Australia's peak property industry body has warned that new details of the federal government's tax reform package do not resolve the risks facing housing investment, with the Property Council of Australia saying critical settings have been deferred to future legislation while the national tax burden on property continues to grow.
Property Council Chief Executive Mike Zorbas (pictured) said the latest update had provided some clarity but left the core issues intact.
"High construction, labour and capital costs are not going away. The feasibility of new projects has rarely been more stretched," Zorbas said.
CBA's economics team estimates the negative gearing and CGT changes will subtract 0.6 percentage points from annual house price growth by end of 2026 and just under 1 percentage point over 2027, with the impact on construction activity described as ambiguous.
The statement comes as the government's bills work through parliament, with the Property Council warning that the combined impact of changes to trusts, negative gearing, and capital gains tax could create an escalating tax burden on the sector. The legislation is still before parliament, with the opposition signalling its intention to block the measures and major lenders already adjusting investor lending policies in anticipation of the changes taking effect.
The Property Council's central concern is the cumulative tax load on property.
"Whether through state and local taxes, or tax hikes via trusts, negative gearing or CGT, property organisations that employ 1.4 million Australians face an historic investment burden if these Bills pass into law," Zorbas said. "Between three levels of government that total tax take is north of $130 billion annually and rising."
The body also flagged that updates to the treatment of discretionary trusts fall short of what is needed. Tens of thousands of family-owned businesses rely on trust structures to develop and manage commercial, industrial, and housing assets — and the revised package, in the Property Council's view, does not adequately address the impact on those operators.
Beyond the immediate tax question, the Property Council raised concerns about the longer-term pipeline. The supply gap at the centre of that concern is already significant. According to HIA, Australia needed to build more than 250,000 homes in the last year just to keep pace with demand growth and begin reducing the housing shortage, but commenced construction of just 196,000 — a gap of more than 54,000 homes.
Yet some of the housing types best placed to fill that gap remain outside the reform debate. Scalable housing backed by institutional capital — including build to rent, retirement living, purpose-built student accommodation, and land lease communities — continues to be excluded from the current policy conversation at a time when new supply is critically needed.
"The many scalable housing types that are backed by long-term, patient capital like build to rent, retirement living, purpose-built student accommodation and land lease communities are still being left out of the debate at a time when we need to pull every lever to increase the supply of new homes," Zorbas said.
The Property Council indicated it would continue engaging with the federal government as the full legislative impact becomes clear. The bills remain before parliament, with further detail on key housing settings still expected through future legislation.
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