One of the surprise effects of the removal of tax breaks for investors was that housing prices were expected to fall.

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Queensland property investors could lose up to $23,000 a year in housing tax breaks and up to $35,000 could be wiped from Brisbane home values if negative gearing is scrapped.

PropTrack has found more than 50 per cent of landlords in nearly two thirds of Queensland suburbs are reporting thousands of dollars worth of losses on their properties, which they can then offset through negative gearing at tax time.

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According to REIQ estimates nine in 10 investors are negatively geared in Robertson.

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The Real Estate Institute of Queensland (REIQ) estimates home prices in the state could drop by up to 4 per cent, while rents could rise 3.6 per cent, if changes to negative gearing and capital gains tax concessions were implemented.

That’s up to $35,000 off the value of an average home in Brisbane, which costs $875,040, and around $21 extra a week in rental payments.

The PropTrack analysis shows investors would be hit the hardest in Robertson, on Brisbane’s southside, where nine in 10 homes are negatively geared and the average investor is claiming up to $18,384 a year in tax deductible losses.

REIQ head Antonia Mercorella has been a vocal opponent of any reduction in negative gearing tax breaks. Picture: NCA NewsWire / Glenn Campbell

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It was followed by Tarragindi, Bardon, Mansfield, and Sunnybank, with at least 85 per pent of all properties negatively geared and average yearly claims as high as $21,000.

Outside Brisbane, the majority of negatively geared properties are on the Sunshine Coast, led by Sunshine Beach, with more than 84 per cent of investment properties negatively geared and the average investor claiming more than $23,000 in tax deductible losses.

The analysis looked at the proportion of recent investors estimated to be in a position where interest on their loan exceeded rental returns.

It compared rents and mortgage costs on all properties listed as rentals since 2019.

REAL ESTATE: This house at 14 Adams St, Sunshine Beach, is on the market with Select Noosa Real Estate as for sale by ‘motivated vendors’.

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REIQ CEO Antonia Mercorella said studies showed the estimated impact of negative gearing on home prices was a reduction of between 1 and 4 per cent.

She said the research demonstrated rents could rise by about 3.6 per cent and there could be a rise in rental subsidies.

The Real Estate Institute of Australia estimates home prices could drop as much as 12 per cent nationally.

“We know 36 per cent of people rent in Queensland,” Ms Mercorella said. “It is these private, everyday Australians who are doing the heavy lifting when it comes to providing rental properties and we know if (negative gearing) were to be abolished, it would have a major impact on the number of rental properties available.”

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SQM Research founder Louis Christopher said the impact on home prices and rents would depend on the magnitude of the changes.

“If it’s just a cap on the number of properties that qualify for negative gearing, the change would be negligable,” Mr Christopher said.

If negative gearing was scrapped altogether, he said it would result in a fall in housing prices to being with, “but the trade off will mean less rental properties in the market”.

According to estimate over 63 per cent of investors properties in Broadbeach Waters were believed to be negatively geared.

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On the Gold Coast, 63.3 per cent of Broadbeach Waters investment properties were likely to be negatively geared, based on the PropTrack analysis.

Up north, 21 per cent of North Ward investments in Townsville were likely to be making a loss, while in the Cairns region, 20.3 per cent of properties are negatively geared.

Out of all of the statistical areas analysed, Fortitude Valley had the lowest level of negatively geared properties at 10.8 per cent.

The inner-city suburb is dominated by apartments, including relatively affordable studio apartments, most often rented out by students.

Also in the top five suburbs with the least amount of negatively geared properties is Woodridge (13.5 per cent), Trinity Beach (15.6 per cent), Gympie and Brisbane City (both 16.5 per cent).

Property Council CEO Mike Zorbas believes any negative gearing changes would shrink new homes by 4 per cent. Picture: NCA NewsWire / Martin Ollman

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Property Council CEO Mike Zorbas said previous modelling by Deloitte showed negative gearing changes would shrink the number of new homes by about 4 per cent and, according to previous work by the Grattan Institute, only reduce house prices by 2 per cent.

“Government taxes and charges are 30 per cent of the cost of your new home across the country,” Mr Zorbas said.

“Let’s start by reducing government taxes and reforming planning systems to boost supply and avoid prioritising a discussion about a change that models as damaging investment in new homes across every Australian city and town.”

2019 Deloitte research commissioned by the Property Council showed changes to negative gearing of the kind taken to the 2019 election would cause a 4.1 per cent hit on the already dwindling pipeline of new homes.

Those changes would also be a $1.5bn hit to GDP and cost 7,800 jobs.

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