THE Housing Industry Association (HIA) has a simple message for the inquiry into Capital Gains Tax (CGT) on residential property – if you tax something more, you will get less of it.
“Housing is already one of the most highly taxed sectors in the Australian economy,” HIA Managing Director Jocelyn Martin said.
“Independent research tells us that nearly half the cost of a new house and land package in capital cities is made up of taxes, fees and charges, and the tax burden on apartments is a similar story.”
Ms Martin said this was already reducing the ability of the market to deliver new homes.
“More and more, the feasibility does not stack up for projects of all sizes, even when approvals are secured,” she said.
“Changing CGT arrangements will be akin to a new tax on an already overburdened market.”
Ms Martin said that last year, two in every five homes was financed by an investor to add to the supply of rentals, so the contribution they made to new housing could not be overstated.
“If we increase the tax on investors, there is little doubt that they will seek opportunities elsewhere, or if they remain in the housing market there will be upward pressure on rents to compensate,” she said. “The construction industry is currently well below capacity, with the first year of the Federal Government’s commitment to build 1.2 million homes yielding around 60,000 homes less than the required target.
“Therefore, every investor that leaves the market represents one less rental property, not an additional family into their own home.”
Ms Martin said the only way that Australia’s housing crisis for both owner-occupiers and renters would be addressed was through building new homes.
“It is a quite simple equation based on the fact that we have more households seeking accommodation than we do homes,” she said.
“Housing supply is now a macroeconomic problem. If we want to ease inflation, improve productivity and restore affordability, we must remove the barriers preventing new homes from being built.”
HIA’s recent 2026-27 Federal Pre-Budget Submission outlined a suite of supply-side reforms to support delivery of the Government’s target.
“The focus of government must be on reducing barriers to increasing supply of housing, rather than going to back to the well yet again to try and squeeze more revenue out of housing,” Ms Martin said.
