Serious concerns over housing supply and rental affordability

THE Urban Development Institute of Australia is urging the Federal Government to reconsider its housing tax changes following new data revealing the largest quarterly fall in investor lending on record.

This is raising serious concerns for housing supply and rental affordability, UDIA said.

Australian Bureau of Statistics figures show new investor housing loans fell 30.6 per cent in the September quarter 2026, compared with a 15 per cent decline in overall new home loans, with the ABS identifying potential tax changes among the factors influencing investor activity.

§ Loss of investor confidence threatens housing supply

UDIA national president Oscar Stanley said the sharp decline in investor lending was deeply concerning at a time when Australia urgently needs to increase housing supply.

“The ABS data makes it clear there has been a significant loss of investor confidence which we all know will have a material impact on the supply of new homes,” Stanley said.

“We are firmly of the view that the government has underestimated the impact of recent tax changes on overall housing supply”.

The decline in investor lending risks reducing the pre-sales needed to get new housing projects underway, delaying construction and further constraining the supply of rental homes at exactly the wrong time, when Australia is already falling behind its housing targets.

With fewer rental properties entering the market, families face the prospect of increased competition for available homes and further upward pressure on rents.

§ Calls to reconsider rental investment tax settings

Stanley warns that current tax settings are not providing strong enough incentives to support increased housing supply, with uncertainty around investment settings also threatening the financial viability of housing projects.

It has previously raised concerns that restrictions on limited recourse borrowing arrangements for self-managed superannuation funds jeopardise further investment in new rental housing, compounding the pressure on supply.

“The government should immediately restore SMSF limited recourse borrowing for new rental investment and reconsider negative gearing and CGT changes that are discouraging investment in rental property, eroding the financial stability of housing providers and undermining market confidence,” Stanley said.