The housing crisis in Australia is still in the news, but now the country’s largest union has come up with a very different idea.The Australian Council of Trade Unions (ACTU) wants to limit tax breaks for investors.
The ACTU’s plan says that these tax breaks would only apply to one investment property per person.The union believes that this move could help first-time homebuyers and level the playing field for wealthier investors in a market where prices have become too high.
The ACTU’s Push for Affordable Housing
The ACTU says that the current tax system encourages people to speculate on real estate and drives up prices.Secretary Sally McManus says that younger Australians can only rent long-term and have little chance of owning a home. Also, many workers can’t afford to live near their jobs.
The ACTU says it wants to make things fairer by limiting the benefits that investors get. Supporters say that lowering investor demand would lower property values and make it easier for families who are having trouble getting into the market.
Problems with rental supply
But experts warn that the change could have effects that are not yet known.Investors not only buy homes, but they also rent them out.If investors are told to leave the market, there could be fewer rental properties.Tenants who are already dealing with record-high rent increases may have to deal with even more stress if rents have to go up even more.
Australia has talked about these tax breaks before.The Labour Party made a similar suggestion in 2019 that caused problems in the market and slowed down building.
Australia hasn’t been able to build enough homes to keep up with population growth for decades, especially in big cities like Sydney, Melbourne, and Brisbane.
A lot of people think that making changes to tax breaks won’t make things much more affordable if these structural problems aren’t fixed.
Capital Cities Median Dwelling Value Growth (2019–2024) —Perth leads with approximately 76% growth, followed by Brisbane (71.5%), Adelaide (70.8%), Sydney (43.1%), and Melbourne (19.8%). SOURCE
A More Complete Plan Beyond Housing
The ACTU’s suggestions go beyond just the real estate industry.The union has asked for:
- People who make more than $1 million should have to pay at least 25% in taxes.
- The same minimum rate applied to family trusts.
- a new tax on LNG exports.
- a cap on fuel tax credits for large companies.
- Superannuation funds will have more freedom to invest in housing.
The main goal of this bigger package is to increase government income and redirect investment to sectors that will help the economy.
Responses from Professionals
Property experts are still being careful. Michael Yardney of Metropole Property Strategists has said that changing tax settings is not the only way to make things more affordable. Instead, he stresses the need for partnerships between the public and private sectors, changes to planning laws, and more involvement from superannuation funds in building new homes.
Buyer agents help clients pick out properties and also warn them about the risks of sudden changes in policy. They say that the uncertainty around negative gearing and CGT could make long-term investors less likely to invest. They say to focus on assets in good locations, that are hard to come by, and that are less likely to be affected by policy changes and market volatility
If property investor tax breaks are taken away, will Australia’s housing crisis be over?
The ACTU’s plan could make it harder for tenants to find rental housing, even though it might ease some demand pressures. At D’MANSHA, we assist buyers, homeowners, and investors in strategising and navigating the property market. If you plan to buy your first investment property, release equity, or strengthen your property portfolio, we have an expert buyer’s agency business that helps you strategise with certainty to build more homes, speed up approvals, and make sure that supply keeps up with demand. Get in touch with us to find out how you can benefit from the right property, with a strategy to fit your financial goals. Book your free discovery session today at D’MANSHA and call us at +61 406 11 22 44 for further queries.