Property tax changes will reduce housing construction

In Short:
– Federal budget property tax changes may reduce housing construction and GDP by $1 billion in four years.
– Property bodies warn rents could rise by $10 weekly, exceeding Treasurer Chalmers’ estimate.

Property tax changes in the federal budget are expected to hinder housing construction and decrease GDP by $1 billion in the next four years.The leading property bodies warn that this crackdown may also increase rent by $10 weekly, five times more than Treasurer Jim Chalmers indicated.

Housing construction impact

The updated analysis highlights that the Albanese government’s ban on self-managed super funds borrowing to purchase property, along with negative gearing and capital gains tax changes, may result in 10,700 fewer homes being built by 2029-30.

When delivering the budget in May, the Treasurer stated that these changes would encourage investors to focus on newly built stock as access to negative gearing would be limited to new builds.

The modelling was commissioned by the Real Estate Institute of Australia, the Property Council of Australia, Master Builders Australia, and the Housing Industry Association.

Budget deal analysis

These organisations believe that the disincentives are further intensified by the Albanese government’s agreement with the Greens to pass the budget.

The implications of these changes could stress the housing market further, as industry experts indicate a potential slowdown in construction activity.

Stakeholders are closely monitoring the situation as the economic landscape shifts under the new regulations.

The long-term effects on affordability and availability of housing will likely be significant if current trends continue.