While Treasurer Josh Frydenberg desperately tries to scare voters into believing that Labor’s negative gearing policy would simultaneously smash house prices and force up rents, the Real Estate Institute of Western Australia (REIWA) has admitted that Labor’s policy would actually make rents more affordable:
REIWA analysis shows the upward trajectory of the Perth rental market should continue through 2019, with stable population growth and slowing new-building construction levels the key drivers for this improvement.
Mr Collins said the Perth rental market had lead the way in 2018, with stable median rents, healthy leasing activity levels, declining listings and a plummeting vacancy rate.
“With population growth in WA expected to remain stable and new dwelling commencements slowing, available rental stock should continue to decline. This should see competition amongst tenants increase, putting further downward pressure on the vacancy rate, which recently dropped below four per cent for the first time in four years,” Mr Collins said…
“We’re at 19 months and counting of stable median rent prices in Perth. If listings continue to decline and leasing volumes remain healthy, we should see the overall median rent price increase in 2019 for the first time since September 2014,” Mr Collins said.
While REIWA’s 2019 outlook for the Perth rental market is positive, any changes to negative gearing could pose a risk for both the rental sector and wider property market.
“In the short term, the improvements we’ve observed in the rental market could see investors returning to the market, however if changes to negative gearing are legislated, this will likely dampen investor activity and have a detrimental effect on the wider WA property market just as it is starting to find its feet,” Mr Collins said.
“As the next Federal Election nears, REIWA will continue its efforts to ensure politicians do not meddle with negative gearing to ensure a healthy and sustainable rental market into the future.”
This, of course, is the stated intent of Labor’s policy, which will permit negative gearing for newly constructed dwellings, thereby lifting rental supply.
It’s also exactly the same approach as the Coalition’s policy restricting foreign investment to newly constructed dwellings, which is aimed at boosting dwelling supply, economic activity and jobs, as explained by the chair of the foreign investment inquiry, Liberal MP Kelly O’Dwyer:
“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”.
Stop lying, Josh Frydenberg.