Federal Treasurer Josh Frydenberg said the survey results were a “chilling warning about the danger of Labor’s ill-conceived and untimely housing taxes”.
“The findings show that not only will Labor’s housing taxes not work as intended, but they will have the opposite effect – driving down new housing supply and construction.”
The Treasurer also jumped on the results of a question where investors were asked whether they would have increased their rent if Labor’s policy was in place when they bought, with 46 per cent saying they would while only 18 per cent said they would not.
“It is alarming that if Labor were in government, around half of the investors admitted they would have to charge more rent on their properties and the number of investors buying new homes would drop by more than 25 per cent,” he said.
About 58 per cent of current investors polled – and there are 1.7 million people who negative gear property across Australia – said if Labor’s new rules came in they would be discouraged from investing in property of any sort – not just newly built.
Property Council of Australia chief executive Ken Morrison said if implemented, Labor’s changes could have a significant impact on the property investment decisions made by Australians.
“These findings directly challenge Labor’s key assumption that its property tax package will stimulate new housing supply and construction,” Mr Morrison said.
But shadow treasurer Chris Bowen defended the findings, saying that there was clearly still a large cohort that would continue to invest in new homes.
“The report confirms what the government has been telling lies about – far from seeing all investors flee the market, which has been the government line, many investors have said they will continue to invest despite Labor’s policy changes,” he said.
Mr Bowen also questioned why the report had not surveyed owner-occupier buyers for whom he said Labor would benefit the most under his policy.
“What’s notable is that the report is all about investors and not one mention of first home buyers who will be the big beneficiaries under our plans. Surveying on the attitudes towards Labor’s housing affordability policies without including the views of first home buyers raises serious questions.”
Property developers such as Stockland have a significant pool of owner-occupier buyers, giving them an advantage over other developers. Its chief executive Mark Steinert said last year thathis business would benefit stronglyfrom the removal of negative gearing tax breaks.
Mr Bowen also rejected the idea that investors would ask for higher rents, citing studies by the think tank the Grattan Institute.
“Just like people don’t increase rents when interest rates go up and down, they will not rise following changes in tax arrangements,” he said.
At a private function in Parliament ,”Housing a Growing Nation”, Liberal Party MP John Alexander said some changes to negative gearing policies when the market is booming would be a good thing.
“Is there any opportunity to use negative gearing in a calibrated way that might encourage the market to do what is required – whether that’s cool or heat the market?” he said.
But the property market has already started to tank, with national property prices having alreadyfallen about 6 per cent since the market peaked in October 2017and are back to the same values they were in October 2016, according to CoreLogic.
But Cbus director and Master Builders chief executive Denita Wawn said there should not be changes of any sort to negative gearing.
“We do not support any changes to negative gearing and capital gains tax,” Ms Wawn said. “We want to see new homes to meet the demands of individuals and we do think there are better opportunities on the supply side.”