Labor's Special Envoy for Housing, Josh Burns, was unable to provide details on how the Treasury arrived at its projection that government housing tax changes would increase rents by approximately $2 per week. The inability to explain the modeling during a News24 interview has drawn attention amid broader concerns that the reforms could place additional pressure on tenants.
The proposed reforms include removing negative gearing for existing homes and ending the 50 percent capital gains tax discount, replacing it with a 30 percent flat tax indexed to inflation. Economists and property industry groups have cautioned that these changes might deter investment in existing properties, potentially reducing the supply of rental homes and leading to higher rents.
Concerns were amplified by analysis from NAB economists suggesting that rents in Sydney and Melbourne could rise by 25 to 30 percent. This projection was based on the assumption that investors would seek higher rental yields to offset the loss of tax advantages. However, NAB later clarified that this analysis did not fully account for existing investment properties that would be grandfathered under current negative gearing arrangements.
During the interview, Burns was repeatedly pressed on the origin of the $2 figure mentioned in the May budget. When asked how the Treasury reached this conclusion, Burns admitted he did not have the full methodology. "I don't have the full methodology of the Treasury modelling. We can get that for you if you'd like," he stated, referring the question to Treasury.
Despite the difficulties in explaining the specific projection, Burns defended the government's policy, emphasizing its aim to increase home ownership. "We want people to buy their own home, and we want people to move from renting to home ownership," he said. He also pointed to a recent increase in investor activity in new housing builds as an indication of market transition.
However, recent data from Australia's major banks indicate a decline in mortgage applications since the reforms were announced. Commonwealth Bank reported a 15 percent fall in new residential mortgage applications, while Westpac noted an average 20 percent decline in applications between mid-May and late July compared to the previous quarter. NAB also reported a 15 percent drop in home lending applications during the June quarter.