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How does negative gearing help Victoria’s tenants?

By Jamil Allouche

The nation's rental market is in a delicate state of balance at the moment, and removing negative gearing from the mix could cause significant problems. The Real Estate Institute of Australia (REIA) has highlighted the benefit of negative gearing in various different contexts, and now it's the turn of the rental sector.

According to the REIA, rental costs would increase if investors were removed from the real estate equation. They help to keep prices down and construction levels up – both of which are important if you're serious about buying or investing in real estate in Parkville.

"From 2013, when investment in housing started to pick up, we have seen the rate of increase in rents slow down in Australia," revealed REIA president Neville Sanders.

"The March quarter 2016 increase was 0.1 per cent, the lowest since March 1995."

He stressed that Melbourne is one area where rents have the potential to increase exponentially, but because of investor activity, this situation hasn't emerged. Figures from the group show that rents have risen 1.4 per cent, making it the lowest annual increase since June 2006.

Lending first-time buyers a hand

The renters of today are quite possibly the buyers of tomorrow, which is another reason why the REIA believes efforts should be made to improve affordability. Mr Sanders argued that changes to current taxation arrangements ultimately won't work in people's favour, as once investment activity falls, house prices will start their upward spiral.

First-time buyers need all the help they can get building a deposit, so they can approach real estate agents in Brunswick knowing they've got a decent chance of being able to make a purchase. Negative gearing plays an important role in this – all that's left now is for policymakers to realise this is the case.

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