Negative gearing changes 'level the playing field' for first-home buyers: expert | ABC NEWS

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[00:00:00]Michael Fotheringham is the managing director of the Australian Housing and Urban Research Institute and he joins us now. Michael Fotheringham, welcome. So, as you heard there, the key message from the government on this budget is giving young people a fair crack at home ownership. But, to what extent will the changes to CGT discount and negative gearing actually help that? I I I think really what this does is level the playing field. I mean, we've seen a lot of energy at a federal level as well as at a state level in recent years really trying to improve our housing system, our housing outcomes. And one of the inequities that we've had in recent years is is the very favorable conditions for investors at the cost of first home buyers. So, it's we've made it easier for people to buy a second or third or fourth home than to buy the home they're actually going to live in and we need to reset that. And so, just going to the detail a bit more for us with the mechanics of this for the people at home, how will it actually work to open up the market for younger people? So, the negative gearing which we've heard a lot about in recent years will be channeled specifically for for investment in new supply rather than existing homes. So, that's encouraging the investment in in new homes in in increasing supply which is which is clearly been a message of the government that we need more supply and and and this is one of the triggers to help with that. For those who've already invested, their their their settings are preserved. So, it's not actually disadvantaging existing investors. It's creating different opportunities for new investors, but it's making it easier for first home buyers to get a look in.

[00:01:29]And what about people using creative accounting though to get around this? If if people are really keen to stick in investing in in existing homes, do you expect that people will look for those loopholes and to what extent might that undermine the government's efforts to open up the market?

[00:01:49]>> Well, that's possible, but then there are some open doors already there that they don't need to be that creative. If they've already invested, they can keep that investment. If if they're looking to invest, you know, there is still opportunity. It's just for new supply rather than existing homes. Look, there'll be some who try to find a way around that and and and and look for particular mechanisms.

[00:02:07]And I'm sure the government will keep an eye on how that develops over time. But But really, there's still plenty of opportunity. And housing has been a big focus for the Albanese government over over two terms now. Where you've spoken about these two particular initiatives, but when you look at the housing policy broadly, including the investment in social and affordable housing, um where do you see this going over the next couple of years? Oh, look, I I think what we see over over the last 24 hours is is a real um a flowering of of that housing policy. We've seen a fairly narrow a singular focus on on housing supply as as the solution to all problems. I think, you know, the criticism of that that that some in you know, some housing experts have had is that it's it's too narrowly just on housing supply and doesn't consider things like tax reform.

[00:02:53]Now, they've brought those dimensions in. We have much more like a a comprehensive housing policy and the sorts of settings that can see us really make a difference. And the federal government will be looking for an electoral return on this. How [clears throat] quickly is that likely to flow those with this with these initiatives announced today and the initiatives announced previously on housing, um uh are younger people likely within the next couple of years to actually notice that it's easier to get into housing or is it going to be a longer-term prospect?

[00:03:26]>> It's It's a little of both. I I think what this will help to do is to is to slow down some of those really rampant price growth we've seen so that so that, you know, price appreciation in housing is is a bit more measured, a bit more stable. And that gives young people more of a chance to save and and to get into home ownership themselves. So So while it might not be immediately apparent, I think those benefits will be there. And I guess the other point I'd make is it's not just young people that are advantaged by this. We have a lot of a lot of their parents are also worried and and you know, they vote, too. So, it's it's not just thinking about young people, but actually thinking about our societal outcome. And so, can you see it looking at this from a political perspective? I'm not sure whether this is out of your wheelhouse. But, do you expect the government will get a political return on this considering it's like such a big picture policy area? Yeah, look, I mean, I'm not a politician. I'll leave the politicking to to them. But, but what I do think is that this is a a setting that was needed a a set of interventions that's needed.

[00:04:20]I think, you know, criticism of budgets in recent years have focused on the lack of courage to take this on. Now, we've seen it there with some quite clever settings involved and and I think, you know, we should be quite optimistic about what that'll do.