Prominent Coalition MP, John Alexander, has also suggested that negative gearing has pushed metropolitan home prices beyond the reach of young Australians:
The moment that it intrudes on the marketplace and stops young families from buying the house, that’s not ideal. And that’s what’s happened in this moment when interest rates have gotten so low.
But tax reform is unlikely.
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Prime Minister Scott Morrison has argued that the current macro-prudential policy settings are sufficient to deal with the inflated metropolitan property market. He has pointed to restrictions on interest only loans which have contributed to a modest downturn in median property prices. Morrison has also attacked the Labor Party’s intended reforms to negative gearing and capital gains concessions, calling them “poor judgment”.
Somewhat incongruently, Morrison has been reported as internally supporting reforms to negative gearing when Treasurer under the Turnbull Government.
Morrison has also gone on the public record supporting housing affordability and home ownership:
Home ownership is a positive for the Australian economy, our society and the nation’s finances. If Australians are able to affordably own their own home and achieve housing stability, this can set them and their children up for success and reduce risks of welfare dependence. Australian homeowners who are not encumbered by large housing debt as they enter retirement will have their pension or superannuation incomes go much further to meet their many other costs of living.
How might housing affordability be improved?
A combination of real wage growth, targeted land release, and reforms to negative gearing and capital gains concessions would deflate median prices.
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Contrary to the suggestions of former Prime Minister Malcolm Turnbull, the bank of mum and dad is not a solution to the housing affordability crisis, as it only creates a divide between those who have benefactors and those who do not.
Although the Coalition may believe that its current hands-off housing policy will satisfy its predominantly older homeowning voter base, it may ensure the near total alienation of Australians under the age of 35.
If this is correct, it points to the Coalition’s 2019 election defeat.
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