Australia's tax changes drive biggest housing affordability gain in 50 years

Summarised from 2 outlets · Updated 11 Oct, 06:54 · Archive

Australia is experiencing its biggest housing affordability improvement in 50 years following Labor's budget changes to the capital gains tax discount and negative gearing, according to the Australia Institute. National housing prices have fallen by 5.2 per cent since March, according to property data firm Cotality, though prices were already falling before the budget due to rising interest rates and high living costs.

The downturn has hit property investors especially hard. Investor loans for established dwellings fell 14 per cent in the June quarter, according to the Australian Bureau of Statistics. However, investor loans for new builds rose 4.4 per cent, suggesting the tax carve-outs for new construction are directing investment into extra supply as intended.

Greg Jericho, chief economist at the Australia Institute, said the changes meant prices should no longer grow at a much faster rate than incomes over the long term, and affordability would gradually improve even after the current downturn ended. Even if prices fall 15 per cent from peak to trough, as the most bearish forecasts suggest, they would only return to 2024 levels. For now, owner-occupier demand remains cool alongside the investor pullback.

How it is being reported

• Tax changes 'crack the nut' on housing affordabilityProperty investors and real estate agents are reeling as Australia's housing downturn deepens, but for young Australians the positives are growing.The West Australian · 11 Oct, 06:29
• Tax changes 'crack the nut' on housing affordabilityProperty investors and real estate agents are reeling as Australia's housing downturn deepens, but for young Australians the positives are growing.Perth Now · 11 Oct, 06:29

In this story: Australia · Labor · Australia Institute · Greg Jericho · Cotality · Australian Bureau of Statistics

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