Negative gearing is an issue that often divides opinion, but a new report from the Property Council of Australia and the Real Estate Institute of Australia (REIA) falls firmly in its favour.
The groups argue that negative gearing improves people's chances of being able to access the national property market. This is achieved through increasing the supply of new homes, while also helping to keep prices down.
Property Council of Australia chief executive Ken Morrison explained that removing negative gearing and the capital gains tax (CGT) discount could have a knock-on effect for the property sector as a whole.
Mr Morrison noted: "The reality is that if negative gearing was abolished there would less investment and rents would go up.
"It is time to start focusing on the real barriers to home ownership like runaway stamp duty costs which have increased by as much as 800 per cent in the last two decades."
Both groups stressed that negative gearing is essential for encouraging investors to enter the market. As a result, they purchase rental property in Belconnen and other parts of the country, therefore benefiting the wider market.
The Tax Institute argues that negative gearing shouldn't be seen as the only driver behind the national property market. Instead, other factors play an equally important role, including job security, deregulation in the banking sector and interest rates.
It identified that there are two major disadvantages to negative gearing, with the first being a loss of government revenue, and the second being the fact that no caps are imposed. However, as the REIA and the Property Council of Australia point out, some regulation of the market could see it play an important role in the future of the housing industry.
Are you considering buying an investment property in Belconnen? Let our experienced team of experts help you every step of the way.