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Give negative gearing a chance, says REINSW

By Louise Morrin

The New South Wales property market is, like many other parts of the country, always in a delicate state of balance. One core component is negative gearing, which one major group has argued is integral to the success of the economy as a whole.

The Real Estate Institute of New South Wales (REINSW) explained that eliminating negative gearing won’t have the positive impact on supply levels that some experts had suggested. Instead, it could end up causing more difficulties than it solves for property in Carlton and other areas.

John Cunningham, president of REINSW, explained that investors will move their money away from real estate if negative gearing is no longer permitted. This has the potential to lead to adverse consequences for the entire nation’s economy.

“People who invest in residential property do so as it is considered a safe haven but at the same time there is risk and as such a large assets class that risk is high. Negative gearing lessens that risk slightly,” Mr Cunningham noted.

He claimed that property often gives people a sense of security that they don’t get with many other investments. This should be something that is nurtured rather than prevented.

The Real Estate Institute of Australia has also voiced its concerns over the abolition of negative gearing. In its latest pre-Budget submission, the group stressed that removing it would lead to a rise in rental costs, which in many cases would put property in Carlton out of reach for many buyers.

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