Real Estate Institute of New South Wales President, John Cunningham, says abolishing negative gearing will lower investment in housing, causing a further tightening of supply.

“The abolition of negative gearing will push investment dollars out of property and into other areas of the economy that do not give the consequential social benefits that property provides,” said Cunningham.


“The removal of negative gearing would deny an allowable tax deduction that all other entities that are in the pursuit of taxable income receive. It is time for government to stop treating property unequally. 


Cunningham said that negative gearing lowers the risk of property investment, and therefore makes it a more attractive investment.

“People who invest in residential property do so as it is considered a safe haven but at the same time there is risk and, as such a large assets class, that risk is high.



“Negative gearing lessens that risk slightly. Property provides investors with a sense of security as they can see and touch it," said Cunningham.

“In reality, negative gearing is not a huge tax saver, the owner contributes far more than government. Most properties become positively geared after 5 to 10 years."

Cunningham believes allowing negative gearing only on new properties could pave the way for unscrupulous developers.



“The potential of capital gain is less on new dwellings due to inflated new prices. Unregulated spruikers will have a field day enticing naïve investors into good returns and high depreciation in the first few years, followed by years of disappointment after that,” he said.