70% of investors to shun existing property under Labor

Advertisement

By Leith van Onselen

In great news for first home buyers (FHBs), a new survey conducted by Washington Brown Quantity Surveyors has revealed that more than 70% of investors would shy away from established homes if Labor’s reforms to negative gearing are implemented:

“With the clear majority of respondents having second thoughts about purchasing a second-hand property if this proposed policy is implemented, any government should be considering the wider implications for both the property markets around Australia and the effect on the broader economy,” said Tyron Hyde of Washington Brown Quantity Surveyors.

Industry special pleading aside, the empirical data shows that there is a direct negative correlation between investor and FHB demand (see next chart), meaning that if investor demand is reduced, then FHBs would necessarily be encouraged to enter the market.

Advertisement

This loss of investors from established homes will also have minimal (if any) impact on rents, given each new FHB represents one less renter, thus leaving the rental supply-demand balance unchanged.

[email protected]

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.