The number of people buying homes as investments has fallen to the lowest level ever seen by real estate major Ray White which says Labor’s policy to wind back negative gearing tax breaks will be a further shock to a market already hit by tight finance.
The Conservative Party opposes Labor’s reforms which will severely impact the value of all Australian properties.
The Australian reports, Ray White, which sold $3 billion worth of property last month, has seen investors fall to 20 per cent of its buyers from 35 per cent during the peak years of 2011-13.
Managing Director Dan White said, “Investors are the first to pull out of the market for purely financial reasons. People are worried about a change of government, so they are worried about policy changes that will affect the market. They are worried the market will get worse.”
Mr White’s comments follow a report this week that found winding back negative gearing would cause investors who are already nervous to desert the property market altogether, forcing down prices further in most cities from next year to 2022.
SQM Research forecast housing prices would drop a further 4-8 per cent over the three-year period to 2022 if negative gearing was unwound, assuming an interest rate cut of 50 basis points by early January next year. The drop could be far bigger if interest rates remain the same.
Mr White said it was difficult to understand why anyone would punish an already weakened market.
