Property experts have expressed concern over the opposition's proposed changes to negative gearing and the capital gains tax.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
The Australian Labor Party shadow treasurer Chris Bowen announced changes to negative gearing and the capital gains tax discount would commence from January 1, 2020, if the ALP were to win the federal election in May.
The negative gearing reforms would not apply to newly-built homes and existing investment properties, while the capital gains tax discount would be halved for investments, from 30 to 15 per cent, entered after January 1 in a bid to encourage new housing supply.
LJ Hooker's principal Richard Rossiter said Wagga continues to be an affordable market that is "isolated" from the downturn witnessed by capital cities, but ALP's proposal could change all that.
"We're seeing good, steady and healthy growth in property prices," Mr Rossiter said.
"I think the biggest influence in our market, in the short term, is the federal election campaigning around the capital gains tax and negative gearing for investment properties.
"This is seeing some procrastination on investors and decision-making and could have a negative impact on the investment market, which would see an increase in rental properties."
Mr Rossiter said if Labor brought in these policies, those who are unable to afford a house will be affected the most.
"This will have a negative impact on the investment market and we would see an increase in rents and therefore impacting renters and those that can't afford to buy," he said.
"If you make investing on property less attractive, this means there will be less investors in property, which negatively impacts builders and a stop to off-the-plan investments.
"This results in a decline in the stock of rental properties, which logically creates higher demand for rental properties."
The Property Council of Australia said it remains strongly opposed to the tax overhaul.
"We are concerned that the proposed changes would drive away investors, which will affect the supply of new and established property to the rental market which is essential for one-third of Australian households," said chief executive Ken Morrison.
The council surveyed more than 1000 Australians on the potential impact of the ALP's policy, which found the taxation arrangements won't stimulate investment in new housing and will lead to a decline in demand for all residential properties.
"These findings directly challenge the ALP's key assumption that its property tax package will stimulate new housing supply and construction," Mr Morrison said.
"They show that investors will be less likely to invest in newly-constructed housing under the ALP's tax changes, not more likely.
"If less new housing is being created for people to rent it can only mean higher rents in the medium term."
Mr Morrison said these changes could put housing construction in danger, which is a major source of jobs.