House prices are forecasted for fall further between 2020 and 2022 under Labor’s negative gearing policy if it is elected at the federal election, according to a new report.
That’s the view of property market analyst SQM Research, which has today released new modelling which reveals property prices would continue to decline up to 8 per cent, even with an interest rate cut – with Sydney and Melbourne expected to see the most falls.
Property sales turnover is predicted to fall another 8 to 15 per cent from by 2020 from 2019 levels with most of the declines in sales to occur in 2020.
This would result in a fall in aggregate state stamp duty revenue of $2.3 billion dollars.
SQM Research believes market rents could rise by between 7-12 per cent between in the three year period.
Brisbane and Perth will bear the brunt and are likely to record the largest rises in rents.
“Our analysis suggests the market impact would last by around three years,” Christopher said in the report released on Thursday.
“There is, right now increased consensus that the RBA may have to cut rates this year. If we were to see a cut of say 50 basis points, this would provide some cushion to the effects of negative gearing changes.”
“Housing construction; already in a slump, would likely fall further due to the lack of investor demand.
“This would set up a shortage of housing come later 2020, based on current strong population growth rates,” he said.
Watch Louis Christopher and CoreLogic’s Cameron Kusher discuss the state of play in the real estate market with Trading Day in the video above.