Federal housing minister Clare O’Neil says the upcoming budget will be a ‘housing budget for the country’, as speculation mounts on controversial reforms to the capital gains tax discount and negative gearing for property investors.
Speaking at the National Housing Solutions Summit in Melbourne on Thursday, Ms O’Neil declined to comment on the details of the upcoming May 12 budget but said it would be all about housing.
“Firstly, this is going to be a housing budget for the country, and that is a damn good thing,” she said.
“It's adding to what was already the most ambitious Australian Government agenda on housing that our country has had for seven years.”
“We see that there is more work to be done, and some of that will be done in the budget.”
It comes as speculation builds that the federal government will cut the capital gains tax discount and negative gearing concessions for property investors in the upcoming budget in a bid to address ‘intergenerational equity’.
Forecasts released by economists at the Commonwealth Bank on Wednesday predict the government will scrap the 50% CGT discount for all assets - not just residential property - and replace with inflation indexation. CBA expects the changes will be grandfathered.
Negative gearing is also expected to be completely abolished for all new investments, rather than capped at the second property as had been widely speculated. CBA noted there may be some exemptions or deductions for new builds.
Federal housing minister Clare O’Neil says the upcoming budget will be a ‘housing budget for the country’. Picture: Supplied
Advocates for the cuts say the CGT and negative gearing concessions are too generous to property investors and have contributed to rising home prices.
But the property industry has warned any cuts to these concessions would shrink the number of new homes being built and consequently drive rents higher.
Shadow housing minister Senator Andrew Bragg told the conference that the opposition wouldn't support any new taxes on housing.
"Any new taxes we won't be supporting because we believe it will make a bad situation worse," he said.
"I also think the speculation is really bad for investment, why would you invest in housing?"
What we do know will be in the budget is a $45 million plan over four years to fast-track environmental approvals across housing, energy and resource projects, announced on Wednesday.
Shadow housing minister Senator Andrew Bragg says the speculation is really bad for investment. Picture: Supplied
Ms O’Neil told the conference that the government's focus was on increasing housing supply.
“The second thing I would say is that the evidence is absolutely clear that we have a housing challenge in our country, principally because for 40 years we have not been building enough homes,” she said.
“Our government is fiercely pro supply, and whatever decisions we make, the end result is that we need to see more housing, not less.”
Mirvac Group chief executive and managing director Campbell Hanan, who spoke at the conference, said governments needed to strike a careful balance for Australia’s housing market.
“I think what we're leaning into now is a little bit like a four-planked seesaw,” he said.
“You've got this intergenerational inequality, which is well prosecuted in the media. You've got a desire for more housing supply. You've got a desperate need for rental accommodation for 35% of Australians who now rent, and you have affordability.”
Mirvac's Campbell Hanan and ANZ's Jo Scotney at the National Housing Solutions Summit in Melbourne. Picture: Supplied
He said all four factors were trying to hover above the ground, with any setting changes likely to impact others.
“We need to be very careful as we think about intergenerational opportunity that we have settings which keep the balance between the amount of residential rental stock, affordability, and that it's concentrated on future supply, as well as intergenerational inequality,” he said.
“It's a really challenging one for governments to lean into, but it's certainly very important.”
Homeownership rates in Australia have been falling among young households for decades, in part due to housing affordability, which has stoked fierce debate between generations.
Governments have poured billions of dollars into initiatives to increase housing supply, however the number of new homes being built has lagged the National Housing Accord target of 1.2 new million homes in five years.
Sources: PropTrack, ABS, RBA.
The 2025 PropTrack Housing Affordability report found that a typical income household, which represents those earning about $118,000 a year nationally, could afford just 15% of all homes sold across the country. It was only marginally higher than the low seen in 2008-09.
Earlier this week, Real Estate Institute of Australia president Jacob Caine warned against changes to CGT and negative gearing, saying that the country was in a structural housing deficit and couldn’t afford to make policy decisions that meant fewer homes get built for Australians.
“Modelling undertaken by every think tank, every economist, and the government shows that adjusting downwards or removing the current CGT settings hurts housing delivery,” he said.
Currently, there is a flat 50% discount that applies to capital gains across all asset classes when held for greater than one year. Under the new plan, inflation indexation will be applied rather than a flat 50% discount.
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