David Nguyen, Oanh Luong with their 15-month old son Archer and Japanese Spitz dogs Hoshi and Emiko in front of their home in Glynde/ Kaurna Yarta on Friday, February 23, 2024. (The Advertiser/ Morgan Sette)

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Negative gearing is a popular wealth-building approach for many, and new data reveals the South Australian suburbs where it is most popular, and in which suburbs it has surged in recent years.

According to PropTrack data, Adelaide’s southern suburbs have recorded the greatest increase in the number of properties now negatively geared, with Aldinga recording the biggest jump – up 21.8 per cent to 63.1 per cent from the 41.3 per cent recorded in April 2022.

Morphett Vale, Christies Beach and Woodcroft have recorded jumps of 20.3 per cent, 17.1 per cent and 15.9 per cent respectively.

The data is based on interest repayments on rental listings advertised since 2019 and excludes other claims for other losses like maintenance.

The Greens recently proposed limiting negative gearing rules to a single investment property and prime minister Anthony Albanese and opposition leader Peter Dutton both face pressure to revisit tax incentives on investment properties before the next federal election.

But Treasurer Jim Chalmers poured water on The Greens’ push, saying the federal government was not considering changes to negative gearing and capital gains.

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Master Builders Australia chief executive officer Denita Wawn condemned the proposed changes to negative gearing and capital gains tax arrangements, saying they would have a negative effect on housing supply.

“Across the whole housing spectrum, the common constraint is supply,” Ms Wawn said.

“In order to put downward pressure on housing inflation and high rents, we need to build more homes.

Master Builders Australia chief executive officer Denita Wawn. Supplied

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“The Henry Tax Review, Productivity Commission and Reserve Bank of Australia have all said curtailing investor incentives like negative gearing and capital gains tax discounts reduces housing supply rather than improve it.

“With the current downturn in new building approvals and investments in new housing, why we would take a sledgehammer to investors including mums and dads beggars belief.”

Back to the data, Hyde Park has the highest proportion of its investment properties negatively geared at 96.2 per cent, with the typical loss being $11,586.

Beaumont wasn’t far behind, with 93.3 per cent of all properties in the suburbs owned as investments negatively geared.

The average loss for these is far greater however – the fourth highest in the state, in fact – at $27,647.

The highest losses per year – $31,303 – were recorded for Walkerville homes, where 50.9 per cent of investment properties were negatively geared.

When it comes to SA’s councils, Burnside has the highest proportion of negatively geared investment properties at 75.2 per cent, ahead of Unley’s 68.9 per cent and Campbelltown’s 67.3 per cent.

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Mike Lao, Director/Sales, Edge Realty.

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Edge Realty director Mike Lao said any decisions regarding potential changes to negative gearing needed to be carefully considered.

“Removing it might make it unaffordable for people to buy investments, which could later on lead to them being reliant on the pension which would be another burden on the government, so negative gearing’s a bit of short-term pain for a long-term gain,” he said.

“I can see both sides of it, but I’d like to see them leave it the way it is.”

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“If they took away negative gearing it could push rents up, or could force people to sell up and move their money into shares.

“It might create a small influx of supply in the short term but in the long-term, where is the rest of the supply going to keep coming from?”

Mr Lao, who sells in the northern suburbs, said he had seen an increase in the number of negatively geared properties there in recent months as month after month of interest rate rises had reduced the number of cashflow-positive homes in the area.

David Nguyen, Oanh Luong and family outside their Glynde home. The couple own an investment property in Vale Park. Pic: The Advertiser/Morgan Sette

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Mortgage broker David Nguyen, 38, of Glynde and his wife Oanh, 37, have a negatively geared investment property in Vale Park and Mr Nguyen said he was happy with how the investment strategy was working for them.

“If they scrapped it we’d still keep it, because negative gearing can be taken away at anytime,” he said.

“It’s great to have but we don’t have the property for just that reason – we look at the capital gains as well.

“It is beneficial, but we treat negative gearing as a bonus and not as our primary consideration.”