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{{propApi.successMessage}} {{region}} Change locationLower housing taxes, not just interest rates, needed to reach 1.2 million target
Lower housing taxes, not just interest rates, needed to reach 1.2 million target
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The ABS today released its Building Activity data for the December quarter 2025. This data provides estimates of the value of building work and number of dwellings commenced, completed and under construction across Australia and its states and territories.
“The number of homes that commenced construction in 2025 was 16.4 per cent more than in 2024, including a 5.6 per cent increase in detached house commencements and a 35.3 per cent increase in multi-units, continuing the recovery in home building from previous decade lows,” added Mr Devitt.
“Home building activity picked up in 2025 on the back of declining interest rates and low unemployment across the country.
“With interest rates on the way back up, the task of increasing supply will depend on governments reducing the cost of delivering new homes to market in other ways.
“This includes reducing taxes on housing, not increasing them. Housing is one of the most heavily taxed items in our economy along with the ‘sin taxes’ of alcohol and tobacco.
“Recent discussion around increasing capital gains tax on investors and winding back negative gearing is pointing the conversation in precisely the wrong direction.
“The logic that taxing investors in the established market will force investors to build new homes is flawed. New housing becomes existing housing. Investors in new housing supply know that they will effectively incur such a tax when they sell their property, deterring them from investing in that new supply in the first place, even though the tax was directed at the established market.
“This will worsen affordability, reinforcing the inequity in housing whereby the wealthiest Australians with pre-existing assets and borrowing power are increasingly the only ones able to access the market.
“If governments want to address this inequity in the housing market, as they should, then they need to increase supply.
“If the government wants to raise more revenue, then they need to build more homes. Around $200,000 is raised in direct tax imposts alone from each new house – even more in some markets.
“Raising more revenue through capital gains tax might have a short term benefit to the federal budget but risks the loss of other tax revenues such as stamp duty and GST to the states as well as exacerbating the inequity in the housing market.
“In the last year, investors were responsible for over 40 per cent of new home building across Australia.
“Attempts to tax them out of the housing market will reduce the supply of new homes without affecting housing demand,” concluded Mr Devitt.
1.2 million homes: actual and target, by quarter
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Detached starts edge higher in Tasmania, but supply gap remains
“Tasmania recorded a modest improvement in detached home building at the end of 2025, as Australia’s housing construction sector showed clearer signs of recovery,” stated HIA Executive Director – Tasmania, Benjamin Price.
Multi-unit starts in NSW at their highest in 7 years
“There were over 10,000 multi-unit starts in New South Wales in the December quarter 2025, the highest since late 2018,” stated HIA Executive Director NSW Brad Armitage.
Lower housing taxes, not just interest rates, needed to reach 1.2 million target
“Australia commenced construction on 282,500 new homes in the first 18 months of the government’s goal of building 1.2 million new homes over five years. This is 77,500 homes behind schedule,” stated HIA Senior Economist, Tom Devitt.
HIA welcomes statewide Community Participation Plan
“The Housing Industry Association welcomes today’s announcement by the Planning Minister for a statewide Community Participation Plan,” declared Brad Armitage, Executive Director NSW.