Australia's tax reforms stir housing affordability debate

The Australian government is moving ahead with tax reforms that would replace the 50% capital‑gains‑tax discount with a rate tied to inflation and a 30% minimum, and limit negative‑gearing deductions to new houses from July 2027. Pro‑business economists argue the changes could improve tax neutrality and modestly boost productivity, but warn higher taxes on capital may offset gains. The Treasury claims the measures will enable an additional 75,000 first‑home buyers over ten years, even as the same reforms are projected to cut the construction of 35,000 homes.

During two Senate inquiries, experts highlighted a decade of stagnant real incomes and an acute shortage of rental housing, with vacancy rates as low as 0.3% in Darwin and rents up 7.8% year‑on‑year. Business groups and the opposition criticised the reforms as insufficient to address the underlying supply deficit, while a poll showed rising support for populist leader Pauline Hanson amid housing concerns. The debate underscores the tension between fiscal policy goals and the need for more housing construction to curb price growth and improve affordability.