No, the budget’s property tax changes have not spiked rents
I reported last week on claims by NAB’s head of Australian economics, Gareth Spence, and SQM Research managing director, Louis Christopher, that residential rents could soar by 15–30% over the next two years due to the federal budget’s changes to negative gearing and capital gains tax (CGT). “In our view, the changes to the tax The post No, the budget’s property tax changes have not spiked rents…
Recent claims by financial experts, including NAB’s head of Australian economics Gareth Spence and SQM Research managing director Louis Christopher, suggest that the federal budget's changes to negative gearing and capital gains tax could lead to a significant increase in residential rents. According to Spence, "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."
He estimates that a rise in rental yield of 1 percentage point from around 3.5% to approximately 4.5% could result in a 25% to 30% increase in rents, assuming house prices remain constant. Christopher further elaborates, "we estimate between a 1 to 1.5-percentage-point increase in the yield would be needed to compensate investors, and that equates to about a 30% increase in rents."
These experts also acknowledge that the impact of these tax changes could be shared between lower house prices and higher rents, potentially causing an increase of about 15%, which could contribute to inflation given rents' prominent role in the consumer price index.
Written by urgent.news from MacroBusiness's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
