The Real Estate Institute of Australia is concerned that the Federal Government blurs its focus on housing supply in the 2026-27 Budget, warning that changes to negative gearing and capital gains tax risk undermining housing delivery at a critical time.
The Real Estate Institute of Australia is concerned that the Federal Government blurs its focus on housing supply in the 2026-27 Budget, warning that changes to negative gearing and capital gains tax risk undermining housing delivery at a critical time.
REIA President Jacob Caine said measures that directly support new housing supply, including the Government’s $2 billion infrastructure initiative, expected to enable around 65,000 additional homes, were positive and necessary steps toward addressing Australia’s housing shortage.
“Supply remains the biggest challenge facing the housing market,” Mr Caine said.
“The only meaningful way to improve housing affordability is to get more homes built.”
However, Mr Caine said REIA remained deeply concerned about changes to current negative gearing and capital gains tax settings, with modelling by Qaive and Tulipwood indicating the reforms may result in around 25,500 fewer homes being built over the next five years.
“Australia is already well behind the National Housing Accord target of 1.2 million new homes, so we need policies that support investment and new housing supply, not policies that make delivery harder,” Mr Caine said.
“Private investment plays a critical role in Australia’s housing system. At a time of acute rental stress and chronic undersupply, policy settings should be encouraging more investment into housing, not creating uncertainty or reducing confidence.”
REIA has consistently maintained that governments should address the underlying supply crisis before pursuing significant tax reform. Australians were promised at the last election that the focus would be on housing supply, rather than changes to negative gearing and capital gains tax. This Budget appears to shift away from that commitment.
The Government also takes a further tax grab across all asset classes on the introduction of a minimum of 30% tax rate on real capital gains from 1 July 2027. The introduction of the minimum tax will for example reduce the benefit of taxpayers deferring capital gains realisation to years where their marginal tax rates are low. The silver lining is that the only asset class eligible for exemption are new house builds.
“This will certainly adversely impact future retirement plans of many Australians,” Mr Caine said.
“It is disappointing that the Government has blurred its focus on increasing supply by destabilising taxation settings that have supported long-term private investment in housing.”
REIA is also concerned about the unintended, on-the-ground consequences of removing negative gearing for existing dwellings. The changes may reduce incentives for investors to purchase, retain and upgrade established rental properties, placing further pressure on tenants and the rental market.
“We will continue to closely monitor these reforms and their impact on housing supply, rental affordability and investor confidence,” Mr Caine said.
While the stated aim of the changes is to improve access for first-home buyers, Mr Caine said the practical effect may be very different.
“What Australia needs is more homes. Every policy decision should be tested against whether it helps or hinders that goal. It is unclear how these new policies deliver new housing for Australia.”
“The Government appears to be the primary beneficiary of these changes, and has demonstrably failed to articulate how they’ll repay their windfall to the Australian people who elected them.”
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For media enquiries, please contact:
Jessica Schulz, REIA Media and Communications Coordinator
0433 849 396
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