Monday, 29 February 2016
Turnbull’s belief that removing negative gearing will “smash the residential housing market” is one echoed with glee by the treasurer, Scott Morrision.
Both base their argument on the belief that removing negative gearing for established residences will mean – in Turnbull’s words – taking out “all of the investors. So there will only be home buyers, people who are buying it as a residence”.
As a consequence Turnbull and Morrison argue that house prices will fall.
It’s a pretty silly argument that doesn’t hold up under close examination. Even worse, it also suggests a pretty dismal assessment of the state of Australia’s housing market.
Are we to assume that the prime minister and the treasurer believe the value of Australian homes is reliant only on the ability of investors to use the system to avoid paying tax?
If so, that’s a pretty scary thought. It suggests that not only do the two top people in our government think the Australian housing market is some sort of tax-driven Ponzi scheme, but that they also want to make sure it stays that way.
[Greg Jericho writing in The Guardian, 22 February 2016]