Trade body urges supply-side focus to tackle housing affordability
Proposed changes to negative gearing and capital gains tax will result in 14,000 fewer homes being built over four years, Master Builders Australia has warned a Senate committee.
The industry body made the submission to the Senate Select Committee on Intergenerational Housing Inequity, arguing that the budget measures fail the two fundamental tests any housing policy must meet: increasing the number of new homes built and reducing the cost of building them.
"Every policy initiative needs to meet two tests," said Shane Garrett (pictured top left), chief economist at Master Builders Australia. "It must result in more new homes getting built and it must help reduce the cost of creating new homes.
"The restrictions on negative gearing and capital gains tax announced in the Budget fail both tests. In isolation, these tax changes are expected to result in 14,000 fewer homes being built over the next four years. Even when additional infrastructure funding is taken into account, independent modelling still indicates a net reduction of 8,700 new homes."
Master Builders national director Darren Disney (pictured top right) told the committee that the broader housing challenge stems from a combination of rising construction costs, workforce shortfalls, infrastructure constraints, and regulatory and taxation settings.
"The construction workforce is hundreds of thousands short, the regulatory burden can reach $320,000 per new house and the cost to build in the first place is almost 50% more expensive than it was before the pandemic," Disney said.
"Builders stand ready to deliver the homes Australia needs. However, to do so, governments must focus on the practical barriers that prevent projects from proceeding and increase the cost of delivering new housing. It's clear what parts are broken, what we need now is carefully targeted action."
Master Builders Australia is urging the federal government to prioritise its Housing Accord targets and pursue reforms across five areas: cutting the regulatory burden on builders without lowering safety or quality standards; replacing ad hoc tax changes with a comprehensive reform agenda that drives new supply; addressing workforce shortages through better-targeted apprenticeships and skilled migration; increasing enabling infrastructure funding to unlock new developments; and improving the efficiency of building and construction regulatory agencies.
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
