Josh Frydenberg blasts Labor’s ‘lose-lose housing policy’ as data warns of slide in confidence

Fears that Labor’s negative gearing policy will sharpen a property slide have been raised as new data warns of a further hit.

Treasurer Josh Frydenberg has warned that Labor’s negative gearing policy will add fuel to the housing market slump. Picture: Kym Smith

Josh Frydenberg has seized on data from CoreLogic that warns of a further “negative impact on confidence, especially among investors” off the back of Labor’s negative gearing policy that will sharpen the housing market slide.

Following the warning, the Treasurer yesterday told The ­Australian: “The experts know the true impact of Labor’s new housing tax.

“While Labor embarrassingly still can’t even confirm the start date of their signature policy and their frontbenchers get tied in knots as to whether the policy will put prices up or down or have no effect at all, the reality is that the experts know the true impact.

“Not only will it hit 1.3 million Australians who already negative gear but it will punish every Australian with equity in their home and every Australian who rents.

“It’s a lose-lose policy. If you own your own home, it will be worth less, and if you rent your home it will cost you more.”

According to CoreLogic data, Sydney house and apartment ­values are down 11.1 per cent from their July 2017 peak, while Melbourne values have lost 7.2 per cent since they peaked in November 2017.

The new figures show Sydney values have dropped back to where they were in August 2016 while Melbourne values are back to February 2017 levels.

CoreLogic’s head of research Tim Lawless said the housing market would continue to slide into the new year.

“With a federal election likely to be held some time in May, we may see a further negative impact on confidence, especially among investors who will be impacted by changes to taxation policy should there be a change of government,” Mr Lawless said.

Opposition Treasury spokesman Chris Bowen is planning to cost Labor’s flagship negative gearing policy again after the next federal budget, which the government has brought forward to April.

It is now unlikely the policy, which seeks to grandfather negatively geared properties and maintain the tax break for newly constructed homes, will be implemented before 2020 if Labor takes power after the next election.

However, current crossbench senators have indicated they will not support the policy as it is ­currently constructed, instead ­preferring to limit the number of properties an individual can negatively gear.

“Every time Josh Frydenberg opens his mouth to criticise Labor policies, it’s a reminder that his day job as Treasurer is getting all too hard,” Mr Bowen said.

“We’ve just had a MYEFO and national accounts that has confirmed low wages, slowing economic growth and a fall in forecast investment. What’s the best the Liberal Party can offer on the economy? ‘It’s all Labor’s fault.’

“The only thing more certain and regular than Josh Frydenberg attacking Labor’s reforms to negative gearing are the same attacks from vested interests in the property sector that benefit from the current tax concessions.”

Economists are concerned the falling housing market could scare households into closing their wallets, triggering a squeeze in consumer spending that could filter through to softer-than-expected economic growth in the short term.

House prices have been dampened with restrictions on investor lending and riskier loans.