Repeal budget tax changes now to avoid housing supply crash: Coalition

Detailed summary

Property analysts have described the combination as a “perfect storm” that would make many new housing developments unprofitable.

Shadow Treasurer Tim Wilson says the outlook for the housing market has become so dire that the government should immediately repeal its property tax reforms, citing plunging auction clearance rates and RBA predictions of a supply slowdown.

Money flowing into new housing surpassed expectations this year, bolstering Labor’s critical housing agenda. But the RBA downgraded its outlook last month and predicted dwelling investment to fall about 2.5 per cent from late next year until 2029, casting doubt on Labor’s target of 1.2 million homes.

The bank used its statement on monetary policy to attribute the drop-off to the “ongoing housing market downturn”, caused by interest rates rising more than predicted and worsened by the effect of Labor’s looming property tax changes. Property analysts including Cameron Kusher have described the combination as a “perfect storm” that would make some new housing developments unprofitable.

Shadow treasurer Tim Wilson said it was becoming clear that Labor’s budget forecast of 35,000 fewer houses as a result of the investor clampdown had underestimated the effect on market sentiment.

“The treasurer needs to do a complete U-turn on the taxes in his federal budget or we will see a continuation of rents rising [and] housing supply falling,” Wilson told this masthead.

The opposition has shifted from arguing the removal of tax concessions was an “attack on aspiration”. Such a message could fall flat with people locked out of housing. Instead, it is more often focusing on the prospect of lower supply and higher rents.

Wilson made the comments on Sunday as data from property tracker Cotality showed national auction clearance rates hit 44 per cent, the lowest figure since April 2020 when lockdowns were in place. The number of auctions held in capital cities is more than 40 per cent down on a year ago and has been declining since before the budget.

Labor welcomed data last week showing that loans to investors were falling more quickly than loans to…

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