New analysis backs negative gearing

New analysis backs negative gearingNew analysis from CoreLogic finds negative gearing is driving investment in low income housing, with 53 per cent of all investment properties worth less than $0,000.CoreLogic’s profile of the Australian residential property investor finds 2.03 million Australians own an investment property, with an average of 1.28 investment properties per investor. The report’s authors argue that investment in Australian dwellings is “generally skewed towards the lower value segments of the market”.Nationally, 53.4 per cent of dwellings owned by investors are valued at less than $0,000, compared with 46.9 per cent of owner occupied dwellings.What’s more, the large majority of dwellings in capital cities have an estimated market value that is lower than the median value in that capital city.CoreLogic says the availability of negative gearing “could be viewed as a way that the government encourages both private construction and investment in rental accommodation”.The report adds that “the $3.719 billion worth of net rental losses claimed by negative gearing investors is potentially much less than what it would cost the government to provide subsidised rental accommodation or more social housing.”Property Council of Australia chief executive Ken Morrison welcomes the report’s findings, which he says underscores the risk of changing negative gearing and capital gains tax concessions at a time when the economy is in transition.”Investors comprise about 40 per cent of mortgage demand for new housing. Investors are creating additional supply which is playing an important role in easing pressures on housing affordability,” Morrison explains.”The construction of a new dwelling typically involves 40 tradies and subbies – these jobs are at risk if investors walk away from new housing construction.”The Opposition has proposed radical changes to the treatment of investment properties that will raise an additional $32 billion. Much of this will be passed on to tenants and will limit new investment.”The report also finds that, while -64 year olds are most likely to own an investment property, people in younger age groups, and those in middle income brackets with a taxable income between $60,000 and $80,000, are most likely to negatively gear a property.”CoreLogic’s report highlights that negative gearing is a vital tool for young people and middle income earners to help secure their financial future,” Morrison concludes.