Nar­row fo­cus on a hot is­sue

Neg­a­tive gear­ing is the topic of the mo­ment right now, with pro­posed changes ex­pected to have a big impact across the en­tire coun­try and across all dif­fer­ent mar­kets

The Courier-Mail - Property - - REALESTATE MARKET OUTLOOK -

NEG­A­TIVE gear­ing is the hot topic and ev­ery­one has an opin­ion, but is ev­ery­one get­ting all the facts?

On Mon­day night, ABC’s Four Cor­ners did a piece on neg­a­tive gear­ing that aimed to es­tab­lish the case that neg­a­tive gear­ing was push­ing up house prices, mak­ing home own­er­ship im­pos­si­ble for young, firsthome buy­ers.

Re­porter Ben Knight re­vealed Mel­bourne’s me­dian house price is above $700,000 and Syd­ney’s me­dian house price is “a tick un­der $1 mil­lion”. Ben also re­vealed it takes 10 times the av­er­age wage to buy a me­dian-priced home in Mel­bourne and more than 12 times the av­er­age wage to buy in Syd­ney.

But the Four Cor­ners re­port made no men­tion of any other part of Aus­tralia. Not even a pass­ing men­tion of any other city – noth­ing on Bris­bane, noth­ing on Ade­laide, noth­ing on Perth, noth­ing on Ho­bart, and noth­ing on Dar­win.

And this is the sin­gle great­est prob­lem with the neg­a­tive gear­ing de­bate. It is be­ing driven by politi­cians who live in Syd­ney and Mel­bourne and it is be­ing de­bated by a me­dia based in Syd­ney and Mel­bourne.

What Mr Knight didn’t men­tion was that greater Bris­bane’s me­dian house price is $498,000, which is around six times the an­nual av­er­age in­come. In Ade­laide, with its me­dian house price of $494,284, it’s seven times the av­er­age an­nual South Aus­tralian in­come and in Perth, where the me­dian is $540,000, it’s six times the an­nual av­er­age WA in­come (ac­cord­ing to ABS data).

These are lev­els in line with con­di­tions in the mar­ket a decade ago – noth­ing much has changed. And if you go out of the cap­i­tal cities and ven­ture into the re­gions, es­pe­cially re­gional Queens­land, the con­trast is much more stark.

In Mackay, $328,000 will buy you a five-bed­room home on 800sq m with a pool, just 3km from the town cen­tre. More than 5000 in­vestors in Mackay use neg­a­tive gear­ing, but you could hardly make the case that first-home buy­ers are be­ing pushed out of the mar­ket in Mackay. La­bor’s pro­posed neg­a­tive gear­ing changes will be detri­men­tal through­out re­gional Queens­land.

Ear­lier on Mon­day evening, on the ABC’s 7.30 pro­gram, Leigh Sales in­ter­viewed Tony Shep­herd, the for­mer head of the Busi­ness Coun­cil of Aus­tralia and the chair of the Gov­ern­ment’s 2013 Com­mis­sion of Au­dit into the Aus­tralian bud­get.

When Leigh Sales asked Mr Shep­herd whether he thought neg­a­tive gear­ing pushed up hous­ing prices he said: “I think the jury’s out on that and I think the dan­gers of tight­en­ing neg­a­tive gear­ing prob­a­bly more out­weigh the ad­van­tages of it.”

He went on to say the big­gest is­sue for hous­ing af­ford­abil­ity was cen­tred around land re­lease.

“I think the fun­da­men­tal cause of ris­ing house prices, and cer­tainly at the lower level in mar­kets like Syd­ney and Mel­bourne, is sup­ply.

“Sup­ply and de­mand are out of whack.”

The neg­a­tive gear­ing de­bate, so far, is pro­vid­ing a very nar­row fo­cus on the is­sue.

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