The big real estate issues of 2017 are already making headlines in 2018. We take you through the real estate news making headlines over the holiday season.

Negative gearing - the debate that won't go away

An ABC freedom of information request exposed treasury advice that the Labor Party's negative gearing policies “could introduce some downward pressure on property prices in the short term”.

The Labor Party jumped on the news, which was in stark contrast to the Liberal party's claims that Labor's negative gearing policies would act as a "sledgehammer" to the economy. On 10 May 2017, treasurer Scott Morrison said Labor's policy would be like taking a "chainsaw to the housing market".

The Labor party went to the 2016 election with a proposal to restrict negative gearing to new homes and to reduce capital gains concessions from 50 per cent to 25 per cent.

Only week after the FOI release, Melbourne University, in a study for the Reserve Bank, said getting rid of negative gearing altogether would lift homeownership to as high as 72.2 per cent of households, and that home prices would decline by only 1.2 per cent, and rents would rise "only marginally".

Malcolm Gunning, president of the REIA, told SCHWARTZWILLIAMS the institute would be very cautious about making negative gearing policy based on the Sydney and Melbourne markets alone. The Sydney and Melbourne markets are already in decline, he said, and other markets, such as Perth and Darwin are in strong need of investment.

Gunning said that over the last two years there have already several adjustments to property taxes, and that APRA has been pulling levers, meaning there have already been significant changes in the sector. 

"The market is already on the decline. We want to be careful (about changes to negative gearing policy)," he said.

Related content: Bizarre academic paper won’t help housing policy debate

REIA calls for the appointment of a Property Minister

The REIA's proposal for the government to introduce a 'property services' minister, which was originally proposed in a 2017-18 budget submission, was floated again in the new year.

The REIA submission stated that property is one of the largest sectors in the country, and is one of the largest drivers of economic growth.

"A minister should be appointed to look at the property industry in total," said Gunning.

"If you're going to look at negative gearing, you have to look at the whole market and take a holistic approach," he said.

Building approvals are strong - especially in Melbourne

Approvals by local councils to build new homes rose by 11.7 per cent in November - the strongest monthly result in a year.

The total value of dwelling approvals was $7.7 billion - a new record high.

Growth was particularly strong in Victoria with approvals up by 37.9 per cent in November, following a gain of 20.5 per cent in October.

Greater Melbourne apartment approvals rose by 81.3 per cent to 6,287 in November

"Strong population growth, low interest rates and strong employment growth continues to drive demand for new homes and apartments in Australia’s second most populous state," said Craig James, chief economist, CommSec.

Source: CommSec.

Foreign demand is falling

The latest ANZ/Property Council of Australia survey of more than 1,700 property professionals from across the industry noted a sharp drop in foreign buyers. The drop in demand is expected to weaken prices, which have already fallen in Sydney during the December quarter by 2.1 per cent.

South Australia was the only state that did not record a downturn in sales of residential properties to foreign buyers in the December quarter, according to a they survey.

Restrictions on access to credit and higher taxes on foreign buyers have contributed to the drop in demand.

Some developers, such as Meriton, are having to resell apartments that were pre-sold to Chinese buyers, and some new developments will not go ahead.

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Property prices down across Australia: REIA