Leading property developers and industry experts have sharply criticized recent changes to capital gains tax and negative gearing introduced in the federal budget, saying the measures have failed to boost housing supply and instead exacerbated affordability issues across Australia.
Tim Gurner, a prominent property developer, described the tax reforms as a “dismal failure” and called for their repeal. Speaking from his luxury development project in St Kilda, Gurner argued that the policy has undermined market confidence, reducing new housing supply and driving rental prices higher. “For Australians to ever have any chance of affordable housing, the budget changes must be repealed,” he said, attributing current rental pressure and price increases directly to the legislation.
Statistical data supports concerns that investor activity in the housing market has significantly cooled. According to a trend report from The Loan Market, mortgage lodgements have fallen 44 percent nationally this year, with Queensland and Western Australia experiencing the steepest declines. Loan values for established properties dropped by 56 percent, and loans for new housing stock decreased by 10 percent over the past ten months. Loan refinancing now accounts for 60 percent of all mortgage applications, indicating a shift away from property investment.
Cherie Bell, chief financial officer at The Loan Market, highlighted that the combined effect of rising interest rates and the tax changes created a “double whammy” for investors, who have been the hardest hit, although first-home buyers and owner-occupiers upgrading their properties have also shown reduced application volumes.
The reduction in investor lending is expected to further strain the already tight rental market. Rental prices increased by $10 per week in the September quarter—five times the $2 increase forecast by Treasurer Jim Chalmers during the budget announcement. Tim Reardon, chief economist at the Housing Industry Association, noted that new home sales have continued to decline since the budget. He reiterated Treasury’s prediction that the tax measures would result in 35,000 fewer dwellings constructed, fueling supply shortages and rising rents.
Reardon also suggested that investor participation could eventually rebound if established home prices rise faster than the combined cost of land and construction, with a potential recovery anticipated in early 2027 alongside expectations of future interest rate cuts.
Queensland developer Don O’Rorke, chairman of Consolidated Properties, echoed the widespread industry sentiment, asserting that the budget’s tax rewrites have significantly slowed the market. He contended that the intended goal of increasing housing supply has not been met; rather, construction activity has diminished since the reforms took effect.
When the budget was unveiled in May, Prime Minister Anthony Albanese, Treasurer Jim Chalmers, and Housing Minister Clare O’Neil jointly stated that the tax changes were designed to “steer investment toward increasing supply.” However, current market data and developer feedback suggest that the measures have not delivered the expected results, with ongoing challenges in housing affordability and rental availability persisting.