Negative gearing triggers election debate

Negative gearing has once again become a potential issue in the federal election following Prime Minister Anthony Albanese’s comments on Wednesday.

Although the Prime Minister made it clear the following day that negative gearing changes were “not our policy”, he did not completely rule out future adjustments to this controversial policy.

“Changes to negative gearing would not increase housing supply, but rather discourage investment and have a negative impact on WA’s already difficult rental market,” Hart said.

She said around 85% of rental properties in WA were owned by private investors, many of whom were middle income earners and only had one investment property.

Warnings about a possible exodus of investors

REIWA warned that even the hint of a change in negative gearing could alarm investors and potentially cause them to sell, particularly given the current favorable selling conditions.

Hart noted that Washington’s rental market is still recovering from the impact of COVID rental moratoriums, which have resulted in a significant decline in available rental properties and record-low vacancy rates.

National perspective: The risk of rental shortages

REIWA’s stance aligns with that of the Real Estate Institute of Australia (REIA), whose president Leanne Pilkington warned against undermining negative gearing.

“Disincentivizing investment will exacerbate an already stressed market and lead to a massive exodus of existing investors as they are recruited,” Pilkington said.

She said abolishing negative gearing would reduce the supply of rental properties, drive up rents and make it harder for tenants to find accommodation.

Call for robust policies to support housing investment

Pilkington said almost 38% of housing finance comes from investment loans and therefore urgent policy action is needed to encourage investment and improve housing affordability.

REIA and REIWA continue to advocate for measures that ensure a balanced rental market and warn that discouraging private investment could have serious consequences for both investors and renters.

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