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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Implementing the Labor government's policy on negative gearing will risk economic recovery as Australia moves from resource investment to other growth drivers such as housing investment, according to the Real Estate Institute of Australia.
REIA president Neville Sanders said a change in negative gearing arrangements will put that at risk economic growth and cut the asset base of Australian households at a time when we need to facilitate further sustained growth in the housing sector.
“Australia’s property industry is the main driver of economic growth and increased employment in the transition away from a decade-long reliance on mining, and whilst it is expected that the weakening Australian dollar will provide a much needed stimulus to a number of sectors, the impact of this is still some time away," he said.
“Providing a stimulus to economic activity outside the mining sector, including the housing and building sectors, was amongst the main reasons for the RBA to keep the official cash rate at record low levels since August 2013.
“The value of building stock owned by Australian households is $5.6 trillion1 (million million). It has been predicted by SQM Research that on a national basis as much as 16 percent could be wiped off this over the three years 2018 to 2020 under the Labor policy."
Laing + Simmons managing director Leanne Pilkington said it is somewhat academic to debate whether this is a price drop of 16 percent or whether prices growth will be 16 percent lower.
"The stark fact remains that household assets across Australia will be devalued by $900 billion," she said.
"This amount is wiped from spending in local economies and off nest eggs."
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jonathanchancellor-7SQnKwU6yx

Economy cannot withstand labor’s experiment on negative gearing: REIA

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Mark Bouris, the executive chairman of Wizard Home Loans says the current debate about negative gearing involves just one aspect of investment property.
"But the true priority for most property investors is the success of the investment itself. 
He advises that to make an investment property worth your while, it should deliver long-term capital gains and sustainable cash-flows.
"Achieving this goal usually comes down to controlling your costs," he said adding that tax law allows investors to treat an investment property as a business, which means the business inputs are deductible for tax purposes.
He advised that optimising costs deductions made a big difference to how any investment performed long-term offering five tips.
1) Remember allowable deductions include fixing damage from natural causes such as falling trees and heavy storms, particularly relevant for many this month.
2) If you live some distance from your investment, travel to and from your property is tax-deductible, as are trips to your property agent. But the trips must be on official business as a landlord.  Track these costs by entering your travel (and reasons) in a diary, keep relevant receipts, and if you use your car, use only a vehicle-expenses formula listed on the ATO's website. 
3) Sometimes disagreements about your property can turn into legal disputes. The ATO allows deductions on court costs, damages claims against you involving your investment property, and the costs associated with evicting non-paying tenants.
4) If you use a property management company to rent the property and manage the tenants, you will pay a fee  that is deductible. Your ongoing management costs include the costs of setting up new bank accounts, council rates and water charges, for example.
5) If you secure a mortgage to buy your investment property, there are many costs that come under the deductions umbrella, including lender's mortgage insurance, mortgage broker fees, loan establishment costs, property taxes   (for example, stamp duty), and valuation fees. However, it needs to be amortised over five years or per the terms of the loan. Be aware that the interest you pay on the loan is deductible, but repayments of principal are not. Which is why property investors generally have interest-only mortgages.
There is a lot of information for property investors on the ATO website, he notes.
"But for first-timers, I strongly suggest using an adviser, such as an accountant or financial planner, even if only for the initial set-up of the investment and advice on how to manage to it."
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Negative gearing just one aspect of investment property: Mark Bouris

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A report by SQM Research on Labor's negative gearing policy states dwelling prices will fall and sales turnover and stamp duty revenue will dip should the changes be legislated.
House prices could fall as much as 15 per cent during the four years it will take for the market to absorb the Labor Party's planned negative gearing changes in the worst-case scenario.
The average decline was suggested as around 4 per cent, according to SQM.
Renters would be shielded for the next few years from higher monthly rents, SQM Research managing director Louis Christopher said.
The report, titled Labor's Negative Gearing Policy - A Market Viewpoint' suggested average acquisition yields will rise up to 5.5 percent.
SQM Research managing director Louis Christopher said there will be a market impact if Labor’s negative gearing policy is legislated, and given the forecast of initial negligible rental growth suggests a correction in the housing market of -3 percent to +1 percent in FY2018, -8 percent to -3 percent in FY2019 and -4 percent to -2 percent in FY2020.
"The positive end of the range takes into account a response rate cut of 50 basis points by the RBA. The negative end of the range assumes no rate cuts in response," he said.
"The total adjustment in the housing market is forecasted to last between two to four years with most of the adjustment phase occurring within three years. Thereafter the market would likely potentially return back to equilibrium, having ‘priced-in’ the loss of the tax concession.
"Our analysis suggests the market impact would last by around three years with sales falling significantly in year one and a correction to take affect with dwelling prices falling the most in the second year. We think there would be a possible response to this event with the RBA cutting rates, thereby mitigating some of the potential price falls. We don’t think the market will crash per say, but it will be felt by the economy. We then expect the market to return to equilibrium from year three.
"We strongly encourage Labor to consider some of the investor issues, particularly surrounding the distortion their policy may create on pricing of off-the-plan developments and the likely losses investors in those properties would face come resale time to those who won’t have the tax concession.
"While we take the view that negative gearing reform is a good thing, such reform should be done as part of a wider property tax reform that should include a broad based land tax and the elimination of stamp duties. Such reform should have a phase in period of up to three years. Doing so would reduce the risks of a significant downturn which would likely have wider ramifications on the economy.”
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Labor's negative gearing plan to trigger price fall: SQM

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<img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Opposition Leader Bill Shorten told Q&amp;A viewers that the federal government spends more on negative gearing and capital gains tax discounts than it does on child care or higher education.
Is that right?
<h2>Checking the source</h2>
When asked for sources to support Shorten’s statement, an ALP spokesperson said the Grattan Institute has estimated the cost of the capital gains tax and negative gearing concessions at $11.7 billion per year.
The Treasury’s tax expenditure statement (TES) lists the cost of the capital gains tax discount as $6.15b for 2015-16. The TES does not list the cost of negative gearing, but using Grattan’s total figure and subtracting the value of the capital gains tax discount, this shows that the cost of negative gearing is around $5.5 billion… this cost exceeds the cost of child care assistance or university education as per the budget papers.
You can read the longer response <a href="https://theconversation.com/full-response-from-labor-spokesperson-61201" target="_blank">here</a>.
So, does federal government spending on child care or higher education outstrip the cost of revenue forgone due to negative gearing and capital gains tax (CGT)?
<h2>How much does the government spend on child care subsidies?</h2>
This year’s budget showed the federal government is estimated to spend about $8.2 billion on child care fee assistance in 2016-17. That’s comprised of about $4.2 billion for the child care benefit and about $3.9 billion for the child care rebate.
<a href="/images/2016/06/21/image-20160614-17209-1gramrh.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/06/21/image-20160614-17209-1gramrh.png" alt="">
Budget Paper 1, 2016-17 Federal Budget.
Here’s a graph produced by the Parliamentary Budget Office showing how the cost of child care subsidies is projected to change over time.
<a href="/images/2016/06/21/image-20160614-29225-1v45yz.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/06/21/image-20160614-29225-1v45yz.png" alt="">
<a class="source" href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Budget_Office/Chart_packs">Parliamentary Budget Office</a>
<div class="enlarge_hint"> </div>
<h2>How much does the government spend on higher education?</h2>
This year’s budget shows that the federal government is estimated to spend about $9.5 billion on higher education in 2016-17, an amount which is fairly stable over the forward estimates period. It is projected to be about $9.4 billion by 2019-20.
<a href="/images/2016/06/21/image-20160615-22416-5uy7q4.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/06/21/image-20160615-22416-5uy7q4.png" alt="">
Budget paper 1, 2016-17 federal budget.
Here’s a graph produced by the Parliamentary Budget Office showing how the cost of higher education expenses is projected to change over time.
<a href="/images/2016/06/21/image-20160615-22411-1qzpsjt.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/06/21/image-20160615-22411-1qzpsjt.png" alt="">
Parliamentary Budget Office
<h2>How much do negative gearing and capital gains tax concessions cost the government in revenue forgone?</h2>
Capital gains tax: As Labor’s spokesperson says, the Treasury’s 2015 tax expenditure statement (TES) lists the cost of the capital gains tax discount as $6.15 billion for 2015-16.
According to Treasury’s estimates of tax expenditures, the “cost” associated with the capital gains tax discount for individuals and trusts is estimated to be $6.8 billion in 2016-17, rising to $9.09 billion in 2019-20. Note that this estimate does not include any estimate for the concessional treatment of owner-occupied housing.
<a href="/images/2016/06/21/image-20160615-22398-cw74xm.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/06/21/image-20160615-22398-cw74xm.png" alt="">
Budget Paper 1, 2016-17 federal budget.
Negative gearing: This is where it gets tricky. Treasury does not regard negative gearing as a “tax expenditure” and thus does not provide any estimates for the “revenue foregone” as a result of it. So we have to look at other sources for estimates.
Labor has inferred from the Grattan Institute’s report that the cost of negative gearing is around $5.5 billion ($11.7 billion minus the $6.15 billion cost of the CGT discount).
Labor did not provide The Conversation with any Parliamentary Budget Office (PBO) estimates on the cost of negative gearing to The Conversation. Labor’s spokesman said only that the PBO estimated Labor’s plan to restrict negative gearing to new property and to halve the capital gains tax discount could raise $565 million over the forward estimates.
The Greens put the cost of negative gearing at somewhere around $4 billion a year.
A 2015 report by The Australia Institute said that modelling by National Centre for Social and Economic Modelling (NATSEM) estimated that:
negative gearing of residential investment property is currently reducing tax revenue by $3.7 billion per year.
Ben Phillips, Associate Professor at the ANU Centre for Social Research and Methods (who previously conducted the NATSEM modelling quoted by The Australia Institute), reported in February 2016 that:
We estimate that in 2017-18 the total tax savings from negatively gearing properties is $4.3 billion.
And I have previously estimated that negative gearing costs more than $5 billion per annum in revenue forgone – although that estimate was for the 2010-11 financial year when interest rates were considerably higher than they are today. It was also a “gross” figure that did not allow for the impact of interest expenses being carried forward to be offset against future capital gains tax liabilities.
So what’s the combined cost of negative gearing and CGT? Nobody knows for sure. It could be as high as $11.7 billion, as the Grattan Institute has <a href="https://grattan.edu.au/report/hot-property/">said</a>. It could also be lower.
<h2>So does CGT and negative gearing cost more than child care or higher education?</h2>
This year’s budget showed the federal government is estimated to spend about $8.2 billion on child care fee assistance and about $9.5 billion on higher education in 2016-17.
Using the estimates outlined above, the combined annual effective cost of negative gearing and capital gains tax discounts to the public purse in revenue foregone is somewhere between about $9 billion and $11.7 billion (although no-one knows for sure because of differing opinions on the cost of negative gearing).
So Shorten’s statement that Australia is “spending more at the Commonwealth level on negative gearing and capital gains tax discounts than we are on child care or higher education” is likely to be somewhere in the ball park – but it’s impossible to say conclusively.
<h2>A word of caution</h2>
It’s worth remembering that none of the major parties are advocating scrapping negative gearing altogether.
And finally, it is worth drawing attention to Treasury’s caution that its estimates of tax expenditures such as the capital gains tax discount assume that taxpayer behaviour is unaffected by the existence of the concessional tax treatment. That assumption that may not be valid in practice, so that these estimates:
do not indicate the revenue gain to the budget if specific tax expenditures were to be abolished…. care needs to be taken when comparing tax expenditures with direct expenditures as they may measure different things.
<h2>Verdict</h2>
Is Australia “spending more at the Commonwealth level on negative gearing and capital gains tax discounts than we are on child care or higher education”?
Nobody knows for sure, because of the difficulty in measuring exactly how much negative gearing tax breaks cost the federal government every year in revenue foregone. (Treasury cautions against comparing tax expenditures with direct expenditures as they may measure different things.)
Using available estimates, however, Bill Shorten’s statement is probably in the ballpark.
<h2>Review</h2>
I agree with this assessment of the statement. There are official estimates on the projected spending on childcare, education and the revenue foregone in relation to the capital gains tax discount, although as Treasury notes these figures may not be directly comparable. It is more difficult to estimate the foregone revenue in relation to negative gearing as there are no official estimates. Each model will come up with a different estimate based on the parameters used for the estimate.
I would also caution that the statement by Bill Shorten should be read in conjunction with proposed ALP policies in these areas. In particular, tax concessions on negative gearing and the CGT discount will be pared back but negative gearing will still be available to taxpayers currently holding investment properties, and the CGT discount will be halved but not removed.
Given the difficulties in identifying the cost of negative gearing and the problems inherent in comparing data measured differently, the statement is within reasonable estimates. – Helen Hodgson
 
Saul Eslake is vice-chancellor’s fellow, University of Tasmania and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/saul-eslake-665" target="_blank">here</a>.
Helen Hodgson is associate professor, Curtin Law School and Curtin Business School, Curtin University and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/helen-hodgson-94553" target="_blank">here</a>.
 
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What’s the combined cost of negative gearing and CGT? Saul Eslake

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GUEST OBSERVER
The Property Council of Australia, a lobby group representing the biggest real estate developers, has shaped election debate about negative gearing and some taxes. 
We see their spokespeople quoted in the papers and their ads on TV, but beyond that we know very little about how Australia’s lobby groups get what they want. This series shines a light on the strategies, political alignment and policy platforms of eight lobby groups that can influence this election.
Housing affordability and tax reform have shaped up to be two of the defining issues this election. The Property Council of Australia – which describes itself as “the Voice of Leadership” – has helped frame the debate on behalf of its 2200 company members.
The council began as the Building Owners and Managers’ Association of Australia (BOMA) in 1969, and was renamed the Property Council of Australia in 1996, with advocacy a core focus. The Residential Development Council and International and Capital Markets division were formed in 2001 and the Retirement Living Council in 2015.
With a board of directors drawn from Australia’s largest residential and commercial developers, the Property Council’s considerable annual revenue (A$27.3 million in 2015) is drawn primarily from membership fees and services.
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The financial stakes are high when it comes to lobbying for regulatory settings which favour property development and investment. The Property Council’s healthy budget for advocacy and communication ($6.4 million and $1 million in 2015 alone) has generated a voluminous amount of reports, advertising campaigns and government submissions on taxation and planning reform. Another $7.2 million for “networking” ensures that this information is disseminated where it counts.
These deep coffers have funded the Council’s high profile television campaign to preserve negative gearing and capital gains tax discounts in response to mooted changes early this year. Likening the housing market to a fragile house of cards on the brink of collapse, the ad (released on 22 February) carried a menacing warning, “don’t play with property.”
The government has got the message. The Treasurer, Scott Morrison, who served as National Policy and Research Manager for the Council between 1989-1995 ruled out changes to negative gearing in the lead up to the 2016 Budget. Despite speaking out against negative gearing prior to becoming Prime Minister, Malcom Turnbull also changed his tune recently, rejecting  “reckless” changes to existing arrangements and suggesting that aspiring home buyers hit up their parents for help.
While the campaign to retain negative gearing is the Property Council’s most visible, behind the scenes the council has been busy meeting with government and writing submissions. In 2015 alone, the NSW division wrote 55 submissions and attended an extraordinary 230 government meetings. Its 2016 election brochure presents a number of “solutions” to “grow the economy through property”. Here are some highlights.
<h2>Negative gearing and the CGT</h2>
The council wants to retain negative gearing (which allow interest rates and other expenses associated with housing investment to be offset against total income) and capital gains tax discounts on investment properties. This is despite substantial evidence that these bonuses stimulate demand for housing, pushing up prices and leaving first home buyers unable to compete. But by framing housing affordability problems as a symptom of supply side pressures rather than demand side incentives, the council shifts the affordability debate to planning reform.
<h2>Housing and planning reform</h2>
Current incentives for property investment (such as negative gearing) don’t target new housing supply - only a small proportion of investor loans finance new dwellings. So the Council argues that Commonwealth payments to the states for “micro economic reform” should incentivise planning system changes needed to “turbocharge housing supply pipelines and deliver innovative affordable housing solutions.”
This is a tired argument which ignores the years of planning reform already undertaken by the states and territories, while levels of new housing production are currently at their highest in decades. This supply has done little to dampen price inflation in a market awash with domestic and foreign investors.
While the Property Council always bangs on about bottlenecks in housing supply (which it argues are caused by planning system constraints), such arguments miss the obvious issue that prices are a result of an interaction of supply and demand. What the combination of negative gearing and capital gains tax do is to drive demand so hard in boom times that even with sharp increases in supply, prices keep on rising, especially in today’s low interest environment.
The chart below shows this problem with respect to Sydney. It shows dwelling completions falling slowly when prices flatlined after the 1996-2004 boom, but rising in line with price inflation from mid 2011 on.
<a href="/images/2016/06/17/image-20160616-19949-lktfvl.jpg" target="_blank">Click to enlarge</a>
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Prices: Department of Family and Community Services, Rent and Sales Report. Source: Completions. NSW Department of Planning, CC BY-SA
The Council’s election platform does call for institutional investment in affordable and social housing, and this is one idea worth taking up.
<h2>Cities and Infrastructure</h2>
The Property Council support long term infrastructure planning and delivery, coordinated by Infrastructure Australia. Who doesn’t?
But the problem is how to assign the costs and benefits. Land value rises due to investments in public infrastructure – such as a new rail line or road – are typically pocketed by landowners and developers.
Commonwealth and state governments are now canvassing value capture arrangements which would use some of this uplift to offset costs of provision. The council oppose this model, instead suggesting Tax Increment Financing (TIF), which leverages increases to commercial rates in defined districts.
While popular in some parts of the US, it has not been proven effective for larger schemes. It would be difficult to implement in Australia because our recurrent property charges are much lower than the US.
The Property Council also wants existing development contributions towards basic facilities like open space, local roads, and footpaths to be wound back, along with stamp duties on property transactions.
The idea of removing stamp duty has some merit (at least for domestic purchasers), since taxes on property transactions can discourage mobility, deterring retirees from moving to a smaller home, for example. But experts think stamp duty should be replaced by land taxes, to encourage more efficient use of land.
This would also provide a mechanism for capturing back values arising from public infrastructure investment. Not surprisingly, the Property Council thinks otherwise, calling instead for a higher GST.
While the Property Council complains about unfair tax burdens on its members, they seem content to spend a lot of money on their advocacy and networking activities. Described by economists as “premium seeking expenditure”, lobbying for more generous regulatory and financial settings clearly promises a high return for the property sector.
But it’s important to remember that despite their size, the Property Council only represents a portion of the development, construction, and real estate industry - they don’t really cover many smaller suburban developers or house builders.
The question is whether the “Voice of Leadership” will dominate the agenda or whether wider perspectives on housing and cities will be heard.
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<div class="profile-occupation grid-eight grid-prepend-three">Nicole Gurran is professor - urban and regional planning, University of Sydney and can be contacted <a href="https://theconversation.com/profiles/nicole-gurran-759" target="_blank">here</a>.</div>
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Peter Phibbs is chair of urban planning and policy, University of Sydney and can be contacted <a href="https://theconversation.com/profiles/peter-phibbs-27130" target="_blank">here</a>.
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How the Property Council is shaping debate around negative gearing

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The Real Estate Institute of Western Australia has kicked off a campaign to engage with the WA community as proposed changes to negative gearing are debated. 
In the lead up to the Federal Election, REIWA is seeking the thoughts and opinions of West Australians who use property to help shape their lives and secure their future. 
As part of the campaign, REIWA will share local research and survey results to ensure a balanced conversation on negative gearing. 
REIWA President Hayden Groves said that the current debate around negative gearing doesn’t focus on the role property plays in the lives of everyday West Australians. 
“The proposed changes to limit negative gearing to newly built properties will not fully address the issue of housing affordability. Housing affordability can only be solved with a combination of supply levers and planning and development policy reform,” he said. 
“Rather than tinker with negative gearing, we’ll be promoting the need for broader tax reform where the system is simple, fair and efficient. Changing just one part of a very complex system can lead to inefficiencies and distortions. 
“Over the coming weeks, we’ll be running a series of surveys with members of the WA public to find out what matters to them in regards to property ownership.” 
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REIWA kicks off local discussion on negative gearing

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The majority of respondents to a recent survey by REIWA negatively gear their investment property.
The survey of property investors in Western Australia found that 72 percent of respondents negatively gear their investment property and from those 76 percent owned just one or two investment properties,
REIWA President Hayden Groves said indicates that the majority of investors are everyday West Aussies who hold small property portfolios.
"These findings debunk the myth that property investment and negative gearing only assists those who are wealthy," he said.
“We can see that West Australians employed across a whole range of industries negatively gear their investment property. 
“We hope these findings provide further insight into why we want negative gearing to be retained in its current form or, alternatively, a review of the entire tax system be carried out.
More than half of respondents to the survey earn a gross salary of less than $100,00.
Top five industry groups in WA whose employees invest in property: 
<ul>
<li>
  Business and human resource – 23 percent 
</li>
<li>
  Mining and engineering – 17 percent 
</li>
<li>
  Construction and building – 13 percent 
</li>
<li>
  Health, education, and social and welfare – 11 percent 
</li>
<li>
  Public service – 11 percent
</li>
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Property 101: Negative gearing in West Australia

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<img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
We have to move the housing conversation beyond a game of political football about negative-gearing winners and losers. Australia needs a bipartisan, long-term, housing policy. Why? Because we have a slow-burn, deepening crisis that is affecting Australians who are already highly vulnerable and disadvantaged. They include:
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206,000 households on the waiting lists for social housing;
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<li>
46 percent of those with greatest needs wait two years or more; and
</li>
<li>
105,000 were designated homeless in the 2011 Census.
</li>
</ul>
The UN Rapporteur on Human Rights, following a visit in 2007, concluded that Australia was failing to deliver the fundamental human right of adequate housing because of the lack of any co-ordinated national strategy. Nothing has changed since 2007.
<h2>A failure to join the dots of housing policy</h2>
Our cities will stop working if we do not do something. A decent long-term housing policy is not just about the million or so Australians who are in housing need, marginal housing or homeless. In reality, housing demand and supply for all tenures is intricately connected.
Failed first-time buyers rent privately, increasing demand and rent levels. This pushes lower-income families towards social housing waiting lists and, at the end of the queue, those on marginal incomes are more likely to experience homelessness. Investors push out would-be home buyers by leveraging generous tax breaks that are not available to renters who are saving up to buy.
Rental affordability is worsening, including for key workers in our cities. First-time buyers are having difficulty entering an overheated market. We face the prospect of a permanent “generation rent”.
Changes in the value of new lending, 2008-2016
<a href="/images/2016/06/15/image-20160608-15024-1pesejn.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/06/15/image-20160608-15024-1pesejn.jpg" alt="">
<h4>
Changes in the value of new lending to investors, first-home buyers and subsequent buyers from December 2008 to March 2016. CoreLogic, ABS
</h4>
More than 40 percent of people in private rental pay more than 30 percent of their income for housing – and this is after taking into account Commonwealth Rent Assistance. The 30 percent threshold is generally recognised as the level at which financial stress is experienced.
While states and territories have a wealth of experience and a clear role in delivery, the fact is the Commonwealth government must take a leadership role in co-ordinating national housing policy and connected programs across the four sectors of our housing system: home ownership; affordable private rental; social housing; and specific housing for Aboriginal, disability and homelessness needs.
It can be done; it has been done before. In 1945, Australia also faced a housing crisis. Despite skills and materials shortages and the financial difficulties of the post-war economy, the Commonwealth built 670,000 homes in ten years.
Decent housing underpins jobs, growth and productivity. Well-located, affordable housing is critical for preventative health, to provide a stable home environment for education and self-confidence, and for a productive workforce.
We need a national program of home building to meet the shortfall in all forms of housing. While this will not in itself resolve all problems, it is critical to a successful housing policy.
<h2>How much will it cost and where’s the money?</h2>
This is the subject of a new research report, Towards a National Housing Strategy, by Compass Housing working with a group of peak bodies, housing academics and community housing providers.
To get the long-term benefits of decent housing, we must recognise that providing this has an up-front cost and we are in a tight fiscal environment. The Ache for Home Report estimates a A$10 billion housing bond could meet the needs of the 100,000 currently homeless people. Across all tenures, Australia could build 500,000 homes in ten years for an annual investment of $12.5 billion.
Even if the Commonwealth government took full responsibility for funding a national building program of such scale, the annual investment would equate to less than one-fifth of the current annual cost of capital gains (CGT) exemption on the main residence. The bonus of investment on such a scale could be the boost to the wider economy in which each $1 spent on construction created a $1.30 gain.
A national housing strategy would need to do two key things to raise the cash needed:
<ul>
<li>
rebalance current tax settings to redirect money to where it is most needed; and
</li>
<li>
revise fiscal settings to attract more private capital into housing.
</li>
</ul>
Innovative financial models have been developed internationally that can bring private finance to the table. The development of an arm’s length, government-funded financial intermediary to provide loan guarantees within a housing bond approach is one model with merit. It is used in the UK, the US and Europe.
Rebalancing subsidy arrangements across housing sectors means ring-fencing current housing support and redirecting it across the housing system. Reforms of capital gains tax exemptions and discounts, as well as negative-gearing concessions, are contentious, but are levers to improve housing supply.
CGT exemptions for the main residence cost taxpayers $54 billion in 2014-15. Nearly 90 percent of the benefit went to the top 50 percent of earners. And the costs are increasing. The CGT discount of 50 percent on capital gains, including investment properties, will cost $121 billion by 2018-19.
Negative gearing amounts to an average saving of $2,900 per year for the 1.2 million who claim. However, its impact on the budget means it costs the remaining Australians $310 per year each in tax that they would not otherwise need to pay.
Across these subsidies alone, a modest redirection would provide for a significant start-up fund for affordable housing, to be leveraged with private investment funds.
A national bipartisan approach would allow an independent review of all subsidies and recommend rebalancing options. It could also ease financial stress in the private rental sector by examining the current caps and levels of Commonwealth Rent Assistance to improve prospects for the many families where renting is a lifetime housing solution.
Without a national, integrated approach to housing, Australia will by default continue the mistakes associated with seeing the four sectors of the housing continuum as discrete and conditioned by different factors.
Ralph Horne is deputy pro vice chancellor, Research &amp; Innovation; Director of UNGC Cities Programme; Professor, RMIT University and can be contacted <a href="https://theconversation.com/profiles/ralph-horne-160543" target="_blank">here</a>.
David Adamson is emeritus professor: Social and Community Policy, The University of South Wales and can be contacted <a href="https://theconversation.com/profiles/david-adamson-259956" target="_blank">here</a>.
Both are authors for The Conversation.
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Our cities will stop working without a decent national housing policy

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SPONSORED POST
Australia definitely is the place to be right now. Pretty much every state and territory in Australia appears to be enjoying steady property growth.
The apartment market is rising and developments are selling out before they’re even built. The low density residential markets in the middle and outer suburbs too are enjoying solid growth.
With property doing well in Australia, you’d think it’s the perfect time to buy, but it’s proving to be probably the hardest it has ever been for first time Aussie investors to enter the market. Banks are asking for bigger deposits, interest rates are on the down turn, and first home buyer grants are only for those first time buyers that want to live in their homes. The question many of us ask is; “Is the government doing anything to help first time investors in Australia?” 
The answer is yes, and they did it 3 decades ago. The introduction of negative gearing and the golden gem that is Property Tax Depreciation, gives investors the chance to reduce the after tax cost of their investment, increase their cash flow all while having a property asset appreciate.
Property Tax Depreciation can be an excellent way to make negative gearing work in your favour. Current interest rates, and a competitive rental market make it very easy for a negatively geared investment to become positive. Positive is good – except for the additional burden of a tax bill!
Understanding your property investment, and the cost of it before you buy is prudent, and knowing the available property tax depreciation can, if anything boost your potential buying power. That extra $10-15k of deductions can make a huge difference in the property game.
Knowing how property tax depreciation works is pivotal when making your first property investment, or any property investment for that matter. As property tax depreciation diminishes over time, the older the property, the less property tax depreciation there is going to be available. One might say it’s always wiser to purchase newer property – this ensures you’ll be able to claim the maximum available property tax deprecation, putting more in your pocket during the life of your investment.
So you’ve bought your investment? Then we come to the harder part – who do we trust? Who do we go to, to ensure we have a maximised property tax depreciation schedule?
In the eighties when residential property tax depreciation was introduced to the Australian taxation system, there was only one company that people turned to; Napier &amp; Blakeley.
Napier &amp; Blakeley were the first professional company to provide residential property tax depreciation advice, and over three decades on, they’re still the market leaders and still providing that same trustworthy advice through NBtax. NBtax is a division within Napier &amp; Blakeley that concentrates purely on the residential property depreciation market.   
With tax time so near, if you’ve purchased an investment property in the past year, make sure you’re prepared with a property tax depreciation schedule that’s best for you.
For more information, <a href="https://nbtax.com.au" target="_blank">click here</a>.
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Making your first property investment possible

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<img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
The Real Estate Institute of Australia (REIA) has unleashed the hounds on Labor’s proposed reforms to negative gearing.
The REIA’s campaign, Negative Gearing Affects Everyone, follows the lead of the Property Council, which describes the Australian housing market as a “house of cards”, with the REIA stressing how “fragile” the Australian economy is. You might be tempted to dismiss this as propaganda from people who exaggerate for a living, but evidence is mounting of instability close to the REIA’s home: the off-the-plan apartment sector.
An array of forces are converging to give the multi-unit house of cards a shove. Over the past couple of years apartment development has boomed. The Australian Bureau of Statistics shows building approvals for new flats, units and apartments reached a huge peak last year. It has stepped down in the most recent quarter, but is still very high.
<a href="/images/2016/05/27/image-20160525-25213-knw2ks.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/05/27/image-20160525-25213-knw2ks.png" alt="">
<h4>ABS, 8731.0 Building approvals, Table 6</h4>
You can see this development in the skylines of our cities, especially in Sydney, Melbourne, Brisbane and Canberra – and in the RLB Crane Index. RLB counts a total of almost 650 cranes engaged in construction in our capital cities, and says more than 80% of these are on residential projects.
<a href="/images/2016/05/27/image-20160525-25245-if8dg7.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/05/27/image-20160525-25245-if8dg7.png" alt="">
<h4>RLB Crane Index, 8th Edition</h4>
This coming supply is reflected in CoreLogic’s projections for new units hitting the market. It estimates that sales for more than 92,000 new units will be settled in the next 12 months, only slightly less than last year’s total number of sales of new and established units. The year after, a further 139,000 new units sales are due to be settled, substantially more than total sales (new and established) last year.
<a href="/images/2016/05/27/image-20160526-17553-1387xjw.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/05/27/image-20160526-17553-1387xjw.png" alt="">
<h4>Source: CoreLogic</h4>
<h2>Dampeners on demand</h2>
But for all this supply, it appears there may be much less demand than anticipated, particularly from the foreign investors who did so much to stoke the boom. Evidence for this includes:
<ul>
<li>
Over the last six months the Chinese government has tightened controls over currency exchange by its citizens. This has restricted their capacity to buy – and repay loans to buy – property in Australia and elsewhere. This in turn has led to…
</li>
<li>
Credit restrictions by Australian banks. Last month each of the Big Four banks restricted how much they’ll lend to foreign buyers (lower loan-to-valuation ratios), with Westpac withdrawing altogether. This month, Macquarie has pulled its horns in.
</li>
<li>
The Victorian government has doubled the stamp duty payable by foreigners – it’s now 7 percent of the property purchase price. The NSW government is reported to be considering doing something similar; it is also introducing checks for residency and Foreign Investment Review Board approvals as a condition for conveyance of property titles, and the FIRB is now charging $5,000 for applications.
</li>
</ul>
Foreign demand for new dwellings (as gauged by the NAB’s Quarterly Australian Residential Property Survey) was already down over the first quarter of the year, before the credit restrictions cut in. Now the media are reporting that Chinese demand for apartments has “fallen off dramatically”: Meriton says the number of Chinese buyers of its apartments halved in the last month.
As those cranes in the sky indicate, there’s a lot of people out there – foreign and local – who’ve paid deposits and entered into contracts to pay boom-era prices on completion of their units. When they go to the bank to borrow the balance, they may find that, between lower loan-to-valuation ratios and lower valuations, they are caught short. Some might make up the difference by selling another property, but many of those settlements projected by CoreLogic may not settle at all.
The result: deposits forfeited, unsold units dumped on the market – accelerating the bust – and possibly, at least for buyers who are actually in the jurisdiction, the threat of being sued by developers for the loss of the contracted higher price.
<h2>So what might policymakers do?</h2>
Faced with such a calamity, why won’t our politicians do something to shore up demand for all these newly constructed rental properties? Oh wait….
This is precisely what Labor’s proposed negative-gearing reform promises do, by allowing rental losses to be set against non-rental income only where the property is newly built. Under Treasurer Bowen, Australia’s dedicated army of negative gearers would be given new direction and purpose, switching from the established dwelling market into the new-built market deserted by foreign buyers. Furthermore, because no-one after the first purchaser can call a dwelling new (and hence get the same preferential treatment on their gearing), they may be inclined to hang on to their properties even as demand looks weak.
We should still expect such a reform to reduce total investor demand for housing, and hence reduce house prices overall. These are both good things. But it may also help cushion what might otherwise be a drastic and painful collapse in the new-build sector.
Both the REIA and the Coalition government talk about Australia’s “transitioning” economy. They should consider negative-gearing reform as a measure for transitioning out of our presently fragile, property-bubble-led economy.
Chris Martin is research fellow, Housing Policy and Practice, UNSW Australia and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/chris-martin-203935" target="_blank">here</a>.
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