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Herron Todd White director chief executive officer Peter Maloney
More than three-quarters (78 per cent) of experts now expect property values to fall off the Federal Government’s tax reforms.
Fewer than one in ten believe it will improve housing supply, research involving more than 500 legal, financial, banking and property professionals found.
Australia’s leading independent property valuation and advisory firm, Herron Todd White found widespread concern among industry professionals regarding the Federal Government‘s tax reforms and the downstream impact on the Australian property market.
Fewer than one in ten property professionals believe the Federal Government’s tax reforms will improve housing supply.
Based on live polling of more than 500 property professionals on June 25, the findings show a strong majority of respondents expect the legislated reforms to reduce residential property investment and further dampen market confidence.
Herron Todd White chief executive officer Peter Maloney said the findings were a clear indication of industry sentiment among professionals working across Australia’s property and financial systems.
“These findings reflect the views of professionals who advise, finance, value, and regulate property transactions every day,” Mr Maloney said.
“The overwhelming view among respondents is that the tax reforms will reduce investor participation and do nothing to lift housing supply, which remains one of Australia’s most pressing economic challenges.”
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When asked whether they expected a significant number of residential property investors to sell or stop investing as a result of the reforms, 75 per cent of respondents answered yes.
Mr Maloney said the findings reflected widespread concern that investor confidence has weakened as the Federal Government moves to implement the property tax reforms recently passed by parliament.
“There is nothing to suggest that investors will suddenly pile in and take advantage of negatively gearing new dwellings to help fuel supply, and if they did, we now have the perverse equation of first home buyers having to directly compete with investors for new dwellings,” he said.
“The irony of this is that the tax reforms may well have created more competition for new dwellings, the category in which first home buyers are more likely to start their home ownership journey.
“Reduced investment activity also has the potential to flow through to rental supply, housing confidence and broader market stability.”
The research also found 78 per cent of respondents expect residential property values to decline if the reforms proceed.
When asked how they expected the tax reforms to affect residential property values over the next two years 37.7 per cent expect values to decline by between 5 and 10 per cent while almost 12 per cent expect a decline of more than 10 per cent.
Only 7.4 per cent expect values to increase.
When asked how they expected the tax reforms to affect residential property values over the next two years 37.7 per cent expect values to decline by between 5 and 10 per cent. Photo by: Martin Berry/UCG/Universal Images Group via Getty Images)
“While the extent of any market adjustment remains uncertain, there is a clear expectation among industry participants that the proposed reforms would place downward pressure on residential property values,” Mr Maloney said.
The research also found limited confidence that the tax reforms would improve Australia’s housing supply challenges.
“Nearly three in four respondents (74.5 per cent) believed the reforms would either worsen housing supply or have no material beneficial impact,” Mr Maloney said.
Nearly three in four respondents (74.5 per cent) believed the reforms would either worsen housing supply or have no material beneficial impact. Picture: iStock
Mr Maloney said the finding highlighted a major disconnect between the stated policy objective and industry expectations.
“Less than one in ten professionals surveyed believe these reforms will improve housing supply outcomes,” he said.
“That is a significant finding given housing supply and affordability remain central to Australia’s economic and social policy agenda.
“These findings provide an important insight into how the professionals who work across Australia’s property and financial systems believe the reforms are likely to impact investment, housing supply and market confidence.”