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{{propApi.successMessage}} {{region}} Change locationInvestors are not the problem, they’re part of the solution
Investors are not the problem, they’re part of the solution
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Australia does need more social housing.
Tuesday, 03rd February 2026
It’s just not going to solve the problem for the remaining 97 per cent of Australia’s renters and aspiring homeowners.
Especially if investors continue to be portrayed as some kind of ‘boogeyman’ standing in the way of vulnerable Australians having a roof over their head.
The Australian government has a target of building 40,000 social and affordable homes across the country in the five years to June 2029, as part of a broader target of 1.2 million new homes over the same period. That’s means social and affordable housing will be just over 3 per cent of the total.
Australia needs more social housing – it’s obvious from looking at wait lists for existing social housing stock, demands on homelessness services, and the numerous reports of financial hardship from Australian social organisations.
But The Guardian is pushing the myth that investors are somehow the reason this social housing isn’t being built.
The Guardian refers to “absurdly generous” tax breaks for investors, completely ignoring the fact that up to half the cost of a house and land package in Australia is already because of government taxes, charges and costs.
Stamp duties, land taxes, infrastructure charges and regulations and restrictions on land, housing and finance – to name just a few – are the reason you’re paying over $1.5 million for a house and land package in the outer suburbs of Sydney. It’s not because of investors.
Investors also pay capital gains tax, something that owner occupiers generally don’t have to pay on their family home at all – doesn’t sound “absurdly generous” for investors.
The capital gains tax discount is a favourite whipping boy for those seeking to punish investors, but this often overlooks the fact that this is a misnomer. It’s not a discount at all. It’s not a concession, or a giveaway, or a tax break. It’s merely an assumption around how much of an investor’s return is already being eaten up by inflation, so as to avoid double-taxation.
If that assumption is over-estimating the inflationary component, thereby ‘overcompensating’ the investor, a much better solution is to reduce investor returns by increasing housing supply. It is not by increasing taxes on investors which, especially during a rental crisis, are passed on directly to the already-struggling renters who rely on the housing stock provided by those very investors.
Another false boogeyman of the housing market is negative gearing, which is merely the principle that people shouldn’t have to pay tax on incomes that they didn’t earn. Hardly an obscure or unjustified philosophy, with Australia being far from the only country in the world to employ it in our tax system.
The Guardian’s piece suggests that these tax rules “drive up home prices and supercharge inequality in our society”.
Investors are crucial to building new housing, especially apartment supply. Just in the last year, investors accounted for over 40 per cent of borrowing for the purchase or construction of new housing.
And they don’t live in this housing – they make it available for other Australians.
Investors literally create new housing supply without adding to housing demand. It is not investors, but the over-taxation of Australian housing, that “supercharges inequality in our society” (see HIA’s Taxation of housing and its impact on supply.
Moreover, Australia is in the midst of one of the worst rental crises in living memory. Rental vacancy rates are around 1 per cent across Australia, some capitals and regions even tighter, resulting in rental prices surging.
Pretending that increasing taxes on those responsible for almost half of Australian home building – and almost all of Australia’s rental housing – is a reasonable way to finance 3 per cent of Australian housing, is misguided at best. And in the middle of a rental crisis, when Australian housing is already taxed, regulated and restricted like some kind of social vice, rather than a fundamental human need – that’s worse.
It will exacerbate the affordability crisis across the broader housing market, resulting in more – not less – people needing social housing and other public assistance.
Australia needs more housing of all kinds. That means more investment in social and affordable housing – fairly funded from broad based taxes, not just additional costs on renters and aspiring homeowners. It means more investors, not less. Lower taxes, not higher. More shovel-ready land for housing development in both greenfield and existing suburbs. More infrastructure – again, fairly funded – to support that housing development. And a large skilled construction workforce – fostered domestically and drawn from overseas.
Australia is not facing a choice between social housing and investors in private housing – we need more of both. And we mustn’t forget in which type of housing most Australians make their homes.
Especially if investors continue to be portrayed as some kind of ‘boogeyman’ standing in the way of vulnerable Australians having a roof over their head.
The Australian government has a target of building 40,000 social and affordable homes across the country in the five years to June 2029, as part of a broader target of 1.2 million new homes over the same period. That’s means social and affordable housing will be just over 3 per cent of the total.
Australia needs more social housing – it’s obvious from looking at wait lists for existing social housing stock, demands on homelessness services, and the numerous reports of financial hardship from Australian social organisations.
But The Guardian is pushing the myth that investors are somehow the reason this social housing isn’t being built.
The Guardian refers to “absurdly generous” tax breaks for investors, completely ignoring the fact that up to half the cost of a house and land package in Australia is already because of government taxes, charges and costs.
Stamp duties, land taxes, infrastructure charges and regulations and restrictions on land, housing and finance – to name just a few – are the reason you’re paying over $1.5 million for a house and land package in the outer suburbs of Sydney. It’s not because of investors.
Investors also pay capital gains tax, something that owner occupiers generally don’t have to pay on their family home at all – doesn’t sound “absurdly generous” for investors.
The capital gains tax discount is a favourite whipping boy for those seeking to punish investors, but this often overlooks the fact that this is a misnomer. It’s not a discount at all. It’s not a concession, or a giveaway, or a tax break. It’s merely an assumption around how much of an investor’s return is already being eaten up by inflation, so as to avoid double-taxation.
If that assumption is over-estimating the inflationary component, thereby ‘overcompensating’ the investor, a much better solution is to reduce investor returns by increasing housing supply. It is not by increasing taxes on investors which, especially during a rental crisis, are passed on directly to the already-struggling renters who rely on the housing stock provided by those very investors.
Another false boogeyman of the housing market is negative gearing, which is merely the principle that people shouldn’t have to pay tax on incomes that they didn’t earn. Hardly an obscure or unjustified philosophy, with Australia being far from the only country in the world to employ it in our tax system.
The Guardian’s piece suggests that these tax rules “drive up home prices and supercharge inequality in our society”.
Investors are crucial to building new housing, especially apartment supply. Just in the last year, investors accounted for over 40 per cent of borrowing for the purchase or construction of new housing.
And they don’t live in this housing – they make it available for other Australians.
Investors literally create new housing supply without adding to housing demand. It is not investors, but the over-taxation of Australian housing, that “supercharges inequality in our society” (see HIA’s Taxation of housing and its impact on supply.
Moreover, Australia is in the midst of one of the worst rental crises in living memory. Rental vacancy rates are around 1 per cent across Australia, some capitals and regions even tighter, resulting in rental prices surging.
Pretending that increasing taxes on those responsible for almost half of Australian home building – and almost all of Australia’s rental housing – is a reasonable way to finance 3 per cent of Australian housing, is misguided at best. And in the middle of a rental crisis, when Australian housing is already taxed, regulated and restricted like some kind of social vice, rather than a fundamental human need – that’s worse.
It will exacerbate the affordability crisis across the broader housing market, resulting in more – not less – people needing social housing and other public assistance.
Australia needs more housing of all kinds. That means more investment in social and affordable housing – fairly funded from broad based taxes, not just additional costs on renters and aspiring homeowners. It means more investors, not less. Lower taxes, not higher. More shovel-ready land for housing development in both greenfield and existing suburbs. More infrastructure – again, fairly funded – to support that housing development. And a large skilled construction workforce – fostered domestically and drawn from overseas.
Australia is not facing a choice between social housing and investors in private housing – we need more of both. And we mustn’t forget in which type of housing most Australians make their homes.
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