Independent economic modelling released by three of Australia's peak property and construction bodies has challenged the government's own projections on the housing impact of its budget tax reforms — and the gap between the two sets of figures is substantial.
The joint statement from Master Builders Australia, the Property Council of Australia, and the Real Estate Institute of Australia, backed by modelling from Qaive and Tulipwood Economics, found the combined effect of the negative gearing and CGT changes alongside the $2 billion Local Infrastructure Fund will result in a net reduction in new housing supply over the next four years — directly contradicting Treasury's forecast of a net increase.
The modelling found that over the four years to 2029/30, the budget's housing measures will cause new housing supply to fall by over 8,700 dwellings, construction jobs to fall by more than 3,800, GDP to decline by $864 million, and rents to increase by up to $9 per week. Treasury, by contrast, forecast a net increase of 30,000 homes over 10 years — equivalent to 12,000 in the first four years — and a more modest rent increase of around $2 per week.
The three associations have been clear about the implications: "The Budget settings are not aligned with the policies that would make this target a reality," they said, referring to the National Housing Accord goal of 1.2 million new homes by the end of 2029.
The government's $2 billion infrastructure spending was supposed to offset the supply impact of the tax changes. The modelling suggests it falls well short.
The independent modelling estimates the fund will unlock around 5,300 new homes over four years — compared to Treasury's estimate of 26,000 in the same period. The modellers warned their estimate "should be treated as the maximum impact of the infrastructure boost," citing real-world constraints including land availability, regulatory barriers, and labour force capacity, as well as limited detail on how the fund will actually operate.
The modelling confirmed that the main driver of the negative supply impact is the changes to negative gearing rather than the CGT discount changes. The tax measures alone are projected to reduce dwelling starts by 14,032 over four years, while pushing established home prices down by approximately 0.67% by 2029/30 — or around $6,700 on a $1 million home.
The rental outlook is where the two forecasts diverge most sharply over time. While the combined policy package is expected to add around $3 per week to rents in 2026/27 — broadly in line with Treasury's $2 estimate — the independent modelling projects that figure rising to $9 per week by 2029/30, five times Treasury's terminal estimate. On a $600 per week rental, that translates to an increase of $142 per year in the first year, rising to $477 per year by 2029/30.
Rising rents reduce the disposable income of prospective first-home buyers still saving for a deposit, potentially extending the timeline to purchase. At the same time, softening established property prices and reduced investor demand will reshape the lending environment for property investors.
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