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$vuetify.icons.faPhone1300 650 620

Tax changes will cripple housing supply and punish renters

Media release

Tax changes will cripple housing supply and punish renters

Media release
Proposed changes to negative gearing and capital gains tax would worsen Australia’s rental crisis by reducing the supply of housing and putting upward pressure on weekly rents, Housing Industry Association (HIA) Managing Director Jocelyn Martin said today.

“Australia’s rental market remains extremely tight. The national residential vacancy rate is just 1.1 per cent, which is well below a balanced level,” said Ms Martin.

“There are even tighter conditions in Brisbane (0.8 per cent), Perth (0.6 per cent), Adelaide (0.8 per cent) and Hobart (0.5 per cent).

“Australia has an acute shortage of rental housing. Any policy that discourages investment in rental homes will only make conditions worse for renters.

“New independent economic analysis commissioned by HIA confirms that changes to negative gearing and capital gains tax would significantly reduce the supply of rental housing by discouraging new investment and slowing housing construction.

“The analysis shows that removing negative gearing would result in tens of thousands fewer homes being built, reduced construction employment and higher rents as rental supply tightens further.

“Removing negative gearing, with minimal grandfathering, would lead to a 46,000 reduction in homes built, a loss of over 4,300 construction jobs and a fall in GDP of $2.3 billion.

“It also finds that changes to capital gains tax would reduce new rental investment and place additional upward pressure on rents over time.

“Removing the CGT discount, with minimal grandfathering, would lead to a 33,000 reduction in homes built, a loss of over 3,000 construction jobs and a fall in GDP of $3 billion.

“Combined, these tax changes would have a compounding effect, fewer rental homes, lower housing construction and higher rents paid by tenants.

"Renter affordability is ultimately about supply. When fewer rental homes are built, renters face higher rents and fewer choices.

“Private investors supply around nine in ten rental homes across Australia, the majority of whom are small-scale, mum and dad investors. Stable and predictable tax settings play a critical role in supporting the ongoing supply of rental housing, particularly new homes entering the market.

“HIA has consistently warned that Australia is not building enough homes to meet demand. Reducing incentives for rental housing investment will only widen this gap.

"If governments want to help renters, the focus must be on increasing housing supply. Targeting rental housing investment with new taxes will make the rental crisis worse, not better," concluded Ms Martin.

For more information please contact:

Jocelyn Martin

Managing Director

Joe Shanahan

Manager, Communications & Media
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