The much publicised changes to current negative gearing arrangements, proposed by federal Labor, have resulted in a chorus of concerned warnings from financial commentators and research institutions. SQM research has forecasted that peak-to-trough declines in the Melbourne housing market would worsen to 20-30 percent, exacerbating current predictions of peak-to-trough declines of 12-17 per cent without the proposed changes.
Other researchers, such as financial research house RiskWise, have also warned that the proposed changes could see negative impacts on established investors even though any changes to negative gearing would be grandfathered. RiskWise chief executive Doron Peng forewarned of two, distinct, property markets occurring – primary and secondary – “significantly” affecting property prices. The primary market would comprise new properties and existing investment properties that would still qualify for tax concessions and the secondary market comprising all second-hand dwellings that are sold following any changes that do not qualify for and tax benefits.