'HOUSE OF CARDS’: Property gurus take on PM’s dire warning
PRIME Minister Scott Morrison has slammed Labor's bold plan to fix the housing market, with the ominous warning it could "invite a housing market crash".
But while the Coalition has poured cold water over the Opposition's promise to limit negative gearing and halve the 50 per cent capital gains tax discount, it has ignited fierce debate among leading property experts and everyday Aussies alike.
News.com.au spoke to some of the country's biggest names in real estate to get their take on what has become one of the hottest topics in the country.
Here's what they had to say.
Starr Partners chief executive officer Douglas Driscoll warned far more research was needed before any "sweeping change" was introduced.
"I think Scott Morrison is right - it could create a house-of-cards scenario, especially when the market is as precariously poised as it is," he said.
But he said if changes to negative gearing were introduced, existing landlords' properties should be grandfathered instead of applying changes retrospectively across the board.
He said about 1.25 million Australians claimed negative gearing and the government couldn't just "flick a switch" on such a significant chunk of the population.
"Three years ago, there were far too many investors in Sydney, it was way off kilter. Now we're in a soft landing scenario," he said.
"Labor kind of had a point three years ago but now I think less so because it's a very different market."
He said the government should look at other measures introduced overseas - such as upping stamp duty on second homes - which wouldn't "rock the boat as severely".
And he said a "broad cross-section" of society was actually using negative gearing, and not just the wealthy "upper echelons" as often claimed.
He said he had a "balanced view" on the issue and that further investigation was needed - but the country must avoid a return to the market conditions of 2015 and 2016.
"We have to ensure the scenario doesn't surface again where scores of investors are outbidding fist home buyers," he said.
THE DATA SCIENTIST
Martin North of Digital Finance Analytics told news.com.au the Prime Minister's claims were a blatant exaggeration.
"Morrison is alarmist on this. The facts are that Labor is only looking to limit new negative gearing on existing property - not retrospective," he said.
"The volume of investors buying new investment property is way down, thanks to the slowing capital growth in many centres.
"Those who are still in the market, according to our surveys … are mainly going to the deeply discounted new developments now and many of which are offering rental guarantees for specific periods, in a desperate attempt to sell."
He said existing investors would not be impacted by Labor's proposals.
"Morrison is, I think, trying to deflect attention away from five years of bad housing and economic policy - driven by consumer debt expansion and over-free bank lending," he said.
"This is playing politics, not dealing with the core issues we face, which is how we manage the mortgage debt bomb, as mortgage stress rises."
He said the Reserve Bank's rates policy had been "wrong" for several years and the gross domestic product was supported by inflating household consumption on the back of artificially high home prices and growing debt.
THE PROPERTY INVESTORS:
Investor, author and The Property Mentors businessman Luke Harris said negative gearing was always a conversation starter among politicians and property-obsessed Aussies.
But he said Australia's growing population and relatively stable government meant supply and demand would not be affected, regardless of negative gearing policy.
"It's a hot topic whenever an election is coming up. It definitely gets thrown around as a political football," he said.
"But for me, regardless of what happens, who gets elected and what policies they implement, it comes down to the long-term fundamentals - people need a roof over their head.
"Scott Morrison said to watch out for a property crash with people selling investment properties but I don't think there's any massive risk of that happening.
"There might be some short-term pain but I don't expect any long-term change."
He said those with long-term investment strategies wouldn't be swayed by who was in power.
But Daniel Walsh of investment buyer's agency Your Property Your Wealth said abolishing negative gearing arrangements could turn off mum-and-dad investors.
"The cost of holding an investment property will go up, which will force some investors to sell," he said.
"With less investors coming to the market, rental accommodation will dry up and rents will soar for those very people who are in need of affordable living."
He said when Paul Keating removed negative gearing in 1985, rents rose strongly and just two years later negative gearing was brought back to "ease the pressure and bring back affordable rental housing".
THE MORTGAGE EXPERT:
On the Triple M Grill Team Sydney this morning, Wizard Home Loans founder Mark Bouris rubbished claims up to two-fifths of homes' values could be wiped out by next year after an explosive 60 Minutes segment that argued the country's property downturn was just the tip of the iceberg.
"All the banks themselves have these amazing scientists working on the data and they come out and say there is no problem," he said.
"When someone says, 'Oh the banks have just started to change their lending profiles in the last six months and it's too late', that's crap … It's been happening now for four years … a .07 reduction in house prices (that's not even 1 per cent) across Australia in the past 12 months is not something to be particularly worried about in my view."
Opposition Leader Bill Shorten was approached for comment.