Perth Inner region to feel brunt of any change to negative gearing
(Supplied by REIWA)
Perth’s Inner region has been identified as one of the 10 areas across the country most likely to be adversely affected by Labor’s proposed reforms to negative gearing and CGT, according to a new report.
Produced by independent research providers RiskWise Property Research and WargentAdvisory, the report found that if the Federal Labor party were voted in and moved forward with their plan to reform negative gearing and capital gains tax, Perth’s Inner region would see the value of units reduce by 12 per cent – second only to Fitzroy in Central Queensland (-12.1 per cent).
Perth’s Inner region comprises 47 suburbs ranging from Inglewood and Mt Lawley just north of Perth down to Peppermint Grove and Cottesloe south-west of the CBD.
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RiskWise CEO Doron Peleg said one of the most important aspects of the proposed changes was that their blanket introduction across the country would have unintended consequences, and some geographical areas (SA4s), especially those with weak or fragile property markets, would be adversely impacted more than others.
“From the second half of 2017, the risks associated with the residential property market increased significantly, and the proposed reforms need to be assessed thoroughly across all geographical areas (SA4s) to ensure they do not unduly impact the weaker and fragile housing markets,” he said.
Report co-author and WargentAdvisory Director Pete Wargent said for years property commentators had been talking about a two-speed economy driven by the resources construction boom, but this dynamic had reversed and those once prosperous areas were now struggling.
“The last thing they need is a further dampening of demand. An introduction of Labor’s proposed changes to negative gearing needs a more nuanced response with some mitigating processes and policies that could be implemented so there are no unintended consequences.”
REIWA is a strong advocate for retaining negative gearing and capital gains tax in their current form, with an eye to undertaking a broader tax reform, both nationally and locally to assess the viability and financial implications on the community of a shift to a broad-based land tax system that ultimately removes transfer duty.