Australia's new housing tax reforms dampen home price growth

Australia's lower house passed a landmark tax bill that limits negative gearing to newly built homes, removes the 50% capital‑gains discount and introduces a 30% minimum tax on net capital gains from July 2027. The reforms aim to boost housing supply and improve affordability, while also providing a A$250 tax offset and a $1,000 instant deduction for workers.

Analysts say the changes will hit the property market harder than Treasury expected. Commonwealth Bank and CommBank now forecast national dwelling prices to be flat in 2026, with a 5% drop in established‑property values and about 1% declines in Sydney and Melbourne during May. Auction clearance rates have fallen to six‑year lows and listings have risen. The tax shift is also expected to slow overall economic activity, potentially easing pressure on the Reserve Bank of Australia and reducing the likelihood of further rate hikes. Over the longer term, economists view the reforms as a temporary speed‑bump, with price growth likely to resume once the market adjusts.