Labor’s Housing Reforms Slash 10,700 Homes, Push Rents Up AUD$10 Weekly

Labor’s housing reforms are making Australia’s rental crisis worse, not better. Updated modelling commissioned by Master Builders Australia, the Housing Industry Association, the Property Council of Australia and the Real Estate Institute of Australia found the government’s tax changes will slash 10,700 homes from the construction pipeline between 2026-27 and 2029-30, push rents up by about AUD$10 per week, and cost more than 4,700 construction jobs. The reforms include scrapping negative gearing for new investors and cutting capital gains tax concessions.

What the modelling shows

The analysis, updated after Labor’s May budget, forecasts cumulative GDP will fall by about AUD$1.05bn over the period. Rents will rise by about AUD$10 a week cumulatively. The figures are worse than the industry’s original post-Budget warning. The modelling includes Labor’s changes to negative gearing and capital gains tax, plus the government’s AUD$2bn Housing Support Program and a measure agreed with the Greens that bans self-managed super funds from using limited recourse borrowing to buy ordinary residential investment property.

Landlords already leaving the market

Fresh investor data suggests landlords are heading for the exits. More than AUD$34 billion has been wiped off Australia’s residential property market as the tax changes continue to impact values. Property prices have fallen 3.6% from their peak earlier this year amid higher borrowing costs, a weak economy, and the once-in-a-generation shift in tax treatment of property investors. The combined impact of Budget housing measures is reducing new dwelling starts and pushing investors away from the rental market.

Who bears the cost

Renters face higher weekly payments. Young homeowners buying land to build are watching their anticipated home values slide as construction costs rise and property prices fall. Some recent buyers accept lower valuations to help close the divide between renters and landlords, but the trade-off is steep. Falling house prices have come at the worst possible time for those locked out of the established housing market who have already committed to construction.

The political pushback

Opposition and industry groups argue the reforms deepen the housing shortage instead of easing it. Liberal Treasury spokesman Tim Wilson said Australian families are watching the value of their biggest asset fall through the floor. The government’s critics blame the downturn on Labor’s May budget reforms, which removed negative gearing for new investors except new builds. The Greens-Labor agreement added the super fund borrowing ban to secure parliamentary support for the broader package.

Final Thoughts

Labor’s housing tax reforms are cutting supply and raising rents, the opposite of the stated goal. With 10,700 homes lost and AUD$1.05bn in GDP wiped out by 2030, the policy trade-off is proving costly for renters and construction workers alike.

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