Jim Chalmers wanted to make things easier for young buyers. Picture: Martin Ollman
Australians have typically baulked at venturing beyond one investment property, and as I anticipated in April before the May federal budget, the unfolding property tax policies will now pause potential investors from making this initial acquisition.
Such has been the budget toxicity, it’s possible some hardworking taxpayers won’t even think there’s wisdom in putting their money into the principal place of residence.
I had thought the outcome of meddling with investment property taxes would be that the tax-free family home would be even more attractive in Australians’ money-making calculations.
But the emerging consequences of Treasurer Jim Chalmers’ asset-taxing budget measures have interrupted that thought.
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The muddled means of his ambition for much-vaunted intergenerational equity – getting more millennials and Generation Z into property ownership rather than investors – has begun to cast a pall over the entire residential market which sits at a record $12.9 trillion value.
According to the Australian Bureau of Statistics, our real estate obsession accounts for 68 per cent of total household wealth, eclipsing the combined total of Australia’s share market, superannuation funds, and commercial property.
Prime Minister Anthony Albanese may have opened the door to more tax on the family home. Picture: Leon Lord
Just this week Moody’s Ratings advised expecting an immediate housing market slowdown, with increased delinquencies, as federal budget tax reforms on capital gains tax and negative gearing reduce investor demand for existing homes.
“The changes will slow housing turnover and price growth, weighing on earnings for residential property developers and banks while reducing stamp-duty revenue for state governments over the next 12 to 18 months.”
The ultimate impact the federal budget has on the housing market, directly and indirectly, is going to take years to unfold.
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It’s hard to think that Australians’ passion for property could wane, but I dread the 2026 budget was a forerunner to heightened taxation on everything property. Sooner than later, local councils, state governments and the Federal Government will be colluding to raise property charges and taxes on the family home from purchase to death.
It’s inevitable because government spending and debt continues to rise, and governments need more than PAYE bracket creep to pay their spiralling outlays.
In their pursuit of so-called intergenerational equity, the Albanese government is potentially burdening the first-time buyer with negative equity, and also assuredly with massive government deficits forever into the future.
Ziad Harb, a Sydney chartered accountant, rejects the idea that the budget changes will improve intergenerational equity.
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The changes may hurt potential first-home buyers. Picture: Damian Shaw
“They will worsen it,” his submission to last month’s two-day rushed Senate inquiry advised.
It was only this week that his submission was belatedly published on the committee website, three weeks after the inquiry published its pro-government report.
All 678 submissions uploaded so far — some claim there were close to 1000 – were asked to believe the inquiry would “carefully” consider their submission.
Obviously. not.
But Harb noted “younger investors will face higher taxes on investment returns.”
“If the Government were genuinely concerned with housing and equity, it would not be hiking taxes on share ownership.
“This is profoundly troubling.
“These tax increases will effectively limit the younger generation’s ability to build individual wealth and independence.
“The changes are fundamentally anti-aspiration.”
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