Powered by MOMENTUM MEDIA
Powered by MOMENTUM MEDIA
subscribe to our newsletter

Scrap negative gearing to curb investors: Eslake

Leading economist Saul Eslake has urged the government to grandfather negative gearing to cool the overheated investor lending market.

Speaking at the Finsia annual conference last week, Mr Eslake said a “simple answer” to the boom in investor lending would be for the government to scrap negative gearing without impacting those who already use it.

“If you grandfather it so that you’re not taking it away from the 15 per cent of the electorate who has it, then my view is: what’s the problem?” he said.

Advertisement
Advertisement

“Surely that would be far more effective in tackling the problem which the Reserve Bank has identified without inflicting any harm on anybody else.

“And if the government, or the opposition, were to present it properly, nor should there be a political backlash because they are not taking a privilege away from anyone who is currently enjoying it.”

The Bank of America Merrill Lynch chief economist said his biggest concern over APRA’s use of macroprudential tools is that they either don’t work or unintentionally hurt those who are not the source of the problem.

He added that the rise in house prices Australia is seeing at the moment is “not doing anyone any good”.

“This is not the United States where house prices fell by 25 to 35 per cent and you want to see some recovery to restore household balance sheets,” Mr Eslake said.

“We never experienced that,” he said, adding that rising house prices are pricing an increasing proportion of young people out the housing market “possibly forever”, and are not spilling over to increased consumer spending.

“People don’t want to borrow against increases in the value of their house to spend more,” Mr Eslake said.

“They might want to borrow against the increase in the value of their house so they can speculate on the possibility of another house,” he said. “I just don’t think that is doing anyone any good.”

 

 

Scrap negative gearing to curb investors: Eslake
mortgagebusiness

Latest News

Analysts are in two minds about the Reserve Bank’s monetary policy strategy, with recent remarks from governor Philip Lowe casting doubt o...

The lender’s mortgage insurance provider has announced the appointment of a new non-executive member of the board, following the retiremen...

The financial services group has reported strong growth in its Australian reverse mortgage book, helping to list its market share to 26 per ...

FROM THE WEB
podcast

LATEST PODCAST: Questions raised about AFG-Connective merger

Do you think Australia will move to quantitative easing this year?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.