Tax changes spark house listings boom but fewer rentals
Investors are prematurely vacating their properties before tax changes hit the market, causing rentals to decline even as listings boom.
Rental listings across the country have shown steep year-on-year declines; May saw the steepest decline ever.
All capitals were part of this trend; Hobart lost just 0.3 per cent in listing volume, while Darwin lost 2.1 per cent and Melbourne lost 1.7 per cent.
Sydney was hardest hit last year, falling 1.5 per cent in May and 9.8 per cent year-on-year, according to data from Neoval.
Ray White chief economist Nerida Conisbee said the figures showed some vulnerable people in the country were at risk of not being able to find affordable homes.
“A home listed for sale is not helpful to someone looking for a home to rent. Rent availability is what determines how much choice renters have,” he said.
Although the federal budget was distributed on May 12, Ms. Conisbee said it likely affected this month’s numbers because buyers and sellers began behaving differently afterward.
As a result, nearly all markets are now in favor of buyers, with May’s influx of listings struggling to sell.
Listing numbers are nearly at their COVID-19 peak but only 51.1 per cent of homes auctioned in capital cities the previous weekend were sold, Cotality data shows. This rate was more than 60 percent the previous year.
These percentages are Australia’s lowest in five years, partly because the economy is strained by conflict in the Middle East.
It’s a trend that ultimately drives down real estate prices and has been criticized by economists as an unintended but likely short-term side effect of the federal budget.
Proposed negative gearing and capital gains tax changes are expected to further impact the market in the coming quarter as buyer confidence weakens.
“If it goes to more homeowners, fewer homes will be available for rent,” Ms. Conisbee said.
“This is particularly problematic given that rental availability has already fallen before budget changes have time to occur.”
Tax changes that will limit the negative impact on new homes from July 2027 and remove the 50 per cent reduction in capital gains tax for a rate linked to inflation have been passed by the House of Representatives.
But the reforms have sparked intense backlash from business groups and the coalition, and Labor will need to negotiate with the Greens to pass the legislation in the Senate.
