A new negative gearing scare campaign emerges
Economists warn that the Albanese government’s removal of key investor tax concessions (negative gearing on existing homes and the 50% CGT discount) could force rents up 15–30% over the next two years, far above Treasury’s estimate of $2 a week, adding substantial pressure to inflation at a time when underlying inflation has already sat outside The post A new negative gearing scare campaign…
Economists have raised concerns that the Albanese government's removal of tax concessions for property investors could lead to a significant increase in rents. The government's recent reforms, which include eliminating negative gearing on existing homes and the 50% capital gains tax discount, may push rents up by 15-30% over the next two years, surpassing the Treasury's estimate of a mere $2 per week.
This increase in rents would put substantial pressure on inflation, which has already been running above the Reserve Bank of Australia's 2-3% target for most of the current government's term.
Property investors are expected to demand higher rental yields to compensate for the loss of tax benefits. Banks, analysts, and property researchers estimate that investors will require a 1-1.5 percentage-point increase in yields, which, if house prices remain steady, could translate to a rent increase of 25-30%. Gareth Spence, NAB's head of Australian economics, stated that "the changes to the tax settings for investors in existing dwellings imply that gross rental yields will need to rise in order to compensate for the loss of tax benefits."
The full implications of these tax changes on the property market and inflation remain to be seen, but the potential for a significant rise in rents has economists and industry experts sounding the alarm. The full text of this report is available to MacroBusiness subscribers.
Written by urgent.news from MacroBusiness's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
