The Housing Industry Association (HIA) has urged a Senate Inquiry to reject proposed Federal Government tax reforms, arguing the measures could reduce housing supply and undermine efforts to improve housing affordability.
HIA Managing Director, Jocelyn Martin, said the Treasury’s own modelling suggests the changes would result in 35,000 fewer homes being built.
“At a time when Australia is struggling to build enough homes, Treasury is forecasting these tax changes will deliver 35,000 fewer homes,” Martin said.
“That’s an extraordinary admission for a policy being sold as improving affordability.
“You cannot solve a housing supply crisis by making housing investment less attractive. More investment builds more homes – less investment builds fewer.”
Martin said the reforms rely on assumptions that investors will redirect capital into new housing developments.
“The changes assume investors will simply redirect their money into new housing. In reality, housing competes with shares, commercial property, term deposits and countless other investments.
“Investors are free to take their capital elsewhere – and Treasury’s modelling suggests many will do exactly that.
“The result will be fewer projects proceeding, fewer homes being built, and even greater pressure on affordability.”
Martin said the reforms would do little to address the underlying challenge of increasing housing supply.
“Budget papers indicate that around 75,000 existing homes may shift to owner-occupiers over the next decade. While increasing home ownership is a worthwhile goal, it does not increase the number of homes – it simply redistributes them.
“Our core challenge is supply, and this policy does nothing to address it.”
Martin said the impact could be particularly significant in regional areas, where smaller investors often play a key role in enabling new housing projects.
“In many regional communities there are no large institutional investors waiting in the wings. Local investors are often the difference between projects proceeding or not.
“Reducing their participation risks stalling much-needed housing supply in these areas.”
HIA also argued the reforms fail to recognise the contribution of alternative housing delivery models, including knock-down rebuilds, medium-density developments, dual-key homes and granny flats.
“A knock-down rebuild that replaces an ageing home with a modern, energy-efficient dwelling should be encouraged, not penalised.
“It is also unclear why housing options such as dual-key developments and granny flats are overlooked, despite their capacity to increase supply.”
Martin said the reforms come as Australia remains behind schedule in meeting the National Housing Accord target of 1.2 million new homes.
“If we are serious about affordability, every policy should be judged on one question: will it deliver more homes?
“On Treasury’s own numbers, these changes fail that test.”
