Perth’s new apartment market recorded its strongest quarter of sales since Q4 2021, with 412 apartments sold in Q1 2026 and a record quarterly sold value of $537 million, according to Urbis’ latest Apartment Essentials results.

Urbis said the March quarter result reflects strong, highly product‑specific demand across both ends of the market, from more attainable projects delivering at scale, through to premium stock being absorbed by equity‑rich downsizers.&nbsp;

David Cresp, Partner at Urbis, said the key story in Perth is not demand, it is the market’s ability to convert demand into delivered housing.&nbsp;

“This is the strongest sales quarter since Q4 2021, and it reinforces that demand in Perth is real and it’s local,” David Cresp said. “But the task now is delivery, turning that demand into projects that can actually be built and completed.”&nbsp;

[smartcode_project:default project_id=110291 project_image_fid=302785]

<h2>Affordable product leads, premium demand remains resilient</h2>

Sales in Q1 were led by more affordable projects, with The Boulevard (SKS Group) recording 115 sales in the quarter, the presentation noting this is only the second time a single project has surpassed 100 quarterly sales. The project was able to offer more affordable housing product right next to a train station.&nbsp;

Palmyra West (Finbar) also delivered strong results with 28 sales in Q1, following 84 sales in Q4, with an average price of under $800,000, underscoring depth of demand for well‑located, attainable new stock.&nbsp;

At the premium end, Urbis said downsizer demand is continuing, with the results highlighting Romeo (Applecross, Finbar) recording 75 sales and reaching almost 50% sold in one quarter.

Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.

Urbis noted that Perth apartment demand is not speculative, not investor‑led, and not uniform, describing it as localised, often equity‑driven and highly product‑specific, a pattern reflected in the polarisation between strong “attainable” performers and premium downsizer product.&nbsp;

[smartcode_project:default project_id=148957 project_image_fid=364102]

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

Urbis said pricing pressure is cost not demand‑driven: construction costs and delivery risk are now a central constraint, with the results noting build costs remain elevated and volatile, and that energy, fuel and labour uncertainty weigh on feasibility.

David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.

“Developers are really feeling the pressure from a building market that was operating at capacity and securing a builder is challenging,” David Cresp said, adding that even where a builder can be secured, “trying to get to the price that makes the development financially viable is incredibly challenging in the current market.”&nbsp;

Urbis’ broader WA commentary also notes that industry remains at or above capacity with lot and housing creation, and that many builders are limiting new sales to manage stretched workforces and fixed‑price contract pressures, conditions that flow directly into apartment feasibility and delivery timing.

[smartcode_project:default project_id=108869 project_image_fid=317905]

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

While near‑term supply remains constrained, Urbis’ forecast shows completions lifting “Supply is forecast to be back above 1,500 apartments per annum for the first time since 2019”, with 1,775 completions forecast for 2026, and volumes remaining above that level over the following years.&nbsp;

Looking further ahead, completions are forecast to reach 2,500 in 2028, with the report noting 32% of that total is social/affordable, reflecting the role of government‑supported delivery in rebuilding the pipeline.&nbsp;

However, Urbis said Perth remains behind comparable markets on pipeline scale. In a national comparison of projects under construction, the report shows under construction Perth Build‑to‑Sell (BTS) at 3,446 apartments versus the Gold Coast at 7,922. Mr Cresp said “The challenge for Perth is how to we grow the delivery pipeline”.

Urbis’ conclusion is that Perth’s market is increasingly defined by product discipline and delivery certainty, with the research identifying “delivery certainty is key” and calling out builder risk and procurement models as core success factors, alongside “timing and staging”.&nbsp;

Joel Robinson

Perth apartment sales hit strongest pace since late 2021 as builder capacity tightens

<a href="https://www.apartments.com.au/developers/sammut-developments">Sammut Group</a> has secured development approval for its latest Brisbane apartment project, marking the Sydney developer’s next step in expanding its Queensland pipeline following the success of its debut Gold Coast development, Coast.

The approved project at <a href="https://www.apartments.com.au/new-apartments/44-glen-road-toowong-qld-4066">44 Glen Road, </a><a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> will deliver a 15-storey riverfront apartment building with 42 residences, significantly increasing the scale of the site’s previous approval for a smaller luxury scheme. Designed by Bureau^proberts, the development will comprise a mix of predominantly four-bedroom and two-bedroom apartments positioned to maximise Brisbane River and city views.

Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.

“Brisbane was the right step for Sammut,” Sammut said.

“With the success of Coast we thought we should definitely look to do more in Queensland alone. We then pushed up to look at Brisbane. We've been looking for I'd say two to three years actually and it was hard to find the right location.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-12-23%20at%203.27.14%E2%80%AFPM.png?VersionId=dYAVIL7qdcGA8ojvkslSrLjczXFejSSx" />

Sammut said suburbs including New Farm and Teneriffe were considered before the group ultimately focused on Toowong due to its strong downsizer demographic and limited supply of developable riverfront land.

The site was acquired off-market after what Sammut described as a lengthy negotiation and planning process, with the developer pursuing an uplift to the original approval.

“We are DA approved now which is very exciting,” Sammut said.

“We've had our change approval come through and we've obviously doubled the height, 15 storeys plus rooftop. We've got 42 amazing apartments that are going to be coming to market soon.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-23%20at%203.27.26%E2%80%AFPM.png?VersionId=ohkRkY0dIZlqdfME2EZePsCQavRiBadE" />

Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.

“A place where traditional Queensland living has taken place for centuries; Toowong is seeing a shift of contemporary influence, commercial and retail hubs mixed with well-considered residential offerings – all the while maintaining its character and charm,” the architect noted in planning documents submitted to Brisbane City Council.

The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.

“They said the mix of four and two-bedroom apartments capture the ‘fundamental qualities of Queenslander living,’ translated into the context of a contemporary subtropical building.”

The development sits just off Coronation Drive within walking distance of Toowong’s retail precinct and the upgraded Regatta ferry terminal, while also benefiting from proximity to the incoming green bridge connection to West End. Sammut said the accessibility and amenity offering were central to the site’s appeal.

The approval adds to growing residential activity along the Toowong riverfront, joining nearby projects including Consolidated Properties’ Monarch Residences and Spyre Group’s ARC Residences.

Sammut secures approval for debut Brisbane apartment development in Toowong

Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.

Lanevick, founded and directed by Steve Maroun, is expecting to receive approval in the coming months for a new apartment development in Gladesville, with the aim to launch it to the market later this year.

The 51-apartment project, designed by Studio Johnston, will comprise a mix of one-, two-, and three-bedroom apartments positioned toward the Hunters Hill downsizer market.

“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.

“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.

“They still want good spacious entertaining areas, they still want quality design, but they also want flexibility and the ability to enjoy life a bit more after working hard for a long time.”

The project sits near Boronia Park and within close proximity to the Parramatta River foreshore, an area Maroun says offers more of a Hunters Hill lifestyle than a traditional apartment precinct.

“From a lifestyle perspective, it’s really more Hunters Hill than Gladesville,” Maroun said. “You’re close to the foreshore, close to parklands, and still connected back into the village precinct.”

From level four and above, apartments will capture water views&nbsp;toward Sydney Harbour. Communal amenity will include rooftop entertaining areas, wellness spaces, and a gym tailored toward owner-occupier buyers.

“We’ve really designed these apartments around that buyer coming from the Hunters Hill LGA and what they’re actually looking for in their next chapter.”

The proposed development has also been designed to respond to the changing character of the broader Gladesville town centre, where a growing number of mixed-use and residential proposals are expected to emerge over the coming years.

“Gladesville presented a rare opportunity to deliver a genuinely design-led residential project within an evolving lifestyle precinct, just moments from the growing Gladesville town centre, and we’ve approached the project with a strong focus on architecture, liveability and long-term community value,” Maroun said.

Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.

“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.

“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”

The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.

“A big part of the thinking was how do you activate that area properly and create more vibrancy and amenity, which is what Hunters Hill has been looking for,” Maroun said.

Lanevick’s focus since 2020 has largely been on smaller-scale luxury townhouse and terrace developments. The developer recently completed Royale Randwick, also designed by Studio Johnston, where prices reached $3.65 million. The project was featured in the UDIA NSW 2026 Professional Development Prospectus and was also named a finalist for Development of the Year.

&nbsp;

Lanevick to cater for Hunters Hill downsizers with new Gladesville apartment development

Property developer One Living, backed by former Macquarie banker turned investment manager Chris Green’s investment firm, has unveiled plans to bring more institutional capital into housing to help address the national supply crisis.

The New York-based investor has focused his firm, GreenPoint Partners, on addressing the supply shortage hitting middle market housing in Australia.

It is backing the new One Living business to develop more than 1000 units along the eastern seaboard. The new firm is starting with a development on Mona Vale Road, on the border of Mona Vale and Pymble, in Sydney’s Northern Beaches, with around 140 apartments planned. They are eyeing off more sites across the city.

With cost pressures rising in the industry, One Living’s model is to be a vertically integrated developer-builder, so it can respond directly to the housing gap by removing the cost inefficiencies embedded in traditional residential delivery.

“We are building a platform designed to operate at scale and starting in a market where there’s a clear need for quality, attainable housing,” One Living joint managing director Joseph Scuderi said.

“It’s that missing middle – it’s that attainable end of housing… that’s what most Australians invest into and what Australians can actually afford.”

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="798dfa93-4941-4db6-a696-31e9dc18e81c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.31.50%E2%80%AFPM.png?VersionId=mKBqi5C_DmeiXS.AtJkcR8LQIxqCqmFi" />

GreenPoint Partners brings years of experience assembling and scaling real estate operating businesses across major markets. And Green sees a big opportunity in Australia.

“For its size, sophistication and importance to the community, Australia’s living sector has remained largely under-institutionalised, which represents significant opportunity,” Green said. “GreenPoint identified that gap, assembled the right team, and is backing One Living to build a platform that is aligned to market needs.”

Green said being a builder-developer would give the company the capacity and flexibility it required to deliver reasonably-priced homes.

“We want it to be at that attainable level; not super high end luxury but at that attainable level,” he said.

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="74a5344a-4b26-4d4a-ada3-056b1220be77" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.32.15%E2%80%AFPM.png?VersionId=vY8hXHO4reBMdO8ZXMWCNtGZJofUPQ3j" />

&nbsp;

One Living will undertake a component of affordable housing in its schemes, which it will own and operate, and it could also run build-to-rent on some sites.

Green praised local policy settings.

“The NSW government is being very supportive, strategic and pragmatic in terms of how do we generate more supply of housing,” he said. “We think it’s actually positive for development and the bit that’s been lacking at that attainable level is that it’s lots of relatively small private developers, whereas we want to create an institutional platform.”

One Living is also&nbsp;looking at high-density projects and could take on more institutional funding in the future.

“The way we will be able to achieve economies of scale is through size,” Green added.

One Living enters Sydney's new apartment market with Northern Beaches site acquisition

It's been several years since there's been an opportunity to buy a brand new townhome in Melbourne's coastal suburb of Mordialloc. Even apartment developments in recent times have been few and far between in the area.

Local developer LDS Property identified the gap in new housing, securing a site on White Street, directly opposite&nbsp;Woodlands Golf Club Mordialloc. They've recently launched&nbsp;<a href="https://www.apartments.com.au/new-townhouses/wm-residences-mordialloc-102-white-street-mordialloc-vic-3195">WM Residences</a>, just 13 townhouses which they have already started building.

Projects by Buxton Director Heath Thompson, who is selling WM Residences, says the townhouses x that perfect middle ground be

"Mordialloc residents have had limited options to downsize within the suburb, often forcing them to look elsewhere despite long-standing ties to the area," Thompson says.

"With very little comparable new supply coming to market, projects like WM Residences are well placed, particularly as buyers look to capitalise on current conditions amid constrained supply."

[smartcode_project:default project_id=134646 project_image_fid=6109]

The development, designed by regarded architecture firm&nbsp;<a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a>,&nbsp;adopts a deliberately restrained architectural approach, focusing on simplicity, durability and liveability rather than overt design gestures.

The boutique scale is central to the offering. With only 13 three-bedroom residences, each home is configured to prioritise functional layouts and everyday use, supported by private terraces and secure two-car garages.

Ewert Leaf’s design response leans into a calm, neutral material palette. Interiors are defined by oak flooring, white walls and soft finishes, creating a consistent and understated backdrop. The approach avoids trend-driven detailing in favour of longevity, with an emphasis on natural light and spatial clarity.

[smartcode_project:default project_id=134646 project_image_fid=6110]

Beyond aesthetics, the homes are designed to meet contemporary performance expectations. Each residence targets a minimum 6-star energy rating, incorporating double glazing, comprehensive insulation and all-electric Bosch appliances.

The project’s location supports a walkable coastal lifestyle, sitting within close proximity to Mordialloc’s foreshore, Main Street retail strip and the train station. Local cafés and dining venues, including Suburbia Deli and Hendriks Café, are within a short walk, reinforcing the area’s established neighbourhood character.

[smartcode_project:default project_id=134646 project_image_fid=6116]

While <a href="https://www.apartments.com.au/developments/mordialloc-vic-3195">Mordialloc</a> is often defined by its beach and pier, the project taps into other areas of day to day living, offering easy access to local food, casual dining and transport, rather than positioning itself purely as a lifestyle retreat.

WM Residences reflects a continued trend across Melbourne’s coastal suburbs towards smaller-scale, design-led townhouse developments, particularly on infill sites where proximity to amenity is already established.

With construction commenced prior to its market entry, the project aligns with a growing preference among buyers for developments with visible progress and defined delivery timeframes.

[smartcode_project_cta:default project_id=134646]

WM Residences fills gap in Mordialloc townhouse market

Negative gearing

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GUEST OBSERVER
Recent statements by the Labor Party that negative gearing and capital gains tax concessions would be reduced send negative messages to ordinary Australians investing in property. 
It is the combination of restricting negative gearing and of reducing capital gains tax deductions on residential property investments that will discourage ordinary Australians from investing in property.
Many Australians have preferred to invest in property over other forms of investment, like shares or bonds, and this has been based on negative gearing to minimise recurrent costs while expecting a positive return from capital gains over time.
While traditionally home ownership has been seen as an Australian ideal this has shifted in recent decades with more people renting while many ordinary Australians have borrowed money to be able to earn an income from a house or apartment.
The people who benefit from negative gearing are those that must borrow to buy an investment property rather than the very wealthy who don’t borrow or borrow less and can use their own funds. It seems unfair of the Labor Party to target ordinary Australians who need to borrow and to discourage them from aspiring to be owners of income producing properties.
The reduction in the use of negative gearing to only new properties while appearing to boost supply is likely to result in increases in new property prices as more investors compete for only new housing. The aspirations of ordinary Australians to be property investors as part of a diversified approach to managing their long term finances should be encouraged rather than discouraged.
The slashing of the capital gains tax deduction by 50% will further discourage all property investors of new or old assets from investing in built assets. The end product of the Labor Party proposals is to undermine confidence in property investment by ordinary Australians as well as larger organisations. This can only lead to less supply of rental properties with a consequent jump in rental fees.
The Urban Taskforce understands that adjustments to the taxation system need to be considered but we believe any changes should encourage the development of more housing funded by the broader community’s investment.
Stamp Duty is clearly a tax that is a disincentive to the purchase of a house or apartment and we believe this should be abolished and replaced by a fair broad based land tax which spreads the tax burden over a much larger ownership base.
 
Chris Johnson is chief executive officer of property development industry group Urban Taskforce and can be contacted <a href="https://www.urbantaskforce.com.au/index.php?option=com_content&amp;view=article&amp;id=97&amp;Itemid=126#.Vdaart55dFI" target="_blank">here</a>.
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cjohnson-8xfqfuuCSq

Labor proposals to change taxation on housing could slow down supply: Chris Johnson

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The Turnbull government has rejected Labor's policy to restrict negative gearing to new properties.
It now plans to target high-end investors by either capping the number of properties that can be geared or limiting the annual tax deductions of which can be claimed.
The Coalition is now pursuing negative gearing, superannuation and tax deductions for savings after plans for an increased GST were ditched.
"We've seen that they've converted tax reform into a cupcake process. The big reform is off the table. Clearly they're looking at options," Property Council chief executive Ken Morrison said.
Master Builders of Australia chief executive Wilhelm Harnisch took aim at Labor's policy saying it was a populist response.
"Investing in new private rental housing is not evil," he said.
Labor says its policy will raise $32 billion over 10 years, but just $570 million in the first four.
Treasurer Scott Morrison told The Australian Financial Review on Sunday that Labor's policy would focus all investors into the new housing market, making it harder for so-called "everyday mum and dad investors" to buy new houses or units off the plan.
This, he said, would intensify the inequity caused by negative gearing in which first homebuyers struggle to compete against cashed-up investors.
"Labor thinks all people who negatively gear are property barons to be fleeced."
On Saturday, Bill Shorten announced that a Labor government, if elected, would move change the rules so that only new homes purchased after July 1, 2017, could be negatively geared.
<a href="/images/2016/02/15/Screen%20Shot%202016-02-05%20at%209.37.06%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/02/15/Screen%20Shot%202016-02-05%20at%209.37.06%20AM.png" alt="">
There would be no limit on the number of new properties that could be geared. Existing investors would not be affected by the changes.
Labor will also halve from 50 percent to 25 percent the capital gains tax deduction for investors who sell a property after holding it for at least 12 months.
On Sunday, shadow treasurer Chris Bowen reinforced Labor's reasoning that its policy would cause a boom in new home construction.
<a href="/images/2016/02/15/Screen%20Shot%202016-02-05%20at%209.37.17%20AM.png" target="_blank">Click to enlarge</a>
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jchancellor-FAypfDUnLy

Scott Morrison targets high end negative gearing residential property investors

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GUEST OBSERVER
The Real Estate Institute of Queensland (REIQ) rejected Federal Treasurer Scott Morrison’s suggestion that curbing negative gearing was a responsible fiscal alternative to raising the GST.
Negative gearing was well established as a vital tool to encourage investors into the property market, where their continued investment was vital to ongoing rental affordability.
Removing negative gearing from property investment will only serve to drive investors to other assets such as shares, where the offset would remain intact.
This would further impact affordability as there would be fewer houses available to meet rental demand
A review of history would confirm this, with the Hawke government removing gearing benefits in in 1985 only to reinstate them in 1987 when rents surged approximately 24 per cent. 
Removing or scaling back negative gearing would actually hurt the most vulnerable in Queensland, with middle and low-income families unable to afford the resulting rising rents as stock dwindled.
In Queensland more than a third of our population is in rental accommodation, so it’s crucial that supply is maintained for this large section of the community.
If private rentals were drastically reduced this would place enormous strain on the limited resources in public housing.
In its 2013 report Housing 2020, the Queensland State Government outlined its public housing strategy to limit its public housing new builds and to actively transition residents through its public housing, moving them towards private rentals or home ownership.
The Government recognises that the private sector is able to gain more efficiencies in the housing market and the public sector is more costly and less efficient.
The Government strategy focuses on moving residents away from “a view that social housing is a home for life” and instead, places “greater emphasis on social housing as a transitional period on the path to private rental or home ownership”.
If supply was limited to the private rental market and public housing was being scaled back, the social consequences would be significant and detrimental.
Instruments such as negative gearing encouraged individuals to save and invest in property, and this boosted financial self-sufficiency for individuals later in retirement, a key plank of government policy.
There was a common misconception about investors who access negative gearing benefits and capital gains tax concessions, as very wealthy with a vast portfolio of property.
Recent ATO statistics, provided by the Property Council of Australia, revealed that about 70 per cent of investors who benefit from negative gearing earn less than $80,000 and about 73 per cent own just one investment property.
In Queensland, owner occupiers account for two-thirds of the residential dwelling market, with investors making up about a third (34 percent).
ANTONIA MERCORELLA is CEO of the <a href="https://www.reiq.com/" target="_blank">REIQ</a>.
 
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Negative gearing cuts no solution to budget hole: Antonia Mercorella

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Australia’s largest industry, the property industry, has warned a Parliamentary Committee into Tax Deductibility that changes to negative gearing will exacerbate Australia’s undersupply of housing and harm average income earners.
New data has revealed that over 430,000 Australians who negative gear an investment property live in marginal seats held by the Government and the Opposition. The ten most marginal Coalition seats have an average of 8,181 investment property owners and the ten most marginal Labor seats have an average of 8,357 property owners.
<a href="/images/2016/02/05/Screen%20Shot%202016-02-05%20at%209.37.06%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/02/05/Screen%20Shot%202016-02-05%20at%209.37.06%20AM.png" alt="">
“Mums and dads see owning an investment property as a way of securing their long term prosperity”, said Property Council Chief Executive Ken Morrison.
“There are 840,000 Australians with taxable incomes below $80,000 a year who negative gear.
"This includes 53,800 teachers, 52,000 retail workers, 35,900 nurses and midwives, 22,600 hospitality workers and 10,400 emergency services workers.
“Interest deductions on property are legitimate deductions. Deductions for interest have been a fundamental part of the Australian tax system for 100 years.
“Two million Australians own an investment property. These people are doing the right thing and investing for their retirement or putting away for a rainy day.
“To play with negative gearing is to play with the financial futures of 430,000 people who live in the most marginal seats.
"That’s enough voters to swing all of these seats eight and half times over, a big political risk to take with people with a lot at stake.
“Limiting interest deductibility will make investments more expensive. In turn, this will exacerbate Australia’s undersupply of housing and infrastructure. This is the wrong approach for the challenges we have to face.
“Australians already pay $72 billion a year in property taxes – and property owners don’t want government’s hands reaching even deeper into their pockets.”
<a href="/images/2016/02/05/Screen%20Shot%202016-02-05%20at%209.37.17%20AM.png" target="_blank">Click to enlarge</a>
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Any negative gearing tampering to become marginal seats election battle: PCA

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GUEST OBSERVER
Average income earners largely are the people who do get to take advantage of negative gearing - nurses, policemen and women on an average wage, investing, for instance, in a property. Most of them hold only one property, which adds to the housing stock that’s available for people as well. – Assistant Treasurer and Small Business Minister Kelly O'Dwyer, speaking on ABC TV’s Insiders, October 25, 2015
Negative gearing is a tax break available for people who own at least one other property in addition to their primary place of residence. This tax break applies only if the costs associated with the investment, including interest payments and other expenses, are greater than the rental income. Any loss made on the property can be offset against other income, thus reducing personal tax.
<div class="grid-ten large-grid-nine grid-last content-body content entry-content instapaper_body">
It’s true many nurses and police officers and other middle-income (and even much lower) people have negatively geared properties. But are these occupations and incomes the typical beneficiaries of negative gearing?
<h2>Checking the data</h2>
When asked for a source to support her statement, a spokesperson for O'Dwyer sent the following statistics.
<blockquote>
• Taxation statistics show 66.5% of taxfilers who declare a net rental loss have a taxable income of A$80,000 or less.
• Those who use negative gearing include 22.6% of police officers, 19.2% of ambulance officers and paramedics, and 18.9% of train and tram drivers.
• Of the Australians who use negative gearing, the majority only hold one additional property.
• 73% of people with a rental property interest have only one property and 18% own two.
</blockquote>
A $80,000 per year is not a typical taxable income. Around 84% of non-investors have a taxable income below $80,000. This compares with the 66.5% of people with negative geared property.
It is true that a relatively high proportion of the listed occupations have negatively geared properties. While it may be the popular belief that these are low or middle income occupations, these are actually reasonably highly paid occupations. For example, 73% of train and tram operators earn more than A$80,000 per year.
In our analysis, we looked at the income distribution of people who negatively gear compared to that of people who do not invest in rental properties.
The data set we used is called the 2012–13 individuals sample file. To collect this data, the Australian Taxation Office (ATO) sampled 2% of all individual tax returns filed in 2012-13.
According to this ATO data set, there are 1.26 million (10%) taxpayers who negatively gear. Their average loss was A$8,930 per year. A further 700,000 with a rental investment are positively geared (meaning their rental income was greater than their costs). About 85% of taxpayers don’t have a rental investment.
<a href="/images/2015/11/23/image-20151115-10412-1h6jg2h.PNG" target="_blank">Click to enlarge</a>
<img src="/images/2015/11/23/image-20151115-10412-1h6jg2h.PNG" alt="">
 
The chart shows what statisticians call the “smoothed” probability distribution (which is a smoothed histogram of the income distribution) of taxable income for people with negatively geared properties and people without rental investment properties. Marked also on the chart are the median and top 10% (P90) income points for both people with negatively geared properties and those without property investments.
The median income for negatively geared investors is A$60,000 per year, compared with $40,000 for non-investors.
A similar gap (50%) exists at the top end of the income spectrum. The taxable incomes of the top 10% of earners with negatively geared investments is around $150,000 compared to $98,000 for non-investors.
The chart shows clearly that, typically, people with negatively geared properties have significantly higher incomes than people without property investments.
In an April 2015 analysis commissioned by GetUp! for the Australia Institute, NATSEM found that 34% of the tax benefits of negative gearing accrues to the richest top 10% of families, as this chart from the report shows.
<a href="/images/2015/11/23/image-20151119-19345-1kb57np.png" target="_blank">Click to enlarge</a>
<img src="/images/2015/11/23/image-20151119-19345-1kb57np.png" alt="">
Only around 20% of the tax benefits go to the bottom half of the income distribution.
High-income families invest more money than low-income families. The tax system benefits high-income earners more than low-income earners due to higher marginal tax rates amplifying the effectiveness of deductions.
<h2>The role of capital gains</h2>
Negatively gearing property implies that the investor is making a loss on their investment. As the chart below shows, the tax savings are greatest among those in the higher tax brackets. However, it remains the case that these investors continue to make an overall loss on their investment, even after accounting for tax deductions.
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<img src="/images/2015/11/23/image-20151119-19348-1fbe7uh.png" alt="">
 
The success of negative gearing as an investment strategy is reliant upon capital gains. In a property upswing, this strategy can be highly successful with lucrative gains on often minimal equity investment. During a property downswing or period of limited price growth, these strategies are very poor investments.
A recent analysis by the Grattan Institute shows that while police and nurses do invest in property, it is the higher-income occupations, such as doctors and mining engineers, who are much more likely to invest.
<h2>Adding to the housing stock?</h2>
Property investment only improves housing affordability when the purchase adds to the stock of newly constructed dwellings in affordable housing.
According to CoreLogic RP Data, in 2014 there were just under 500,000 property transactions and ABS building completions data suggest only around a third of those were newly built dwellings. It therefore stands to reason that most property transactions each year are probably existing stock.
<h2>Verdict</h2>
O'Dwyer’s assertion is not supported by the data. <a href="https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Tax-statistics/Taxation-statistics-2012-13/?page=40" target="_blank">ATO data</a> shows that, typically, negatively geared investors have higher incomes than people without rental investments.
The same data shows that negatively geared investors have typical incomes around 50% higher than non-investors – even after deducting their losses from negative gearing.
The top 10% of the income distribution for negatively geared investors earn around 50% more than non-investors. Incomes for this top 10% are around $150,000 per year, compared with $98,000 for non-investors, according to the ATO.
Ben Phillips is principal research fellow, National Centre for Social and Economic Modelling (NATSEM), University of Canberra. Cukkoo Joseph is research assistant, University of Canberra. Both are authors for The Conversation and can be contacted <a href="https://theconversation.com/profiles/ben-phillips-98866" target="_blank">here</a>.
Review
While I agree with everything in the above FactCheck, I would go further in criticising Kelly O'Dwyer’s statement, particularly the reference to investors adding to the housing stock.
The figure cited above for the ratio of housing purchases for new housing stock includes owner occupiers.
The impact on housing stock is tiny, but the effect on housing affordability of all those investors bidding up the prices of existing housing is likely to be substantial. 
Warwick Smith is research economist, University of Melbourne and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/warwick-smith-95344" target="_blank">here</a>. 
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Are average earners in Australia the main beneficiaries of negative gearing?

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Negative gearing is a contentious subject. Owner-occupiers often resent it, many organisations have called for it to be abolished and it doesn’t always work for all investors.
So what are the pros and cons and what do you need to know as an investor?   Firstly it depends on your investment needs and ambitions. If you’re looking for a short-term investment where the capital growth will accumulate quickly and you can get high rental returns then negative gearing probably won’t work for you.   If you’re an Australian working overseas and looking to invest back home then negative gearing probably won’t make a lot of sense either. This is because if the bulk of your income is being earned offshore and you’re being taxed in the country you’re working in, then you won’t stand to get the tax breaks that the government offers through negative gearing.   Negative gearing itself has been decried as giving an unfair advantage to investors. The Australian Council for Social Services recently suggested that it hurts owner occupiers who aren’t given similar tax breaks. However there are clear benefits to the overall market through negative gearing.   Specifically negative gearing helps the rental market and also keeps the overall property marketing ticking along – driving up prices and keeping it buoyant.   Investors need to keep rentals low so they can effectively negatively gear. This in turn creates equitable and affordable properties for people to rent. Back in 1985 the then Labor government under Bob Hawke abolished negative gearing only to bring it back in 1987.  During that two year period, rents increased drastically across Melbourne, Brisbane and Sydney. 
In Sydney rentals skyrocketed by over 50%. So there’s a clear correlation between negative gearing and affordable housing. Nor does it only help wealthy investors, as some assert. Figures show that 80 percent of those claiming negative gearing earn less than $80 000 per year.   So while there are many benefits to the property market, what do you need to consider if you’re an investor?   The pros • Your taxable income can be significantly reduced by claiming losses on your property. • You can use depreciation of the property to your advantage. So this too can be added to negative gearing claims. • Big losses on the property (such as major strata levies or hefty property maintenance) can potentially be offset once you sell the property. • Most negatively geared properties are bought in high growth, attractive and stable areas. This the best way to achieve long term capital growth. Therefore your property should be safer from sudden market changes. • You have far more scope to develop and existing property or subdivide a block through negative gearing. The cost of building, construction, legals and developing all come back through negative gearing. It means you can potentially add a lot of - value to your long term capital growth.
Cons
• The biggest downside to negative gearing is the high out of pocket expenses you can face. These can be very prohibitive and, if you suddenly have to install a new roof or pay for water damage, exorbitant. Simply you will need to have deep pockets to cover the loss in rentals and all the maintenance of the property. This requires skilful budgeting. • The higher debt you’re potentially accumulating leaves you open to any sudden interest rate rises. Also, if you’re using equity to cover negative gearing this can leave you even deeper in debt and more vulnerable to sudden spikes in the market. • Negative cash flow properties are a longer-term strategy. So you can’t rely on them as a quick cash solution. • Vulnerable to market whims and moods. No capital growth rate is ever assured. Yes, it’s true that most negatively geared properties are in resilient, high growth suburbs. But if the entire property market’s bubble bursts or some unforseen factor drives prices down (natural disaster, industry collapse or over development) then you could be stuck with a property losing money with no capital growth. • It’s harder to build a big property investment portfolio as you have to outlay so much cash. Unless your pockets are very deep, the sheer costs of negatively gearing will prevent you from having as many property investments as you may like. At least in the short term. • It prevents you from being agile – you’re tied down to a property in the long term. If you’re a small-medium investor this limits your overall investment options. Say if some fabulous investment opportunity arises, you may not be able to tap into it because you’re committed to the long term capital growth of your property and may not have free cash available.
So there are very strong arguments both for and against negative gearing. At the end of the day, you’re best to talk to a professional about what choice will work for you. Many investors come asunder through hasty or poorly informed decisions. And with so much fevered interest in the current property market that’s not a mistake anyone wants to make. 
SAM KHALIL is founder and director of <a href="https://www.dpn.com.au/" target="_blank">Direct Property Network</a>.
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The pros and cons of negative gearing: DPN's Sam Khalil

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A new Deloitte report says that while negative gearing gets the blame, it is the 50% capital gains tax discount that has been mostly under-appreciated for frenetic property speculation.
Doubling the length of time an asset has to be held before it is eligible for a capital gains tax break - from 12 months to 24 months - was an option that needed consideration, the report suggested. 
Another options suggested for reform included reducing the size of the discount to 33.3 %. 
"The current . . . discount is too generous, to the extent that it undermines the very principles of this nation's progressive income tax system," the Deloitte report says.
It suggests 33.3% as this is what super funds are eligible to receive. 
Currently capital gains on an asset sold within 12 months are not eligible for any CGT discount.
It is the second "myth-busting" report released by Deloitte as part of its contribution to the tax reform debate.
While overused, negative gearing was not the "evil" force many believe it to be, the report advised. Shares and other assets can also be negatively geared.
Another "skeleton in the closet" for the Australian taxation system are the carried-forward capital losses, the report suggested.
The ATO calculates carried forward losses as at 2012-13 at $8 billion for individuals, $35 billion for companies and $33 billion for super funds.
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Capital gains tax discount more to blame for property bubble than negative gearing

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In their submission to the House of Representatives Standing Committee on Economics, the Australia Institute state not only is current tax treatment putting upward pressure on house prices but are also encouraging speculative behaviour and increasing the chances of property bubbles and financial instability. 
"Negative gearing has been a part of the Australian tax system from early last century. In the context of residential housing investment it allows property investors to write off any losses against their taxable income from other sources. This effectively means that the tax payer is paying for some of the loss. 
"The CGT discount was introduced in 1999 and means that for assets held for more than a year only 50% of the capital gain is taxed. This decreased the amount of CGT paid, and means capital gains become increasingly important to property investment."
The effect of the GCT discount can be seen in the Net rental income table 1995-2013.
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"After the introduction of the CGT discount net rental income collapsed. Investors were willing to take on significantly larger losses at a time when they could keep a larger slice of the capital gain. 
"In a normal investment market if the return on the asset was going down because the price of the asset was rising then this would be a signal to investors that it could be overvalued and would decrease the interest in investing. 
"But an interest in capital gain means that a rising price is a signal to enter the market because future capital gain is likely. Such a situation makes speculative bubbles more likely. 
"While middle and lower income households are being increasingly shut out of home ownership, most of the benefits of negative gearing and the CGT discount flow to high income households. 
"Modelling done by NATSEM for the Australia Institute shows that 55 per cent of the benefits of negative gearing and the CGT discount flow to high income households, while 50% of families only get 13% of the benefit. Figure 3 shows the income distribution of the negative gearing and CGT discount benefits. 
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The Australia Institute does not believe that changes made to negative gearing would decrease investment and increase house prices. AI claims that there is already little investment into property with just six per cent of investment finance going to new housing.
"The other 94% is spent on existing stock. If the objective of negative gearing is to encourage new housing then this could be achieved by restricting negative gearing to apply only to new housing. 
"The Australia Institute proposes that negative gearing is restricted to new housing stock and only for a period of 10 years.
"The CGT discount replaced a system where capital gains were discounted by the inflation rate. The argument for the CGT discount is that it is a simpler method for calculating and taxing the real capital gain. 
"The broader question that should be considered is why we tax real capital gains but level all other taxes on the nominal gain. For example, interest earned on money is taxed at the nominal interest rate rather than the real interest rate. 
"Given that all other taxes are levelled on the nominal gain and not the real gain there is little justification that capital gains should be taxed differently. The Australia Institute proposes that the CGT discount should be abolished. 
"These changes will have a number of effects. It will decrease demand for housing and hence put downward pressure on house prices as potential investors pick other investment opportunities. 
"It creates a bigger incentive for new housing. It reduces the speculation in the residential housing market, making property bubbles and financial instability less likely. Finally it will raise $7.4 billion a year in revenue at a time when the government is trying to decrease the budget deficit."
 
The Australia Institute report outlined the case for abolishing the capital gains tax discount – not capital gains tax as previously headlined.
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Abolish capital gains tax discount: Australia Institute

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The Property Council of Australia has welcomed comments from Treasurer Joe Hockey reported in the Weekend Australian that there is “no merit” in changing negative gearing for residential property.
"As the Government's analysis shows negative gearing is used overwhelmingly by people working in some of our most valued, but lower paid professions,” its chief executive Ken Morrison said.
“Negative gearing is a well-established, long-standing part of Australia's tax system and the people who use it most are everyday Australians looking to get ahead.
“This isn't some tax lurk for the wealthy, it is a legitimate and effective part of our taxation system that is used most by people earning under $80,000 per annum who become property investors through their own hard work.
“Any changes to negative gearing would hit middle Australia hardest and would take away one of the best ways most people have to save for their retirement.”
The Property Council of Australia says in 2012-13 almost 36,000 nurses and midwives, 10,415 emergency service workers, 53,855 teachers, 10,255 social workers and 90,000 clerical staff all earning around or less than $80,000 per annum declared a net rental loss.
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PCA says negative gearing is for everyday Australians

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Negative gearing is a very controversial issue. The latest round of debate stems from the Reserve Bank’s submission to the House of Representative Standing Committee on Economics regarding the enquiry into home ownership. The Bank believed that “there is a case for reviewing negative gearing”.
Treasurer Joe Hockey promptly responded to again rule out any change of the tax policy on negative gearing. In particular, it was reported that he claimed that removing negative gearing would create “an exception to a standing rule in taxation law”.
Is negative gearing in accordance with well-established tax rules? A fundamental principle in the tax law is that a taxpayer should be able to deduct expenses only if the expenses have been incurred to generate assessable income.
This is why an employee can only deduct expenses that are sufficiently related to work. For example, a funeral director at tropical Queensland would be able to deduct the cost of his black jacket (but not his black trousers) because the ATO believes that no rational person – except a funeral director – would wear a black jacket in such a hot place.
Should mortgage interest on an investment property be deductible? Investment properties generate two kinds of income: rental income and capital gains (if any). As capital gains on investment property can enjoy a 50% tax discount if the property has been held for at least a year, strictly speaking only 50% of the interest expenses related to the capital gain should be deductible.
In practice, it is impossible to predict whether there will eventually be a capital gain, and also impossible to predict the amount of the gain. This presents the key difficulty in the design of the tax policy on negative gearing.
Allowing full deduction of the interest expenses every year effectively allows deduction of expenses that may be incurred to generate the tax free portion of the capital gain (if any), and therefore may violate the fundamental tax principle for deductions. However, how can the Australian Tax Office (ATO) determine how much of the interest expenses should be disallowed every year before the investment property is actually sold?
Many countries resolve this issue by quarantining losses on investment properties. It means that losses generated from negative gearing cannot be used to offset against other sources of income, for example, salaries or business income. Instead, the losses can be carried forward to future years to offset against income from the investment properties.
This policy is fair in the sense that the same tax principle for deductions applies to both taxpayers with and without negative gearing. Many countries adopt this quarantine policy, including major developed countries such as the US, the UK, France and Japan.
Some countries have even stricter tax rules on investment properties. For example, China allows a fixed 20% deduction of the rental income, and the Netherlands tax property investors on a deemed yield rate of 4% on the value of the properties. In other words, these countries do not allow deduction of any tax losses on investment properties at all.
Australia’s current tax policy on negative gearing seems overly generous when compared to both groups of countries. More importantly, it is not fair to taxpayers who do not have negative gearing. The policy effectively subsidies negative geared property investors through the tax system.
The Reserve Bank concluded its submission to the enquiry into home ownership by rightly stating that “policy should not unduly advantage property investors at the expense of prospective owner-occupier home buyers … tax and regulatory frameworks should avoid encouraging over-leveraging into property”.
Of course, the negative gearing issue is complex and highly political. The ATO’s Tax Statistics for 2012-13 showed that taxpayers claimed a total of $12 billion tax losses from investment properties, and almost 1.3 million taxpayers had negative gearing.
The sheer number of taxpayers currently enjoying the benefit of negative gearing dictates that it will demand strong political will and leadership before a politician is willing to propose changes to the current tax rule on negative gearing.
Even if the government is bold enough to change the rule, careful consideration has to be given to transition rules to cater for the existing taxpayers that have negative gearing. This is a story for another day.
Antony Ting is associate professor at University of Sydney and also an author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/antony-ting-117958" target="_blank">here</a>.
 
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