AHURI research twisted to support negative gearing
Cameron Jewell | 25 January 2018
The Property Council of Australia has used new research by the Australian Housing and Urban Research Institute (AHURI) to argue that negative gearing is not responsible for high home prices.
“A new report released today by AHURI joins others in confirming that negative gearing is not responsible for high home prices,” a media release sent out on Thursday stated.
“We welcome this new AHURI report which finds that Australia’s negative gearing settings are neither out of kilter with those of other comparable countries, nor are they the driver of escalating house prices across much of Australia,” PCA chief executive Ken Morrison said.
The PCA’s take on the report has raised eyebrows, as the authors behind the report have previously stated that negative gearing is a causal factor in Australia’s high housing prices.
Indeed, soon after the release, one of the report authors, Dr Chris Martin from UNSW’s City Futures Research Centre, challenged the PCA’s take on Twitter.
.propertycouncil Please read the report again. We’ve no doubt that #negativegearing, in combination with other tax and policy settings, contributes to Australia’s high house prices. Reforming it will make housing more affordable. https://t.co/RjEYju9Jo8
— Chris Martin (@dr_chris_martin) January 25, 2018
The report, an international comparative analysis of private rental housing, did note that Australia and Germany had similar negative gearing policies but had very different housing market outcomes, due to Germany having “a large private rental sector, low population growth, conservative lending by public financial institutions and rent regulations”.
Writing in The Conversation, Dr Martin said the findings showed “the necessity of considering taxation and other policy settings in interaction with each other and in wider systemic contexts”.
“So, for example, Germany’s conservative housing finance practices, and regulation of rents, may mean the speculative potential of negative gearing and tax-free capital gains isn’t activated there.”
Also not mentioned by the PCA was a recommendation to more strongly regulate the private rental sector and provide more rights to tenants.
“The view of tenancy regulation as ‘red tape’ is out of step with the recent experience of most countries in this study,” Dr Martin said.
“On the contrary, Ireland and Scotland are examples of successively stronger regulation being implemented as the private rental sector has grown.
“State government could legislate to improve security of tenure, for example by removing ‘no-grounds’ terminations, without unduly burdening landlords.”