Property giant says home prices must fall 27pc to offset new tax rules
New analysis from Ray White suggests that recent changes to negative gearing rules may force a significant market correction, with property prices potentially needing to drop by up to 27% to maintain investor viability. Alternatively, the report warns that if prices remain stable, tenants could face rental increases of up to 30% as investors seek to offset lost tax benefits.
Why it matters
The findings highlight a critical tension in the Australian housing market where policy shifts aimed at tax reform could inadvertently trigger either a sharp decline in asset values or a severe spike in rental costs for consumers.
Home prices may need to fall as much as 27 per cent even if rents surge another 20 per cent for some investments to become self-funding under the new negative gearing rules.
And if property prices hold steady, tenants could be the ones to feel the pain, with rents across the capital cities needing to jump about 30 per cent from current levels to make investing attractive again.
New Ray White analysis attempts to calculate how far property prices and rents may need to move to entice investors back into the market following the federal budget decision to remove negative gearing for established properties.
Ray White research reveals home prices may need to fall 27 per cent for investors to get back into the market.
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