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AS Australia grapples with a housing crisis, property industry leaders are urging the federal government to prioritise housing supply and avoid tax changes that could deter investment in new homes. Ahead of the Budget, experts say boosting housing construction must remain the focus as demand continues to outpace supply across the country.
The federal government has flagged potential tax reform as a way to address intergenerational inequity, particularly the growing difficulty younger Australians face in entering the housing market. However, the industry is on alert amidst speculation Treasurer Jim Chalmers may reduce the capital gains tax discount or change negative gearing settings in his upcoming Budget.
Housing leaders warn that, with supply already constrained, the change risks undermining supply at a critical time. “We want to ensure we’re working on removing barriers to housing supply and certainly not introducing any regulation that gets in the way of that,” Housing Industry Association (HIA) managing director Jocelyn Martin said.
This includes any changes to the capital gains tax discount and negative gearing rules. “That’s not because we have any kind of philosophical support for investors per se, but investors are 42 per cent of the market of new homes,” Martin added. “If you take investors out of the market, you’re going to affect demand for new homes and also reduce homes made available to renters.” By MELISSA IARIA BUDGET 2026 SPOTLIGHT The Property Council of Australia also cautions against adding new costs or complexity at a time when construction and financing pressures are high.
“The Budget should focus squarely on improving the conditions to deliver more housing,” said Matthew Kandelaars, Property Council group executive of policy and advocacy. “That means stable, competitive tax and investment settings, faster planning and postpermit delivery and targeted investment in housingenabling infrastructure like transport, utilities and services.” To improve affordability and lift supply, Kandelaars said governments must clear bottlenecks and support productivity in construction, including through skills and migration settings, so approved projects can actually get built.
Last month, Real Estate Institute of Australia President Jacob Caine told a conference that raising taxes on housing would reduce supply. “What that translates into is fewer homes being built, fewer jobs in construction and, most significantly, an increase in rents,” Caine said. A key priority is more federal funding for infrastructure.
The HIA is calling for an extra $5 billion to support states in delivering critical “last mile” infrastructure - including water, sewerage and powerto unlock housing developments. “That might be an incentivised system, a bit like they have now, but nevertheless, it’s something that’s really needed to boost new housing in the states,” Martin said.
“We have housing estates that can’t either get started or finished because they’re missing services. “The states, who are providers of infrastructure, just don’t seem to have enough funds to do enough of that work.” Despite a Housing Accord target to build 1.2 million homes by mid-2029, Australia is falling short, even after initiatives to boost supply and affordability.
Only 219,000 new homes were built in the first five quarters of the agreement, less than the required 280,000 new homes, the National Housing Supply and Affordability Council revealed last month. While the nation is below the required pace, Martin said the target had been valuable in exposing the factors holding back building.
One reason for the shortfall is the apartment market, which won’t be helped by rising interest rates and fuel squeezes. “Apartments, at the moment, are not passing the feasibility test to even get out of the ground,” she said. “We’re short of (the target) but still supportive of it.
We reckon by about 2030 we’ll probably be building the right amount of homes per year.” Workforce shortages must be addressed, Martin said, highlighting that permanent support for employers hiring apprenticeships for housing construction would help create the skilled labour needed.
Overall, though, states have improved their planning systems to prioritise housing supply, leading to greater confidence from the private sector, according to Urban Taskforce CEO Tom Forrest. However, he points out the high cost of building remains an issue, particularly “We need the government to put its hand in its pocket, which is swollen in terms of revenue through the large numbers of immigration intake.”
— Urban Taskforce CEO Tom Forrest
BUDGET 2026 SPOTLIGHT April 2026 The practitioner’s companion for apartments.
“In large parts of greater Sydney, areas like Newcastle and Wollongong as well, also in Melbourne and to a lesser extent in Brisbane, it costs you more to build than you can possibly sell it for,” Forrest said. “People aren’t prepared to pay for it, or can’t pay for it, particularly with increased interest rates and now construction costs are increasing further because fuel prices have gone up associated with the warthat leads to real constraint.” Forrest is calling on the federal government to fund significant housingrelated infrastructure, as infrastructure - along with fees, taxes and chargesis killing project feasibility.
“We need the government to put its hand in its pocket, which is swollen in terms of revenue through the large numbers of immigration intake,” he said. “Immigrants are great. They’re producing more revenue than they’re taking by a long, long waythey’re net contributors to the economic benefit of the society.
“The government, though, isn’t using that to help the states build the infrastructure necessary to house them. That’s why we’ve got a housing supply crisis.” Phasing out stamp duty in favour of a broadbased land tax would encourage empty nesters to downsize and lead to more efficient use of housing stock, he pointed out.
But Forrest said the transition would Clockwise from far left, Urban Taskforce CEO Tom Forrest; Matthew Kandelaars, Property Council group executive of policy and advocacy; and Housing Industry Association managing director Jocelyn Martin. need federal support to help states manage the temporary loss of revenue.
In addition, easing Foreign Investment Review Board barriers and removing foreign investment surcharges would encourage more investment in housing supply. “The more foreign investment we have in solving the housing supply crisis, the more opportunities developers have to be able to access that finance to build more housing,” Forrest said.
“Why would you take something that’s funding the solution to a crisisthat you’ve acknowledged as a crisis, and you’ve set up a whole national Housing Accord to fix itand you’re still placing extra taxes on the people who are seeking to solve it?” “We want to ensure we’re working on removing barriers to housing supply and certainly not introducing any regulation that gets in the way.”
— Housing Industry Association
The ‘missing middle’ suburbs in major cities and regions – home to ageing building stock, built on oversized blocks which are ripe for duplex or townhouse redevelopment – are on the radar because of their proximity to transport, schools and services. Public policy think tank CEDA, the Committee for Economic Development of Australia, recently released the report A middle path: How gentle density can help solve Australia’s housing crisis.
The report shows that if just one in four standalone homes in major cities were developed into dual occupancies, Australia could increase its current housing stock by nine per cent, roughly equating to one million new homes. And with major cities likely to bear the brunt of Australia’s population growth – estimated at an extra 14 million people over the next four decades – the report predicts cities and major centres will grow at twice the pace of regional areas.
Currently our major cities are By LEIGH REINHOLD ISSUES
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