HIA
NEW data from the Australian Bureau of Statistics has reignited debate over negative gearing, with the Housing Industry Association arguing that restricting the tax concession to new homes would actually reduce housing supply rather than boost it.
According to HIA Chief Economist Tim Reardon, investors accounted for 43 per cent of all new homes built in Australia over the past year, highlighting the increasingly important role private investment plays in residential construction.
The comments follow the release of the ABS Lending Indicators data for the March quarter 2026, which tracks housing finance commitments from major lenders across the country.
Mr Reardon said proposals to limit negative gearing concessions to newly built homes were based on an overly simplistic assumption that investors would simply switch from established homes into new housing stock.
“While it might initially appear that limiting negative gearing to new homes only would result in an increase in new home supply, this logic only makes sense in a theoretical environment where there are only two investment options – new homes or established homes,” he said.
“In the real world, capital is mobile.”
He argued that investors faced with higher taxes on established housing could instead redirect their money into commercial property, industrial assets or shares, ultimately reducing overall investment in residential housing.
The HIA claims that less investment would mean fewer homes built, worsening Australia’s already severe housing undersupply and pushing rents and property prices even higher.
“Australia’s housing affordability problem is fundamentally a shortage of homes compared to the number of households,” Mr Reardon said.
“It can be viewed as trying to fit 11 million households into 10 million homes.”
The HIA argues the policy could particularly discourage “mum and dad” investors, while larger institutional investors and self-managed super funds may be less affected because they can offset losses through other income streams or investment structures.
The comments come as affordability pressures continue to intensify in key markets including Sydney, Melbourne and Brisbane, where rising construction costs, infrastructure charges and taxation are pushing new home ownership further out of reach for first-home buyers.
The ABS figures showed owner-occupier loans for the construction and purchase of new homes nationally fell 1.7 per cent in the March quarter to 13,890 loans.
Queensland remained steady over the quarter, while the strongest growth was recorded in the Australian Capital Territory, up 65.3 per cent. Victoria and Tasmania both recorded significant declines.
Investor lending for new housing remained largely flat nationally.
