Record 1.3 million landlords cash in on negative gearing as shake-up looms

Original article by Ben Butler, Michael Roddan
The Australian – Page: 19 & 26 : 17-Apr-19

Data from the Australian Taxation Office shows that the number of property investors who use negative gearing rose from 631,000 to about 1.3 million between 2000 and 2017. In contrast, the number of investors who broke even or made a profit rose from 532,000 to around 856,000. The figures also show that the proportion of investors who are aged 60+ rose from around 15 per cent to about 23.5 per cent. Robert Deutsch of the Tax Institute does not expect Labor’s proposed negative gearing reforms to have much effect on housing prices.

CORPORATES
AUSTRALIAN TAXATION OFFICE, THE TAX INSTITUTE, AUSTRALIAN LABOR PARTY, BIS OXFORD ECONOMICS PTY LTD, UNIVERSITY OF NEW SOUTH WALES

Negative equity feared as house prices plunge

Original article by Michael Roddan, Luke Griffiths
The Australian – Page: 2 : 11-Apr-19

The Reserve Bank of Australia’s deputy governor Guy Debelle says the number of homeowners with negative equity has increased, although he notes that it remains largely confined to Western Australia and mining regions. He adds that it is unusual for house prices to fall sharply at a time when the economy is continuing to grow and the unemployment rate is low. Debelle says the outlook for the labour market is likely to determine whether there is a further increase in negative equity and mortgage arrears.

CORPORATES
RESERVE BANK OF AUSTRALIA, S&P GLOBAL RATINGS, INTERNATIONAL MONETARY FUND, WESTPAC BANKING CORPORATION – ASX WBC

Nation’s residential building boom well and truly over: BIS

Original article by Michael Bleby
The Australian Financial Review – Page: 31 : 11-Apr-19

BIS Oxford Economics is bearish about the near-term outlook for Australia’s housing construction market. The firm has forecast that the sector will be hit by a two-year correction, with the number of new dwelling starts tipped to fall to 161,000 a year. This compares with between 220,000 and 230,000 annually over the last four years. Meanwhile, official data shows that there was a 16.3 per cent decline in housing starts during the December quarter, which is the largest quarter-on-quarter fall since September 2000.

CORPORATES
BIS OXFORD ECONOMICS PTY LTD, COMMONWEALTH SECURITIES LIMITED, AUSTRALIA. DEPT OF THE TREASURY, BROOKFIELD MULTIPLEX LIMITED

House values expected to fall sharply

Original article by Ingrid Fuary-Wagner
The Australian Financial Review – Page: 3 : 10-Apr-19

Moody’s Analytics forecasts that house prices will fall by 9.3 per cent in Sydney during 2019, and apartment prices will decline by 5.9 per cent. The ratings agency expects the prices of houses and apartments in Melbourne to fall by 11.4 per cent and five per cent respectively. Moody’s economist Katrina Ell says factors such as stricter lending conditions in the wake of the Hayne royal commission and Labor’s proposed negative gearing reforms could weigh on the housing market. Moody’s expects the cash rate to remain on hold until mid-2021, although it says further housing market weakness could see a rate cut before the end of 2019.

CORPORATES
MOODY’S ANALYTICS AUSTRALIA PTY LTD, RESERVE BANK OF AUSTRALIA, CORELOGIC AUSTRALIA PTY LTD

IMF warns on housing slide

Original article by Jacob Greber
The Australian Financial Review – Page: 1 & 2 : 8-Apr-19

The International Monetary Fund is expected to downgrade its forecast for the Australian economy in its latest World Economic Outlook. Thomas Helbling, the IMF’s lead economist for Australia, warns that the nation’s housing market downturn has been more severe than anticipated and it has occured sooner than expected. He says the property market downturn will need to be offset via government policies aimed at stimulating the economy, such as increased investment in infrastructure. Helbling has also raised the possibility of interest rate cuts.

CORPORATES
INTERNATIONAL MONETARY FUND

Top 10 housing stress seats all held by Labor

Original article by Matthew Cranston
The Australian Financial Review – Page: 8 : 1-Apr-19

Labor is hoping to make housing more affordable if it wins the federal election by implementing changes to the negative gearing and capital gains tax regimes. Analysis conducted by the National Centre for Social & Economic Modelling indicates that the 10 electorates with the highest level of housing stress are all held by Labor, while Digital Finance Analytics estimates that the number of households facing mortgage stress now exceeds one million. The NATSEM analysis also indicates that Labor holds eight of the 10 seats with the highest level of poverty.

CORPORATES
AUSTRALIAN LABOR PARTY, UNIVERSITY OF CANBERRA. NATIONAL CENTRE FOR SOCIAL AND ECONOMIC MODELLING, DIGITAL FINANCE ANALYTICS, LIBERAL PARTY OF AUSTRALIA, AUSTRALIAN GREENS

Property tax crackdown from Jan 1

Original article by Phillip Coorey
The Australian Financial Review – Page: 1 & 4 : 29-Mar-19

Labor is set to announce that its proposed changes to the negative gearing and capital gains tax regimes will take effect from the start of January 2020 if it wins the federal election. Shadow treasurer Chris Bowen will state on 29 March that this will give investors sufficient time to prepare for the reforms, which Labor had initially flagged more than three years ago. Labor’s reforms would most likely require the support of at least two independents in the upper house, in addition to the Greens.

CORPORATES
AUSTRALIAN LABOR PARTY, AUSTRALIAN GREENS, ONE NATION PARTY, CENTRE ALLIANCE, FINANCIAL SERVICES COUNCIL

SQM urges phasing in of gearing reforms

Original article by Michael Bleby
The Australian Financial Review – Page: 35 & 38 : 21-Mar-19

SQM Research MD Louis Christopher says Labor should implement its proposed negative gearing and capital gains tax reforms gradually if it wins the federal election, to avoid a "shock" to the broader economy. Research by SQM suggests that Labor’s reforms could potentially result in a 12 per cent decline in residential property prices over three years, while rents could rise sharply as supply is reduced. SQM adds that two official interest rate cuts by January 2020 would see housing prices fall by just 4-8 over three years, as well as lower rent increases.

CORPORATES
SQM RESEARCH PTY LTD, AUSTRALIAN LABOR PARTY, RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY

Greens’ $20m man now says no more tax breaks

Original article by Chip Le Grand, Christine Lacy
The Australian – Page: 1 & 4 : 15-Mar-19

Prominent barrister and Greens candidate Julian Burnside has declined to disclose whether he used negative gearing to build a property portfolio that is estimated to be worth about $20m. The Greens want to abolish negative gearing on all future residential property purchases, while its policy would restrict existing investors to negatively gearing just one property. Burnside says it is not fair that the system benefits wealthy people such as himself at the expense of first-home buyers. The Greens policies will not affect his investment portfolio.

CORPORATES
AUSTRALIAN GREENS, AUSTRALIAN LABOR PARTY, MELBOURNE SAVAGE CLUB, MARITIME UNION OF AUSTRALIA, PATRICK STEVEDORES HOLDINGS PTY LTD

Rate cuts, not supply, the key to house prices

Original article by Matthew Cranston
The Australian Financial Review – Page: 5 : 12-Mar-19

Reserve Bank of Australia analysts Trent Saunders and Peter Tulip have concluded that monetary policy has the biggest impact on house prices and the level of construction activity. They argue that historically low interest rates have been the major driver of rising house prices in recent years, while factors such as construction costs and population growth have had a smaller impact. In contrast, RBA governor Philip Lowe recently suggested that housing supply has been the major influence on prices.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY