SQM crashes and burns in Labor negative gearing attack

By Leith van Onselen

For years, SQM Research’s managing director, Louis Christopher, was a big supporter of negative gearing reform (see here). Then in 2016, Christopher flip-flopped, releasing an incredibly superficial report that was comprehensively debunked by Dr Gavin R Putland.

Today, Louis Christopher has updated its 2016 report, which reaches many of the same flawed conclusions. Here’s the report’s “key findings”:

Yields to Rise

International comparisons, historical precedents and the effective grossed up yield benefit all indicate that acquisition rental yields are likely to rise between 0.85% and 1.2% (85 to 120 basis points) over a two to three year period post the implementation of the new tax policy. Average acquisition yields therefore may rise from approximately 4.0% up to 5.2%. If interest rates are cut by 50 basis points, the rise in yields will be smaller, with a rise to between 65 and 95 basis points. Much would depend how much of the interest rate cut is passed on by the banks.

Rents to Remain Stable – Initially

Rental changes are initially likely to remain stable at -1% to +1%. However there is likely to be upward pressure from 2021 due to the current slump in building approvals which will be aggravated by the loss of negative gearing. The slump in approvals has now fallen below underlying demand requirements which may create a shortage of dwellings from late 2020.
SQM Research believes market rents could accelerate rise between 7% to 12% over the period 2020 to 2022, assuming there is an interest rate cut. Brisbane and Perth are likely to record the largest rises in rents.

Dwelling Prices to Fall

Given the forecast of initial negligible rental growth and a rise in gross rental yields, SQM Research forecasts further price falls in the housing market over the period 2020 to 2022. There may be a brief rally in the lead up to the proposed change of negative gearing, especially if there is an interest rate cut prior to legislation passing. This would also be as a result of grandfathering opportunities and, potentially a mild loosening of the current lending restrictions by the banks.

Thereafter, dwelling prices would likely fall again due to a rapid decline in investor demand.

Sales Turnover and Stamp Duty Revenue to Fall

Property sales turnover is predicted to fall another 8% to 15% from 2019 levels with most of the declines in sales to occur in calendar 2020. This would result in a fall in aggregate state stamp duty revenue of $2.3 billion dollars.

Build-to-Rent Schemes will increase

With the housing market potentially trading at a higher gross rental yield, we anticipate an increase in interest in the housing market by financial institutions, particularly industry super funds who will invest via build-to-rent schemes. This is a concept that has had some success in improving rental affordability overseas and could be useful for improving long term affordability in Australia.

Off-the-plan Investors at Risk

Investors seeking to benefit from negative gearing remaining on new properties/off-the-plan developments are exposed to a substantial risk of their property being valued below purchase price, especially if the investor is seeking to sell their investment within the first three years.

Comments

Managing Director of SQM Research, Louis Christopher, said “In short, if Labor’s Negative Gearing policy is legislated in its current form, we expect a rise in rental yields which will occur through a combination of additional falling dwelling prices and, eventually, a rise in rents.

Our analysis suggests the market impact would last by around three years. There is, right now increased consensus that the RBA may have to cut rates this year. If we were to see a cut of say 50 basis points, this would provide some cushion to the effects of Negative gearing changes. Even so, the market would still record dwelling price falls. Housing construction; already in a slump, would likely fall further due to the lack of investor demand. This would set up a shortage of housing come later 2020, based on current strong population growth rates.

Such a tax change during a housing downturn is in our opinion a risky move for the economy and so we encourage discussion of perhaps a phase in period for such legislation that would reduce the economic shock that this tax change could create.

Once again, strongly encourage Labor to consider some of the investor issues, particularly surrounding the distortion their policy may create on pricing of off-the-plan developments and the likely losses investors in those properties would face come resale time to those who won’t have the tax concession.

While we take the view that negative gearing reform is a good thing over the long term, such reform should be executed as part of a wider property tax reform that should be phased in over time.”

So basically, property prices and dwelling construction will be higher and rents will be lower under a Coalition Government (Scenario 3).

While SQM’s assertion about dwelling values falling and rental yields rising is fair (although its price forecasts are a bit extreme), its claim that Labor’s policy would drive rents-up and push dwelling construction down is flat-out ridiculous.

As we all know, Labor’s policy will redirect negative gearing tax benefits into newly constructed dwellings, which would make new dwellings relatively more attractive to would-be investors, thereby helping to increase construction and lower rents (other things equal).

Curiously, SQM has ignored this fact and instead argued that “housing construction… would likely fall further due to the lack of investor demand” because of “the likely losses investors in those properties would face come resale time to those who won’t have the tax concession”.

SQM directly contradicts itself here. While it argues on the one hand that investors would avoid new dwellings for fear of having to sell at a loss, it simultaneouly argues that “there may be a brief rally in the lead up to the proposed change of negative gearing… as a result of grandfathering opportunities”.

If investors will supposedly be scared away from new properties because they won’t be able to re-sell them to negative-gearers, why would they rush to buy established properties before the policy change given they won’t be able to re-sell the right to claim negative gearing afterwards?

In any event, several commentators and builders have recently admitted that Labor’s negative gearing for new-builds policy will boost dwelling construction (other things equal), thereby lowering rents.

Here’s Deutsche Bank:

“Our sense is that the relative attractiveness of new dwelling investment compared to investment in established dwellings should be a positive, at least at the margin, for new dwelling construction”.

Here’s Sydney developer, Capio Property Group:

“This reform is exactly what the market needs … it’s a shot in the arm for what is a depleted off-the-plan market”.

And here’s listed developer, Stockland:

“Our business will rip… We’re all about new product…  If the investors are going to participate in the market like they have in the past, that means they’re all pointing at our product and other developers’ products”…

Of course, this is precisely the stated objective of Labor’s policy: to put taxpayer subsidies to work to boost supply and lower both prices and rents.

What Really Happened Between 1985 and 1987?

The most questionable section of SQM Research’s report relates to its re-writing of history regarding the temporary abolition of negative gearing between 1985 and 1987. This, of course, was completely different to Labor’s policy, since it didn’t maintain negative gearing for new homes.

Nevertheless,  SQM claims the complete abolition of negative gearing between 1985 and 1987 caused rents to rise:

According the Australian Bureau of Statistics Consumer Price Index Table Sydney rents rose by 31.9%, Melbourne rose by 22.9%. Perth rose the most by 33.5%. In all, five of the eight capital cities rose by more than the CPI increases over the period Negative Gearing was repealed.

Additional evidence from the Real Estate Institute of Australia (REIA) suggests that rents for houses recorded rampant increases over the period. The REIA records that rents for 3-bedroom houses in Sydney, rose by 43% over the period June 1985 to September 1987.

And it caused dwelling construction to fall:

Housing Commencements Fell in all States

The average decline was 23.7%. The Northern Territory recorded the largest decline, falling by 47%. NSW fell by 30.2%. Victoria fell by 29.9%. Queensland fell by 12.9%.

The large declines in commencements reduced new supply relative to underlying demand. This would have directly attributed to the large rises in rents over the same period.

Leading to the below conclusion:

There was an impact on the housing market as a result of the repeal of Negative Gearing between 1985 and 1987. This was reflected in a sharp decline in commencements, a rise in rents for the majority of capital cities over and above CPI, a fall in sales turnover, a rise in rental yields and a fall in housing finance approvals.

Again, this is incredibly superficial analysis that is easily debunked.

First, SQM gives no longer-term context. The below charts show clearly that real rental growth only increased in Sydney and Perth when negative gearing was abolished in the 1980s (shown in red):

ScreenHunter_3798 Aug. 15 11.12
ScreenHunter_3802 Aug. 15 11.14

Whereas real rental growth was flat or fell elsewhere:

ScreenHunter_3799 Aug. 15 11.12
ScreenHunter_3800 Aug. 15 11.12
ScreenHunter_3801 Aug. 15 11.12
ScreenHunter_3803 Aug. 15 11.15
ScreenHunter_3804 Aug. 15 11.15

There was also no discernible impact nationally:

But don’t just take my word for it. Here’s what the 1987 Cabinet Submission on negative gearing said about rental growth (my emphasis):

“Data for individual capital cities suggest that, as might be expected, rents have risen more rapidly in those cities where vacancy rates have been tightest. In the twelve months to March quarter 1987, rent increases in six of the eight capitals lagged the CPI“.

Now, if there was any truth whatsoever in the claim that abolishing negative gearing pushed up rents, then wouldn’t rental growth have risen Australia-wide, rather than in only Sydney and Perth?

As for the REIA data, real rents fell across Melbourne, Adelaide and Canberra, according to SQM’s own chart. Whoops!

As an aside, the 1987 Cabinet Submission on negative gearing explicitly stated that “the ABS measure of rental cost movements [is] superior” because “the ABS index is based on a properly constructed sample of dwellings representative of the overall rental stock. The MBFA and REIA measure the asking rent of dwellings available through advertisements (MBFA) and real estate agents (REIA) without full regard to their representative nature”.

Finally, SQM’s claim that dwelling construction fell after negative gearing was repealed is asinine. The fall in construction can be explained by the sharp rise in mortgage rates, from 11.5% in March 1985 to 15.5% in September 1986 to June 1987 (circled below):

Indeed, the decline in construction, which bottomed out in March 1987, was one of six corrections over the last three decades that all closely followed, or were simultaneous with, rises in mortgage rates.

SQM references the rise in mortgage rates in passing, only to then dismiss it:

There were other contributing factors over the time. Average home lending rates rose from 11.5% (June 1985) up to 15.5% (May 1986). Then were later cut from September 1987.

This would have also been a contributing factor in the decline of housing finance approvals and commencements plus the rise in yields. However, this alone can not explain the immediate acceleration rents that happened in some cities such as Sydney.

We also note that gross rental yields fell post the re-introduction of Negative Gearing even while interest rates rose again over the course of 1988 to 1990; also a time when rental growth was slowing.

Amazingly, regarding the last paragraph, SQM doesn’t acknowledge that the stock-market bubble would have attracted funds away from property, or that the ensuing “crash of ’87”, would have caused a flight back to property.

Overall, this is very superficial analysis that has attempted to re-write history, alongside misreading the likely impact on construction and rents.

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Comments

  1. Well pulled apart Leith. Like they say, you can twist any data to suit your agenda and it looks like Louis is doing the scare campaign. Maybe his subscriptions have taken a battering with the downturn.

  2. Am I reading that table correctly. Looking at dwelling values for sydney, comparing scenario 1 and scenario 3 the only difference is the negative gearing change and SQM predicts 20% difference?

  3. Leith is of course correct, but this will matter not a whit to the boneheads who believe this. They’ll never be convinced

    • As the saying goes “It is difficult to get a man to understand something, when his salary depends upon his not understanding it”

  4. JunkyardMEMBER

    I’m confused, if yields improve, if property is cheaper to buy and can generate better rents, doesn’t that make it look more like an actual properly functioning investment?

    You would think property industry types would be all over that.

    • Yep an investment that actually generates positive cashflow is a good investment. This whole madness where investors are chasing capital gains fueled by cheap easy credit is madness. Negative gearing with CGT discounts just fuel this crazy scheme.

      You need to remove one, having neg gearing and CGT discount is just cancer for our society.

      Personally I think the CGT discount is the problem, we had neg gearing before the discount and it never caused bubble like madness. Reducing tax on capital gains encourages people to lump their income into that basket.

      • Strange Economics of IO and NGMEMBER

        Yep the CGT cut (from no analyis except a rush of blood to Peter Costello’s head) was the fuel on the negative gearing fire.

    • Junkyard, that’s the irony of negative gearing. It pushes prices up and over the past twenty years along with other factors, pushed prices up to ridiculous heights, completely decoupled from rental returns. The irony is that the more prices are out of whack with rental returns, the greater the need for negative gearing.

      Remove negative gearing, and prices fall to be more in line with rents, but as with anything, take something away from someone benefiting and there is going to be a lot of squealing.

  5. Did anyone keep a note of which politicians denied that negative gearing pushes up house prices back in the day? I’d love to see a few of them skewered for changing their tune in the face of it’s imminent curtailment.

    • Lachlan, what happened back then was that the property lobby was the one putting pressure on the Hawke/Keating government and as there was an election looming they backflipped to win votes. But times were different then. The 1987 crash meant that money flooded into property rather than the stock market pushing up prices until the 1991 recession we had to have. However, at the peak of the boom, it was nothing compared to the bubble we have been experiencing over the past few years.

  6. reusachtigeMEMBER

    This fella is spot on and totally understands how housing markets work unlike the rank amateurs with no skin in the game, ever, who comment on this blog from their mums place.

  7. What’s truly incredible is that rents increased by far greater margin both before and after negative gearing being placed on mute, and absolutely no one mentions it.

  8. Curious – is the Australian Financial Review operated by the Liberal party these days?! That rag has a serious bias issue.

    • “Everyone has the expectation that now you have a house you can get a second house.”

      LOL

      Wasn’t there a South Park episode in which one parent (Stan’s?) placed a big bet in a casino and won big, only to go on to lose everything by placing the whole proceeds on another bet?

  9. Wonder what his game is. Seems to be getting into the RWNJ space if his twitter likes are any indication.

  10. Another ethical problem with NG not often discussed is – no diversification. Property is very expensive and you can’t really allocate it $50k. You go all in. Government policy encouraging all eggs in one basket investment after the GFC and clear evidence that property can fall is irresponsible. And that is one of the problems with this downturn, people cannot really reduce exposure, they are in or not. So now that ‘property always goes up’ theory is debunked, and people try and get out, expecting mum & dad investment into property to fall of the cliff.

    • Yeah, the trading volume of a property market is much thinner than that of a share market (unless you are talking about the likes of BRK-A).

      The thinner the market the larger the spread and the swing.

    • SoMPLSBoyMEMBER

      Great points AI!
      Behind the A Gov’t policy was the ‘banking policy’ whose objective was to amplify their ‘share of wallet’ of the populace. A Gov’t policies ( CGT and especially NG) encouraged many to adopt debt levels that heretofore would make rational consumers choke on the always lurking dangers.
      The FIRE succeeded in their mission-there is no doubt- as Strayan retail debt levels approach the ionosphere. The capacity to lend correlates with the capacity to borrow and this limit has been reached and exceeded and both sides of these greed-driven handshakes are seriously damaged as the inevitable price falls have arrived.

      Control of Straya’s economic future has been lost and this is not a recent development as those in FIRE are suggesting; it was years ago when prudent debt-service ratios were rapidly expanded ( with the A Gov’s help) to deify the nation’s most powerful lobby group. It was a ‘given’ then that there would be H3ll to pay and now we pay.

    • Strange Economics of IO and NGMEMBER

      Yep and those who invested blindly in NG and IO property on a 10% deposit made the millions on a 200% rise. Blind uneducated pop psychology paid off.

      The rest of us invested in the sensible stock market, which has risen a total of -20% since 2006. Everyone on MB reads too much. Next time follow the pub crowd ..

      Now finally property goes down 20% before the govt rescues it… Whoopee do…

      • ChristopherJMEMBER

        You don’t have to type out ‘Strange Economics of IO and NG’ everytime, do you bro? /s
        Better handle than mine. Didn’t give mine a whole lot of, well, anything really

        You are right. Stock prices have gone nowhere in the last decade. Dividends keep many invested.

        We’re where we are at around 20 per cent? Without the looming catastrophe for working men and women…

      • Strange Economics of IO and NGMEMBER

        And the only shares that did any good were the banks and developers related to the housing bubble.
        4 banks, 2 mining companies are most of the Australian share market.
        No other industries after the bubble burst and China slows…

        The story of the 21st century in Oz :
        Over thinking Mugs bought shares and made -20% , punters went to BBQs and took their fishing boats out, and didn’t waste time analysing, boasted about their NG investments and made 100%.

        And the name gives saved options.
        IO and NG are the bubble tricks, thanks to Costello, Australia’s worst treasurer with his long term results.

  11. “Strongly encourage Labor to consider some of the investor issues, particularly surrounding the distortion their policy may create”. They are eliminating, not creating, a distortion, Louis. Ffs.

    • Totally remove negative gearing (no grandfathering, no application to new builds) and remove all distortions :).

      • NG’s death was a necessary loss. Soon I will have a new apprentice, one far younger and more powerful.

      • Grandfathering is overestimated, in my view.
        Even if left as is it condemns greater fools to PPOR buyers and that is small enough market for Capital Gain investors not to score.
        It makes little difference but it optics are good.

    • To cheat market crash is the power only one has achieved, but if we work together, I know we can discover the secret.

    • They are creating new distortions, such as the ability of those with investment income to continue negatively gearing established homes.

  12. Funny. You want Labor’s change to improve affordability, Leith, yet you won’t acknowledge that means falling prices. Something I thought your base here, would like?
    You would do well too to acknowledge that dwelling commencements did fall significantly over the 85 to 87 period. That’s a fact. Something you don’t want to admit to I suspect because it damages your case. The charts on the rents we published are real. The main chart from the ABS CPI index and that index clearly illustrates rents for the majority of cities rose above CPI increases at the time. Further, rental rises were lower in the lead up to ’85 and were rising at a decelerated rate between late ’87 to ’89. Why omit these points? Because it is an inconvenient truth for you, Leith? Come on, man. Fair debate here please.

    Now, we are being very consistent here. We are in favor of negative gearing changes along with other property taxation reform including the incorporation of a broad based land tax. But how this is executed is critical. Phasing it all in over time makes better sense. And no, Grandfathering isn’t enough. Phase it in over three years and that reduces the economic shock risk. Sadly, the majority of you audience here probably hates that notion as it would mean no massive housing crash..

    • Thickie McBigot

      “Black Dragon” LMAO

      Why not simply transfer the NG tax distortion/break to new OOs instead of investors?

      • Thickie McBigot

        Was going for something that encapsulated the personality of some of the MB loonie fringe dwellers. 🙂

        Think you should consider doing a podcast with LvO considering there is A LOT you agree on from migration to property overvaluation. If debate is to be reasonable it’s worth discussing what unites you and remembering that before we then go into our tribal corners… thoughts?

      • Too deadly bruv

        ” I like Leith and have met him a couple of times over the years for a coffee in Melbourne.”

        Do you also like HnH?

    • I am sure our house prices are resilient enough that to have downward pressure applied for 3 years as opposed to an instant change would stop them falling. but what about the Chinese investment dropping off a cliff? banks lending standards being enforced, the ATO focusing on rental income, the introduction of AML for property (pipe dream huh), america and china becoming preferred trade partners and cutting us out of the picture, and perhaps interest rates higher than 3%? You want to pin economic shock on just NEG Gearing? BTW, have you read up on Keen and the credit impulse. The rate of change of credit issuance has changed direction.. the bust is on 🙂

    • “yet you won’t acknowledge that means falling prices”

      Ah, I explicitly agreed with you that prices will fall and yields will rise.

      “You would do well too to acknowledge that dwelling commencements did fall significantly over the 85 to 87 period”.

      I did. However, you blame it on negative gearing when the culprit was more likely the sharp lift in interest rates and the stock market bubble, which sucked money out of property.

      “The charts on the rents we published are real. The main chart from the ABS CPI index and that index clearly illustrates rents for the majority of cities rose above CPI increases at the time”.

      So what? My charts are also real and show that the growth in real rents only rose in Sydney and Perth. Also, it was below that both before and after the negative gearing change. Your REIA chart also shows that real rents fell across three capitals.

      Surely if negative gearing caused rents to rise, then wouldn’t rental growth have risen across Australia, not just in Sydney and Perth? Pretty basic stuff. You’ve tried to find a negative gearing ‘smoking gun’ when there isn’t one.

      “Further, rental rises were lower in the lead up to ’85 and were rising at a decelerated rate between late ’87 to ’89. Why omit these points? Because it is an inconvenient truth for you, Leith? Come on, man. Fair debate here please”.

      My charts prove you wrong here. I’ve used the very same ABS CPI/Rent data as you. Take a look. There was absolutely nothing exceptional about this period.

      • Funny enough, the Grattan Institute came to exactly the same conclusion on rents as me:

        “The potential effects of tax changes on rents are perhaps the most contentious. Concerns persist that limiting negative gearing or reducing the capital gains tax discount will reduce the supply of rental properties and push up rents.

        To some extent these claims are based on experiences from the 1980s, particularly in Sydney. In 1985, the Hawke Government restricted negative gearing so that rental losses could not be used to reduce tax payable on other income streams. Rents rose rapidly in Perth and somewhat in Sydney. Two years later, the policy was abolished out of concern for increasing rental prices.

        History might have taught a different lesson if fewer of Australia’s Prime Ministers and Treasurers came from Sydney. Although the tax changes were nation-wide, inflation-adjusted rents were stable in Melbourne and actually fell in Adelaide and Brisbane (Figure 14). In Sydney and Perth, rent rises were in fact driven not by tax changes but by population growth and insufficient residential construction – due to high borrowing rates and competition from the stock market for funds”.

        Again, there is no smoking gun here.

      • Surely if negative gearing caused rents to rise, then wouldn’t rental growth have risen across Australia, not just in Sydney and Perth? Pretty basic stuff. You’ve tried to find a negative gearing ‘smoking gun’ when there isn’t one.

        Similarly, if NG caused house prices to rise, then wouldn’t they have risen across Australia, not just the East Coast?

      • Yes, it is basic stuff which you don’t want to state. The rent rises back in the 80s clearly record that rents rose above CPI in the majority of cities, Leith. Indeed rents were rising at a slower pace before and after the negative gearing repeal period. That is according to the ABS. Those are the facts.
        Have you considered that the acceleration in rents was actually fueling inflation at the time? Certainly rents are a large composition of the CPI basket.
        I am glad you acknowledge that housing construction fell over the period. We have never stated that was solely to do with the NG change and do acknowledge that the rise in interest rates were a contributor. But at the same time, you would do well to also acknowledge the NG change was also a contributor instead of just pointing to anything BUT that large taxation change.

        Finally if you actually think Investors are going to pile into OTP properties due to this tax change and therefore save housing construction, you are kidding yourself. OTP is risky at the best of times. Think of OPAL as a start! It won’t happen. Housing completions are going to take a big fall and given the rather strong population growth rates still with us, rental stock is going to be absorbed in quick fashion creating upward pressure on rents.
        Anyway, a bit pointless in carrying on the debate when your partner is so trigger happy..

      • “Finally if you actually think Investors are going to pile into OTP properties due to this tax change and therefore save housing construction, you are kidding yourself.”

        And yet you explicitly state that investors will pile into established dwellings before negative gearing is cut off, even though they know they won’t be able to pass on negative benefits to future buyers. Inconsistent much?

    • I don’t want a crash thanks

      I would prefer there is no grandfathering but it is introduced over time. Grandfathering is just a distortion for those already in the club.

      • Those who are already in the club are the most important people, you will find. Best looking too.

    • Dear Black_Dragon,

      Even if all that were conceded (a big “if”), you have skated around the fact that the experiment of ’85 to ’87 didn’t maintain the NG deduction for new homes. How then is it applicable to the present debate?

      You might try to make it applicable by claiming that the inability to re-sell NG rights is as bad as the complete absence of such rights. But that claim wouldn’t pass the laugh test – as you implicitly admit, by suggesting that the introduction of Labor’s policy will be preceded by a rush to buy up grandfathered properties (which can’t be re-sold with grandfathering intact), and followed by a reluctance to sell them.

      Alternatively, you might claim that “this time it’s different” because of the increase in CGT. But that won’t fly, because the CGT was first introduced in ’85!

    • Strange Economics of IO and NGMEMBER

      The popular view is affordability is lower payments (lower interest and Interest only). NOT lower price.
      No one ever plans to pay back any the capital so that is the wrong way to consider.

      A 2 million house at 2% interest (available soon) is cheaper than a 1 million at 6%.
      Election time, so panic time RBA and Lower the rates….

  13. Won’t someone think of the speculators! The ATO should have categorised most of these absurd loss making speculative interest shelters as on capital account and we wouldn’t be in this place.

  14. ceteris paribus

    This issue is not even an economic question. The question is whether houses are for people or just board collection pieces to be stuffed, in the greatest numbers as possible, into the paws of a few.
    No one would happily choose to walk the path from this outrageous ponzi to housing sanity. But staying put is no option at all.
    When the economy turns toxic, the primary issue should probably be consideration for recent owner-occupier buyers who may be just be able to continue to tread water.

    • I finally managed to include your nom de plume into an evaluation the other day.

      It raised some quizzical looks, as did ipso facto and inter alia.

      • ceteris paribus

        Yep, “ceteris paribus” is a handy little disclaimer against those who wait primed to hit us with the phrase: “What a gross generalisation”!- a fate we have all suffered from time to time, no doubt often with good reason.

  15. As we all know, Labor’s policy will redirect negative gearing tax benefits into newly constructed dwellings, which would make new dwellings relatively more attractive to would-be investors, thereby helping to increase construction and lower rents (other things equal).

    The problem is, other things aren’t equal because the ALP want to reduce the CGT discount at the same time.

  16. I hope Mr Christopher’s 2019 forecasts are as accurate as his 2018 ones.

    https://www.propertyobserver.com.au/forward-planning/investment-strategy/property-news-and-insights/79288-house-price-growth-forecast-for-2018-across-australia-sqm.html

    Australia’s housing market will likely record moderated dwelling price rises in 2018, with Melbourne again being the top mainland performer, according to SQM housing expert Louis Christopher in his end of year review. In 2018, Mr Christopher expects national house prices to rise between four and eight percent.

    It will be led on the mainland by Melbourne with a gain of seven to 12 per cent. Hobart will be even stronger at eight to 13 per cent. SQM tips Canberra will show five to nine per cent price growth. Sydney house prices are forecast to rise four to eight per cent. Perth will tick over into mildly positive territory, with small gains tipped in Adelaide and Brisbane.