The Greens plan to reduce house prices through their demands to axe tax concessions for investors to make buying more affordable for renters, the party’s housing spokesperson, Max Chandler-Mather, has said.
In an episode of the Guardian’s Australian Politics podcast, to be released on Saturday, Chandler-Mather argues projected price reductions in the order of 2.5% are “not much” and preventing further rises of 10 or 20% would be desirable.
The Greens say they will use their balance of power in the Senate to push for Labor to pare back negative gearing and capital gains tax discounts in return for supporting the government’s Help to Buy shared equity scheme.
Negative gearing allows investors to claim tax deductions on rental property losses, while the capital gains tax discount halves the amount of excise paid by people who sell assets that have been owned for 12 months or more.
Costings of the Greens’ policies by the independent Parliamentary Budget Office in April 2023 suggested they might cause “house prices [to] fall and rents [to] rise” although the extent of the impact would “be influenced by how many renters would be able to switch to owning property”.
Asked if the Greens wanted cheaper house prices so that more renters can become owner-occupiers, Chandler-Mather replied: “Yeah, absolutely.”
Chandler-Mather said that modelling including by the Grattan Institute “pointed out changes might see a 2.5% drop in house prices”. “Now that’s not much, right … in the context of big house prices.
“But it is a lot when you consider the fact, well, that means that house prices don’t go up by another 10 or 20% next year.”
In 2016 the Grattan Institute estimated abolishing negative gearing and halving the capital gains tax discount to 25% would leave house prices roughly 2% lower than otherwise, favouring would-be homeowners over investors.
Chandler-Mather said “the problem with our housing market is we have a tax system that basically continues to force house prices up, often far in excess of wages”.
“Since about 2000, house prices have gone up more than double wages every year.”
“That’s crazy. So slowing that down, at the very least, is a good thing. Because when you’re saving up for a deposit and house prices are increasing faster than you can even save up for a deposit that … is one of the most demoralising things you can possibly experience.”
Chandler-Mather said that “big decreases” were not desirable because of “people who don’t want to fall into negative equity”, owing more to the bank than their property is worth.
“But just moderating the system, calming it down, I think, is a good thing,” he said.
Chandler-Mather rejected the suggestion phasing out negative gearing could increase rents, arguing that “generally landlords are charging as much rent as they can get away with”.
The member for Griffith conceded that “some … might be charging a little bit less but in aggregate terms, that’s just not really how the rental market works”.
Chandler-Mather said the Greens still want the federal government to incentivise states and territories to freeze rents for two years, a call rejected by Labor premiers last year during housing future fund negotiations.
The Greens went to the 2022 election proposing to build 1m public houses over 20 years, allowing cheaper access to housing with payments to allow occupants to take up to 75% of the equity in the home.
Chandler-Mather said this was “broadly” still a “good idea” but there would be “some tweaks” to its housing offering before the next election.
