보머 집주인들: 60세 이상이 임대차 시장을 통제하는 방식을 보여주는 차트

The government is about to change capital gains tax and negative gearing. These are the numbers that show why.

Older and wealthier Australians have increased their ownership of rental properties by up to 1500 per cent over the past two decades, while young people have been priced out of the investment market.

As senior ministers prepare to sign off on key tax reform elements in the May 12 budget, including an overhaul of the capital gains tax concession and negative gearing, this masthead can reveal astonishing figures that show how the investor rental market has become the domain of people in their 60s and 70s.

Data from the Australian Taxation Office shows that in 1999-2000, the year the Howard government introduced changes to capital gains tax that critics argue encouraged speculative property investment, there were almost 1.2 million landlords in the country.

Of that group, about 170,000 were over the age of 60, while 109,200 were under the age of 30.

But by 2022-23, the latest available figures, this had dramatically changed. Over-60s now account for 27 per cent of all landlords, holding almost 610,000 properties. The number owned by under-30s fell to 95,000.

At the turn of the century, most under-30s, about 84,000, held one investment property, compared to the 122,000 held by those over 60.

Two decades later, under-30s ownership of a rental property had dropped by 13 per cent. Among over-60s, it had climbed 233 per cent. When it came to owning six or more properties, there was a 400 per cent increase among those over the age of 60.

The period coincided with a surge in property prices. Sydney’s median house price climbed fourfold to $1.5 million while Melbourne’s lifted by 260 per cent to $900,000. Average mortgages in both cities almost tripled, pricing out younger buyers with lower wages.

By income, the past 20 years have seen similarly large swings among the nation’s army of landlords.

In 1999-2000, people on a taxable income of between $100,000 and $500,000 held less than 5 per cent of all rental properties. Two decades later, they owned more than 37 per cent.

Less than 0.3 per cent of all Australians have a taxable income exceeding $500,000. But they hold 1.5 per cent of all properties.

The number of the uber-wealthy owning at least six rental properties has climbed by 1529 per cent since 1999-2000.

By contrast, the number of people earning between $50,000 and $100,000 with at least six properties climbed by 199 per cent.

Curtin University housing and property expert Rachel ViforJ said there were a range of options open to the government to overhaul negative gearing, which allows a property investor to reduce their overall taxable income by claiming losses on their rental properties.

She said the government could limit the number of properties a person could negatively gear, restrict tax concessions to new builds or put a cap on how much an investor could claim from their property.

ViforJ said the current tax system delivered a substantial tax advantage to older people and those on higher incomes to out-bid potential first home buyers, pushing up prices across the property market.

“Doing something is better than nothing,” she said.

“You expect older people to have more wealth tied up in housing. They’ve been around for longer, so there will always be a gap between them and younger generations. The problem is that the gap is widening.”

Critics of changes to negative gearing argue that in a two-year period in the 1980s when the Hawke government effectively ended the tax claim, rents soared by up to 30 per cent.

But ViforJ said just two markets, Sydney and Perth, experienced a lift in rents. Rent inflation actually eased in Melbourne and Brisbane, and was steady in other capital cities.

Long-time negative gearing critic, independent economist Saul Eslake, said just making a change to the CGT concession would influence the property market.

“Even just reducing the CGT discount or reverting to the pre-1999 CGT regime, as seems to be on the cards, would reduce the appeal of negative gearing to those seeking to minimise tax,” he said.

In her tax white paper, independent MP Allegra Spender backed a system to ring-fence rental property deductions so they can only be used against the income raised from the property rather than wages and salaries.

Spender estimated the change would eventually raise up to $10 billion a year in extra revenue that could then be used to reduce personal income rates.

She said this change would reduce the incentive to invest in unproductive assets, slightly reduce the price of housing and reduce intergenerational inequity.

Commonwealth Bank economists Luke Yeaman and Harry Ottley estimate that a housing tax reform package that includes a return to the pre-1999 CGT system and abolition of negative gearing for new investments would generate about $2 billion over four years and between $25 billion and $30 billion over a decade.

On Thursday, Treasurer Jim Chalmers signalled changes to CGT and negative gearing would not adversely affect people who already hold assets while downplaying suggestions of a surge in revenue from housing reform.

He told a podcast with the Commonwealth Bank that suggestions of such a large and immediate increase in revenue were incorrect.

He said if the government made any change, it would take into account previous decisions by investors, suggesting transitional arrangements would be put in place for those with existing assets.

“Without getting into hypotheticals about policies, what you try and do is to make sure that we recognise the decisions that people have taken in the past,” he said.

Chalmers told Channel Seven that all of the changes around housing were aimed at giving younger people a “toehold” in the property market.

He said boosting supply remained the best way to help young people.

“I think a lot of us are very concerned about, over time, the way that there are fewer and fewer younger people who are able to buy their own homes. So housing supply is the main game,” he said.

Chalmers used his first budget in 2022 to promise one million homes by mid-2029. That pledge has since been increased to 1.2 million homes.

But figures from the National Housing Supply and Affordability Council show the government is only on target to build 980,000 properties by its deadline. That’s 42,000 up on its estimate from last year, but still more than 200,000 behind the 1.2 million target.

But the council warned that the war in Iran had increased uncertainty for the housing supply outlook, with higher oil prices increasing pressure across the construction sector.

Opposition housing spokesman Andrew Bragg said instead of blaming the war for a shortfall in homes, the government should do far more to boost home building.

“A serious policy response commensurate to the housing supply crisis is needed. One that cuts housing taxes, makes building houses much easier and cheaper, cuts red building tape, cuts green tape, and unlocks private investment,” he said.

“We need to build our way out of the housing supply crisis. Blame shifting won’t help Australia.”

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