Changing Capital Gains Tax (CGT) isn’t the answer to address housing affordability and supply

problems, said the Housing Industry Association (HIA) – the voice of Australia’s residential

building industry.

“Improving housing affordability and home ownership rates needs to be a focus of all parties in

the upcoming federal election,” says HIA Chief Executive Industry Policy and Media, Graham

Wolfe.

“Yesterday’s announcement by the Opposition that it intends to halve the capital gains

discount on investment properties will, in our view, not achieve these objectives.”

“Reducing the CGT discount, which is an important measure to recognise the net present

value of an asset, will push investment away from Australia’s housing sector.”

“The Henry Tax review rightly concluded that addressing the supply side impediments to new

housing had to be the priority focus, including: reducing stamp duty; alleviating land supply

restrictions; addressing onerous planning controls; and delivering housing infrastructure in an

equitable and timely manner.”

“Research conducted by Independent Economics on behalf of the HIA – using a model also

applied by the Commonwealth Treasury - confirmed that restricting access to negative gearing

for residential property would reduce investment in housing, erode housing affordability and

put upward pressure on rents.”

“The priority for tax reform of housing must be to reduce the tax burden on new home buyers.

The level of taxation on a new house and land package can be up to 44% of the final price,

which far outweighs the positive benefits to investment in new housing to support the rental

market, of the current CGT or negative gearing regimes.”

“Now is a pivotal time for investment in new housing, which has implications for affordability

and the broader economy, with starts expected to decline over the year ahead. Any changes

to taxation with respect to housing must be aimed at boosting housing supply, and reducing

the overall tax burden on the sector.”

Media contact:

Graham Wolfe, Chief Executive Industry Policy and Media, 0419 751 188

Greg Weller, National Director Communications, 0438 846 752 

This media release was directly sourced from the Housing Industry Association website here.