Prime Minister Scott Morrison

‘Inviting a crash’: PM issues ominous warning as he defends government’s housing policies

Sam Clench and Malcolm Farr

SEPTEMBER 19, 2018

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PRIME Minister Scott Morrison has warned a popular idea to help Australians buy their own homes could actually “invite a housing market crash”.

A vow to limit negative gearing to newly built homes is the centrepiece of Labor’s housing proposals. It also wants to halve the 50 per cent capital gains tax discount.

Bill Shorten claims the current government’s policies give investors an unfair advantage over first home buyers, and overwhelmingly benefit people with high incomes.

But in an exclusive interview with news.com.au, Mr Morrison issued an ominous warning about the Opposition’s alternatives.

“The risk is this,” the Prime Minister said. “If you now take the sledgehammer of negative gearing and capital gains tax changes — if you abolish negative gearing as we know it — then you’re inviting a housing market crash. And that’s good for nobody.”

Mr Morrison defended the government’s policies, saying they had helped property prices fall in a controlled way.

“We’ve seen house prices come back to a soft landing, and that’s not me saying that, that’s ratings agencies, it’s the Reserve Bank,” he said.

“Everyone has recognised that one of the biggest economic risks that the country faced was a housing market crash. That’s what the ratings agencies were concerned about, that’s what the banks were concerned about, that’s what economists all around the country were concerned about. That’s what, as treasurer, I was very concerned about. So we needed to bring the housing market into a soft landing.”