Peak Housing Groups Warn Tax Changes Threat to Supply

Australia’s peak building and property groups have warned the Federal Government against increasing taxes on housing ahead of the upcoming budget, citing new modelling that suggests such moves would worsen the supply crisis.

A joint statement from the Housing Industry Association, Master Builders Australia, Property Council and the Real Estate Institute of Australia said policy settings must focus on increasing, not reducing, the delivery of new homes.

The groups released independent modelling by Qaive and Tulipwood Economics showing that changes to the capital gains tax discount or negative gearing would lead to fewer new homes being built under multiple scenarios.

They said the findings reinforce industry concerns that proposed tax reforms risk undermining already fragile housing supply pipelines.

The warning follows media reports and a parliamentary committee review into the capital gains tax discount, which the industry argues failed to adequately consider impacts on housing supply.

“The upcoming federal budget must deliver an increase, not a decrease, in the supply of new housing,” the groups said.

They cautioned that additional taxes on new housing would deter investment and slow development activity at a time when supply is already constrained.

The industry reiterated its support for the National Housing Accord target of delivering 1.2 million homes over five years and said it backed policies that would help achieve that goal.

It pointed to initiatives such as the Housing Australia Future Fund, the National Planning Reform Blueprint and updates to the National Construction Code as positive steps.

▲ The groups said private investors finance up to two in every five new homes built across the country.

“At a time when interest rates are rising, a war is waging and the country is in a housing crisis, now is the time to introduce policies that turbocharge new housing supply,” the statement said.

The groups emphasised the critical role of private investors, noting they finance up to two in every five new homes built across the country.

They argued that reducing incentives such as negative gearing or the capital gains tax discount would lead to a decline in rental property investment over time.

This, they said, would result in fewer rental properties and place upward pressure on rents as supply tightens.

“Housing policy demands a holistic approach,” the groups said, warning against isolated tax changes that could have unintended consequences.

They said the federal budget represents a pivotal moment for housing policy and urged the government to prioritise measures that support a sustained increase in supply.