PICA attacks Labor’s ‘flawed’ neg-gearing policy

"Ask yourself, who’s going to buy a brand new property and run it at a loss for several years, if they know these new properties aren’t going to have the buyer demand that they once had?"

According to PICA, Labor’s proposed policy changes will have a number of damaging consequences; including falling prices, loss of jobs, economic lag and rising rents.

Mr Kingsley warned against being misled by Labor’s modelling, particularly in respect to it only marginally affecting property prices.

“All the modelling is flawed because it doesn’t adequately take into consideration what we believe will be a big shift in buyer behaviour,” he said.

“A macro reform of this magnitude will absolutely impact buyer behaviour significantly, so much so that it’s very difficult to accurately forecast any realistic model.”

No-brainer

He said PICA’s view is based on anticipating investor behaviour in the face of uncertainty.

“All you need to do is ask a simple question like, ‘Would you invest in property if it didn’t grow in value, yet you had to pay all the loan interest over the years?’” he said.

“We all know the answer to that question.”

Mr Kingsley said the exceptions to falling property prices in the vast majority of markets will be soaring land values for inner-city land, as well as the risk of over-development in city fringe suburbs.

“Demand for inner-city land will soar as investors opt for quality as well as for development potential as close to the city as possible, which will push up prices,” he said.

PICA wants government to introduce regulation in the property investment industry to better protect consumers.

“We are open to some potential reform to CGT exemptions to encourage long-term investors and discourage short-term speculators into the market,” Mr Kingsley said.

"We want to co-operate with all political parties and regulators to help them understand the importance of the residential property market in developing good, sensible and sustainable policy.

"This is the reason why we have created this petition, as there are many of us who are very concerned and through this petition we can show our concern.”

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