House prices in Sydney and Melbourne have dropped by around 10 per cent in the past year, following a rapid, 50 per cent rise in prices between 2012 and 2017.
While there have been some concerns that Australian house prices have been falling, Mr Morrison told a NSW Business Chamber briefing in Sydney on Wednesday (8 March) that Australia’s housing market has enjoyed a “soft landing” during this current downward cycle.
However, he said investors can be assured of skyrocketing rent and free-falling values should the Labor party’s plans to limit negative gearing to new builds and halve the CGT discount are put into action.
There is conflicting data in the marketplace about the real-world impact of Labor’s housing policies. However, several research houses believe Labor’s policies will trigger a disruptive period for residential housing.
Mr Morrison referenced modelling from SQM, which estimates that rents could rise anywhere between 7 per cent and 15 per cent on average, while dwelling prices could drop by between 4 per cent and 12 per cent should Labor’s policies go ahead.
However, speaking to the national broadcaster this week, opposition leader Bill Shorten said his tax plans for property would support housing affordability across all working age groups, versus only those with significant capital or existing investments.
He also reiterated his concern over ‘intergenerational inequities’ with the way taxes, subsidies and concessions – including those related to property – are applied in Australia.
“Is it right that we spend billions of dollars to give people the ability to claim a subsidy when they invest in a property in the future or should we properly fund our hospitals and schools? It’s not a zero-sum game,” he said.
“Young people get a bad rap in the political debate. The reality is not only do you have housing a lot more expensive than it used to be, not only do you have to pay for university in a way your previous generation didn’t, but even things like Medicare which you should pay, you’re less of a challenge on the health system than the older people. So, I want to see some measures which put young people at the front,” Mr Shorten said.