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Drone aerial photograph of construction and infrastructure development in the fast growing suburb of Oran Park in the high density development region of western Sydney, NSW Australia.
The Housing Industry Association (HIA) has told a Senate Inquiry the federal government’s proposed tax changes will result in 35,000 fewer homes, despite being promoted as a solution to Australia’s housing affordability crisis.
HIA warned the reforms risk undermining the government’s broader housing agenda and called on senators to reject measures that Treasury itself expects will reduce housing supply.
While the tax changes are aimed at helping first-home buyers, internal Treasury modelling acknowledges they will result in 35,000 fewer homes being built across the private market over the next decade.
Treasury Secretary Jenny Wilkinson said the government's tax reforms - which limit negative gearing to new builds and overhaul the capital gains tax (CGT) discount - are aimed at reallocating existing housing stock rather than directly boosting total construction.
“At a time when Australia is struggling to build enough homes, Treasury is forecasting these tax changes will deliver 35,000 fewer homes,” HIA managing director Jocelyn Martin said.
"That’s an extraordinary admission for a policy being sold as improving affordability.
“You cannot solve a housing supply crisis by making housing investment less attractive."
Ms Martin said the reforms rely on unrealistic assumptions about investor behaviour.
“The changes assume investors will simply redirect their money into new housing," she said.
"In reality, housing competes with shares, commercial property, term deposits and countless other investments.
“Investors are free to take their capital elsewhere - and Treasury’s modelling suggests many will do exactly that.
“The result will be fewer projects proceeding, fewer homes being built, and even greater pressure on affordability.”
Ms Martin said the policy would do little to address the underlying supply challenge.
“Budget papers indicate that around 75,000 existing homes may shift to owner-occupiers over the next decade," she said.
"While increasing home ownership is a worthwhile goal, it does not increase the number of homes - it simply redistributes them."
