Negative gearing is here to stay and it's bad news for first time buyers and the property market despite Scott Morrison's $500m home deposit pledge
- Expert warned first time buyers should not be too optimistic about Coalition win
- Finance analyst Martin North said the property market would continue to fall
- Mr Morrison offered a loan guarantee for those with just a five per cent deposit
- But Mr North said those who put down small amounts were more likely to default
First time buyers should stay away from the housing market despite the Coalition's election victory, a property expert has warned.
Prime minister Scott Morrison pledged $500million last week to help Australians purchase their first home - which would add to investor tax breaks known as negative gearing.
However Digital Finance Analytics founder Martin North said neither policy would make up for the fact house prices would continue to fall over the next two years.
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First time buyers should stay away from the housing market despite the Coalition's election victory, a property expert has warned (pictured Scott Morrison giving victory speech)
'There are very few people looking to invest in the first place - according to my research about 60 per cent of investors are losing money,' he told Daily Mail Australia.
'I don't think the continuation of negative gearing is going to affect that - it's going to be a case of the same old, same old.'
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Labor had planned to scrap the tax incentive which allows investors to deduct any losses on their investment from their taxable income.
Mr North also doubled down on his criticism of Mr Morrison's promise to offer loan guarantees, enabling first-time purchasers to buy real estate with deposits of just five per cent instead of the usual 20 per cent.
Prime minister Scott Morrison had pledged $500 million last week to help Australians purchase their first home - which would add to investor tax breaks known as negative gearing
Digital Analytics founder Martin North (pictured) said neither policy, though, would make up for the fact house prices would continue to fall over the next two years
Earlier this week, he told Daily Mail Australia the policy would backfire because buyers with very small deposits were more likely to struggle keeping up with repayments.
On Sunday, he added those first-time buyers were often supported by their parents and were more likely to stop making payments altogether.
'I would tell people trying to get into the market to wait - in a year's time you can probably buy a property with more amenities,' he said.
The financial analyst added the falling property market meant new purchasers faced getting into a situation where their loan amount was much higher than the value of their home.
'If you look at Ireland negative equity was a big factor in causing their current financial environment.
'The fact the Australian government are encouraging people to buy into a falling market is very worrying.'
Before their election victory, the government said it would give the National Housing Finance and Investment Corporation $500 million to deliver the home deposit scheme.
Alongside that, the government also pledged $25 million to set it up and research the housing market.
About 10,000 people are expected to benefit, which would have been about one in 11 new home-buyers in 2018.
Before their election victory, the government said it would give the National Housing Finance and Investment Corporation $500 million to deliver the home deposit scheme (pictured Scott Morrison on the campaign trail this week)
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