Property Council chief executive Mike Zorbas said the tax-heavy approach being canvassed for the May budget was “full of risk for the supply of housing in Australia”, arguing it would penalise investment in new homes precisely when more stock is needed.
“The most likely approach, as flagged by ministers to date, is property tax hikes alone. 33% Capital Gains Tax (CGT) discount vs equities at 50%, with a two-home negative gearing cap,” Zorbas told The Courier Mail. But “hiking CGT on investment in new homes relative to shares will hammer supply”.
“That means intergenerational equity is at risk, especially for people who can only currently afford to rent not buy – almost 30% of the population,” Zorbas said, warning any “retrospective change would be explosive”.
His warning comes as separate Colliers research points to a ‘rental‑first’ housing system emerging – with low vacancies, high prices, and family‑funded deposits keeping more Australians renting for longer – and a new Youi survey finds 46% of Australians don’t believe they’ll ever own a home.
Even with carve-outs for future developments, Zorbas argued that tightening tax settings on existing rentals would leave tenants footing the bill.
“Even if you put the CGT discount on existing property to 33%, while leaving new homes untouched, and add grandfathering, upping tax rates on existing rental homes still means rents will rise and modelling shows housing supply will go down,” he said. “Combining those outcomes doesn’t crowd many more people into becoming homeowners either because prices barely change and rates are not going down.”
The council estimates that “after May under any change scenario almost three in ten people will still need to rent next year and for the next decade”, including aspiring first-home buyers whose national median age is already 34. Zorbas warned those median ages “will hit 40 in Sydney and Melbourne in our lifetimes without radical supply boosts.”
Zorbas said many landlords make “sub 3%” annual returns once costs are factored in and “rely on a rising house market” for overall gains, describing this as a “desirable wealth effect” for the majority of Australians who own property.
He cautioned that if investors switch their “marginal investment dollar” into shares, development pipelines, and construction employment would suffer, worsening an already fragile supply outlook.
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