Fresh industry modelling has warned that the combined federal budget changes could significantly deepen constraints on new residential construction.
Peak construction, property, and real estate groups have warned that the federal budget’s housing tax reforms and subsequent superannuation lending restrictions could reduce new dwelling starts by 10,700 over four years.
Master Builders Australia, the Housing Industry Association, the Property Council of Australia, and the Real Estate Institute of Australia released updated modelling by Qaive and Tulipwood Economics examining the cumulative impact of the government’s housing package between 2026–27 and 2029–30.
The assessment incorporates changes to negative gearing and capital gains tax concession arrangements, the $2 billion Housing Support Program, and the government’s move to prevent self-managed super funds (SMSF) from using limited recourse borrowing arrangements to purchase residential properties.
According to the modelling, the combined measures would result in 10,700 fewer dwelling starts over the four-year period.
The research also found that the changes would lift rents by about $10 a week, lower cumulative GDP by around $1.05 billion, and reduce construction employment by more than 4,700 jobs.
The associations said the revised projections had worsened from the modelling published in the immediate aftermath of the federal budget, following the inclusion of the SMSF borrowing restriction.
“The findings represent a further deterioration from the modelling released immediately after the budget, which already showed that the package would reduce housing construction, weaken economic activity, and place additional pressure on renters,” the associations said.
Supply pressure intensifies
The organisations said that policy changes affecting the availability of investment finance could have consequences well beyond existing-property investors, reducing the capacity to fund and deliver rental housing at a time when national supply remains constrained.
“The updated figures reinforce a straightforward point: Australia cannot resolve its housing shortage through policies that make it harder to finance, build, and supply rental homes,” the joint statement said.
“With the national 1.2 million-home target already under significant pressure, policy settings that are estimated to remove 10,700 new homes from the market move Australia further away from its housing objectives.”
Competing assessments
The associations said they remained concerned about the gap between the government’s stated expectations and the independent modelling’s projected impacts.
The government has said its housing measures would help create about 75,000 additional owner-occupiers over the next decade while increasing rents by less than $2 a week for households paying the current median rent.
It has also forecast house-price growth would be about 2 per cent lower over several years than otherwise expected.
When combined with other supply policies, the government has said the package would support 30,000 additional homes over a decade.
However, the industry groups maintained that housing policy should be centred on lifting building capacity and preserving the investment needed to sustain rental supply.
“Housing policy must place supply first. This means accelerating planning and approvals, delivering enabling infrastructure, supporting construction capacity and skills, and maintaining the investment needed to provide homes for Australia’s growing population,” the associations said.
[Related: Housing downturn set to worsen as approvals collapse]
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