to make sure there wasn’t a shock to the system.”
Chalmers laid price falls to date at the feet of APRA:
“It means that there is less appetite and less finance available to investors and there is an argument that introducing our policy at that time is actually a more favourable thing as investors are already slowly softening their appetite for some of these investment properties.
“If you are a first home buyer in this country, we need to make policy over the medium and longer term, in the interests of levelling the playing field so that when people who want to get into their first home go to an auction, they are not competing unfairly with investors who might have 6, 7, 8 properties already.”
Alan Kohler chimed in at The Australian:
…The reason that approvals for high-rise apartments (four-plus storeys) are now crashing (down 38 per cent in August) is not that developers can’t get finance — there is still plenty of high interest rate money available from non-bank lenders. It’s because the developers’ customers — negatively-geared property investors — can’t get bank finance anymore and they can’t afford to borrow at the rates on offer outside the banking system, even tax-deductible.
This is a permanent state affairs, or at least it will last a long time, and will be exacerbated, not helped, by the ALP policy of restricting negative gearing to new properties and banning it on existing buildings.
The aim of the policy is to encourage new building, but it will do the opposite. That’s because the purpose of investing in a new property is to sell it for a capital gain, but at that point it’s an existing property and the buyer can’t negatively gear, which means the resale value is much lower, which is known when it’s new.
I agree and remain of the view that the reform will drive prices lower. Investors are a very long way from abandoning property at this point:
We need (and may see) investor shares of mortgage finance halve yet for a healthy real demand driven market. Negative gearing reform should go ahead to achieve it.
But these days I’m not worried about press warnings or Labor’s will. I worried about this:
The Reserve Bank of Australia and Treasury have privately cautioned the Morrison government that any regulatory response to the financial services Royal Commission must be careful to avoid putting the brakes on lending to home buyers and business.
If Chairsatan Lowe at the RBA is willing to support criminal banking to keep his pet property bubble inflated then he is willing to do anything to achieve that end. Rolling democracy and forcing the new Shorten Government to abandon its negative gearing reforms is chicken feed by comparison.
