Shadow Treasurer Tim Wilson said proposed changes to negative gearing tax rules could cause rental prices to soar across Australia.
These warnings come as the country faces a severe housing crisis. Changes to these tax incentives may reduce the number of properties available for rent, potentially pushing costs higher for tenants in already strained markets.
Wilson referenced modelling from SQM Research to highlight the potential impact on major cities. He said the data suggests a weekly rent increase of $160 [1] in Sydney and approximately $130 [2] in Melbourne.
To support his position, Wilson pointed to historical precedents in Australian fiscal policy. He specifically referenced the actions of former Treasurer Paul Keating during the 1980s.
"You just need to go and look at what happened when Paul Keating did this back in the 1980’s, got rid of negative gearing, what happened? The price of rent went up," Wilson said.
Negative gearing allows investors to offset the cost of an investment property against their taxable income. By removing or restricting this benefit, the government aims to change investment patterns, but critics argue this will tighten the supply of rental homes.
Wilson said that the reduction in investment would lead to a direct increase in costs for those renting. He said that the resulting shift in the market would hammer tenants who are already struggling with affordability, a trend he believes is inevitable if the rules are altered.
“The price of rent went up.”
The debate over negative gearing centers on the tension between improving home ownership accessibility and maintaining a stable rental supply. If investors exit the market due to reduced tax incentives, the resulting supply drop could increase rental costs, potentially offsetting the benefits of any corresponding increase in available homes for first-time buyers.
