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
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.