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Today in property: lenders cutting rates, negative gearing savings overstated, cars are the problem

Calls for Labor’s negative gearing policy to be rethought have intensified, with The Grattan Institute’s number-crunching showing expected savings could be overstated by up to $8 billion. The disparity is around Labor’s inaccurate assumptions on the level of investment in new housing stock…they think the levels are around 4 per cent, however Grattan says that’s more like 14 per cent – and people in the business of writing loans for investors say it’s much higher.

Whatever the ratio between purchases of existing versus new housing stock among investors, the numbers of actual purchases are still pretty low – although new ABS figures released yesterday showed that lending to investors increased by 0.9 per cent last month after six straight months of declines. That said, this is down 29.1 per cent from the previous year.

Lenders big and small are cutting their mortgage rates to try and boost demand. Non-bank lender Pepper Group is doing pretty well out of it – it has doubled its loan book in the past twelve months, and is moving into commercial lending – but says small lenders will never be able to fill the gap left by the big banks.

Two factors reported today that may be related are CoreLogic data showing a blowout in the time it takes to sell a property – from 43 to 60 days nationally – and Standard & Poor Performance Index findings that owner-occupier home loan arrears rates rose from 1.60 in December to 1.69 in January. Providing the backdrop in today’s reporting is the latest Moody’s Analytics prediction that house prices in Sydney Melbourne and Perth have another 10 per cent to fall before 2020.

According to the IMF, Trump is the blame for all this. It has downgraded its global and Australian economic forecasts – and while our property market conditions are a major factor in its thinking on Australia, it has laid the global troubles firmly on the doorstep of Trump’s international trade policies.

Some developers are playing a longer game in light of all this. Merc Capital fits that category; it has announced seven new mixed-used towers on two Norwest sites, including residential, public spaces, commercial and a hotel.

They might want to see if ex-city planner for Toronto, Jennifer Keesmaat has a TED Talk they can catch up on. Jennifer was in Sydney yesterday talking up the idea that when people complain about density, it’s not people they’re worried about, but cars. When it comes to the emerald city, she certainly knows her audience.

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