New data released by MCG Quantity Surveyors is claiming the Labor Party relied on incorrect assumptions in formulating its negative gearing policy.
According to the data, Labor’s assertions on the percentage of investors buying new homes were grossly understated and call into question the party’s revenue projections.
“Shadow treasurer Chris Bowen has suggested new-buy investors comprised anywhere between four and 14 per cent of the cohort, but our figures suggest this is patently wrong with the number actually over 40 per cent,” said Mike Mortlock, managing director of MCG.
“Labor’s based much of their projected budget revenue on the premise investors will move ‘en masse’ from buying existing property to purchasing new holdings due to its negative gearing changes,” he said.
“But our figures show investors are already buying new – and with gusto – under the current regime.”
MCG analysed data from thousands of its investor clients which show that from 2016 to now, 43 per cent of investors bought or built brand new housing.
When the calculation was applied across the 2017/18 financial year, it showed 44 per cent were buying or building new.
“We applied further scrutiny by removing from the data those properties bought or built new, but lived in by the owner for a period prior to being used as an investment.
“This still showed around 40 per cent of buyers were purchasing new stock as straight-up investments in the 2017/18 financial year.”
MCG are claiming their findings are proof of recent claims across the property and investment industry made by the Labor party are incorrect.
“This is particularly concerning for everyday families who own just one or two investment properties – which is the vast majority of Australia’s investor cohort.
“Our analysis also indicated around 22 per cent of all investors have simply retained their old home when moving to the next, creating a huge number of ‘accidental’ investors who could be affected by policy changes in the future,” he said.
Mr Mortlock said relying on incorrect assumptions was a dangerous move for the potential new government.
“Our analysis reveals the Labor Party’s estimates are woefully inaccurate,” he said.
“If negative gearing is to be addressed, it must be in the context of accurate data, otherwise the consequences could be financially dire with a shortfall in revenue and a huge potential drop in the real wealth of everyday families.”
“Unless the details of Labor’s policy are made available for scrutiny, we could be in for a disastrous economic outcome.”