Changes to negative gearing would worsen housing crisis

Responding to reports around proposals to change negative gearing, Master Builders Australia says this is a timely reminder as to why proposed changes to negative gearing have been dropped in the past.

“Prior to the 2019 election Master Builders had modelled ALP policies to change negative gearing and capital gains tax arrangements,” said Master Builders Australia CEO Denita Wawn.

“The policies would have seen a fall in the number of homes being built, thousands of job losses and billions of dollars wiped off the value of residential building activity.

“Fast forward to 2024 and we’re now in an even worse economic and housing environment with renters and mortgage holders bearing the brunt of rapid interest rate rises and high inflation.

“Across the whole housing spectrum, the common constraint is supply. In order to put downward pressure on housing inflation and high rents, we need to build more homes.

“The Henry Tax Review, Productivity Commission and Reserve Bank of Australia have all said curtailing investor incentives like negative gearing and capital gains tax discounts reduces housing supply rather than improve it.

“With the current downturn in new building approvals and investments in new housing, why we would take a sledgehammer to investors including Mums and Dads beggars’ belief.

“The priority of the Federal Government should be on ensuring the objectives of the Housing Accord are fulfilled and our target of building 1.2 million homes is achieved.

“This means doubling down on reducing the cost and time it takes to build, increasing the building and construction workforce, and investing in critical infrastructure to make land “build ready”,” Ms Wawn said.

Media contact: Dee Zegarac, National Director, Media & Public Affairs

0400 493 071 | dee.zegarac@masterbuilders.com.au