Negative gearing not driving up prices: report
A report by the Australian Housing and Urban Research Institute (AHURI) has revealed high home prices are not a result of negative gearing.
The report undertakes an in-depth review of the private rental market in Australia and nine other comparable countries, considering tax and finance settings, demand and supply, and regulation of landlords and tenants.
Property Council chief executive Ken Morrison said that the report dispels common myths around negative gearing.
“We welcome this new AHURI report which finds that Australia’s negative gearing settings are neither out of kilter with those of other comparable countries, nor are they the driver of escalating house prices across much of Australia,” Mr Morrison said.
“AHURI’s peer-reviewed report compares Australia and Germany, which has the same negative gearing tax settings. However, Germany’s housing supply is more closely matched with its lower population growth.
“This comparison highlights the need for a lot more supply-side policy levers in Australia to ensure our supply matches demand.”
Mr Morrison said that the AHURI report underscores the requirement for more variety in Australia’s rental stock, including the role institutional investment can play.
“This matches the Property Council’s calls for [the] government to support the emergence of a build-to-rent sector in Australia,” the CEO said. “AHURI’s inquiry also flags the important role the community housing sector plays in providing and supporting social and affordable housing, and this is an important element in overall housing policy settings.”
The AHURI report recommends that policy settings and any future strategy for rental markets should consider not only tax settings but also the availability of finance, population and other demand levers, and the variety and volume of supply.