RE/MAX WA managing director Geoff Baldwin has issued a strong response to the 2013 report by the Grattan Institute after it was revisited yesterday following news of Australia’s housing affordability.
Mr Baldwin argued that suggestions by the Grattan Institute that negative gearing should be abolished, that the family home should be subject to capital gains tax, and that land tax should also apply to the family home are “recipes for disaster not only for property owners but also for renters”.
“When the Keating Government abolished negative gearing in the 1980s, investors fled the market, rents skyrocketed and the whole market suffered, not least tenants, with the result that it was reintroduced within two years,” he said.
“Winding back negative gearing in the naive belief that it will assist first home buyers neglects to take into account that investors provide around 80 per cent of rental accommodation in Australia and that no government has the funds or the inclination to go back to providing 1960s-style government housing estates.”
The Grattan Institute's suggestion that planning processes need to be streamlined and simplified makes sense, said Mr Baldwin. However, he argued that the report draws “a very long bow” to suggest that this will make it easier for first home buyers to live close to the city.
“On the other hand, meddling with the last bastion of individual security – the family home – with some vague conception that it will assist first home buyers, is fanciful at best and if taken seriously, very worrying for home owners,” he said.
“The last thing current or future home owners would want to see happen is governments viewing the family home as a potential cash cow.”
Mr Baldwin said it is “very obvious” that the authors of the Grattan report were slanted towards justifying a particular outcome rather than providing a well-researched and rational study.
“There is no doubt that assistance for first home buyers is justified but attempting to harm current home owners and investors, devaluing their assets by changing negative gearing rules or by introducing taxes on their properties should not be considered seriously,” he said.