Is it just me, or is everyone a bit underwhelmed by looming federal election? Where is the brave, groundbreaking, socially challenging, progressive policy agendas?
The recent state election was terribly underwhelming too. Not a great deal of difference between the major parties other than broad promises and, thanks to Labor’s massive majority, the result had a certain inevitability about it.
In 2019, the federal Labor opposition brought over 200 divergent policies to the electorate, most notably proposed changes to negative gearing and Capital Gains Tax laws that would have had substantive impacts on property markets across Australia.
Having learnt that poking your head up above the parapet can lead to having it shot off, Labor played it safe in 2022 ditching controversial policies and promoted itself as “not being the government”.
As the next election looms, both major parties have guaranteed support for retaining negative gearing. Some may recall that in 1985, the Hawke government ditched negative gearing. It was back again in 1987 off the back of rent increases in the major cities. Sydney rents rose a remarkable 57.2 percent, Perth rents shot up 38.2 percent and rents in Brisbane rose 32 percent during the 18-month period.
There is a direct relationship between stable and affordable rents and negative gearing tax settings. Disincentivising investors to buy residential homes always leads to investors looking elsewhere; the share market, superannuation, commercial property, overseas and businesses. The result is supply constraint in the residential property sector which causes rents to rise through competition from the demand side.
Changes to tax laws at this stage in the market cycle would seriously damage rental affordability. REIA’s latest Housing Affordability Report shows the proportion of family income needed to meet rent payments are at record levels. Perth remains the most affordable place to rent in Australia with families paying 22.8 percent of their wages for rent.
27 percent of all housing stock in Australia is privately owned rental homes. 70 percent of all other houses are owner occupied, and 3 percent is social housing delivered by mostly state governments.
Protecting and encouraging more investment in the 27 percent grouping is critically important if we want to provide more affordable rental homes in Australia. Labor’s decision to ditch changes to negative gearing laws after losing the 2019 election is a step in that direction.
Now we need state governments to desist in making changes to state tenancy laws that further dilutes the rights of property owners in favour of tenants. There must be a practical balance between the rights and obligations of tenants and landlords if we are to increase rental housing stock in Australia and keep rents affordable.
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