‘I’ve built thousands of units and want to build more’

 

Getting rid of negative gearing for investment properties is a bad idea. This is at a time when there is a housing supply crisis.

No one is building, and developers, builders and subcontractors are going broke. They are talking about offshore investors coming to build here being the solution, but we are yet to see them build much at all.

Investing into rental property has already reduced dramatically due to media statements that prices are going down and will fall further.

Interest rates have increased, and talk of them increasing further is ­another pressure.

Investors used to make up 40 per cent of our buyers; we are now lucky if they make up 20 per cent of our sales.

Taking away negative gearing means that investors in property who already get very small rental returns on their investments will be losing money and won’t even get to use these losses to reduce their tax.

These are the investors who provide pre-sales to get developers building and provide rental acc­ommodation for people to live in.

They will stop buying and will sell their investment properties – which will further depress the housing market, which is already on its knees.

There will be even fewer properties for people to rent to live in, and nothing will continue to be built.

At the same time, everyone is already complaining about high rents. But they will not come down because there is no profit to be had.

Unit developers are lucky to make 2.5 per cent profit from rents per annum. And banks charge 5 per cent. People keep saying that prices will come down and rents will drop.

But to drop rents, we need to look at how the planning department and Treasury costs every unit owner about $330,000. The unit only sells for $1.1m. This has to stop at once. Talking about how the price of units will drop is false and has to stop.

For years, I was arguing with the pessimists, and thank God they are going up, not down. Rents have now stabilised. But unless the government changes its way, then rents will start to go up again.

Meanwhile, if the government insists on imposing costs of $330,000 for a $1.1m unit, they must help the builder and developer in some other way, so that they will start building and stop going broke.

It is wonderful that the government listens to the disadvantaged. But things will only improve when the builders and developers will be helped, and that will help everyone.

If people continue to have no ­affordable accommodation, they will leave the country, and we will be left with old people and their foreign carers. We must immediately find a way.

Planning reform in NSW could help. Meriton is now building 2000 units a year and that is with the help of Queensland. We have held land for five years in Little Bay in Sydney for 2,000 units, which the council refuses to approve. We want to build there tomorrow. And look at Randwick Council, very little is being built for many years.

Next door, in Bayside Council, we are now building thousands of units. And they are sold or leased and everyone is happy. I have built thousands of units in Randwick City over the years and I want to start building many more.

Only development raises the income of people.

The government is helping jobseekers, but the ones who are complaining in the new blocks are often employed people. So, really the government has to listen also to people who are not only jobseekers but also to job keepers.

 

This story first appeared in The Australian.