Timing Disastrous For Neg Gearing Reforms

09/05/2019
The timing couldn’t be worse for Queensland’s rental markets to change the negative gearing benefits for investors, according to new REIQ rental market analysis.
  
Rental markets are steadily tightening across the state and these tighter markets will be faced with a double impact of rising rents and falling supply if Labor’s proposed changes to negative gearing are introduced. 
 
Comparing the March 2019 rental markets with the March 2018 markets, 53 per cent of our rental markets were classified as tight in 2018, but in 2019 that jumped to 63 per cent. This indicates supply is not keeping pace with demand in a state known to be one of the highest rental states in the country. 
 
REIQ CEO Antonia Mercorella said the market was crying out for additional supply in certain pockets but the proposed changes to negative gearing were designed to remove incentives for landlords and diminish the supply to the rental market. 
 
“This could potentially be disastrous for parts of our rental market. The Labor Party’s policy is – by their own admission – specifically designed to remove investors from the established housing market. 
 
“This couldn’t happen at a worse time. We need incentives that will bring new investors to the market, not disincentivise them,” she said. 
 
Renters will face the brunt of the impact. Rents are already rising due to tightened conditions in many markets and the consequence of the proposed changes to the negative gearing policy will likely be to amplify those rises in some markets. 
 
Analysing 32 rental markets, we found that 17 of those were tight in the March quarter of 2018. This grew to 20 markets just 12 months later, in March 2019. 
  
In March 2018 there were eight healthy markets, that grew to nine in 2019. The greatest change came in the weak markets. Seven markets were classified as weak in March 2018 (vacancies greater than 3.5 per cent) and a year later that fell to just three markets. 
 
“In Queensland 34 per cent of us rent our home and with continued population growth, we clearly need additional supply. The state stepping back from public housing in Queensland which means the load falls to private investors,” she said. 

-ENDS-

Media enquiries: 
REIQ Media and Communications Manager 
Felicity Moore
T: 0408 020 428 E: media@reiq.com.au