Property Council to Senate: tax changes shrink home supply
The Property Council will today restate its strong opposition to proposed changes to capital gains tax and negative gearing at a Senate Economics Legislation Committee hearing in Canberra, warning tax hikes will disrupt new housing supply and sap market confidence.
Due to appear in Canberra today, Property Council Chief Executive Mike Zorbas said the organisation's submission applies a clear test to the proposed legislation.
"Australia's housing challenge is a supply challenge, and the test for these changes is simple - do they deliver more homes or do they shrink supply?"
"On the evidence available, these proposed changes deliver fewer homes at a time where Australia desperately needs more."
"Established and new housing are directly connected. Projects are financed against confidence in future market conditions and expected exit value. If those price outcomes weaken, project feasibility is diminished before construction starts."
He said the impact is magnified in a system already under pressure. Independent modelling commissioned by the Property Council, Master Builders Australia, Housing Industry Association and the Real Estate Institute of Australia shows the combined package will reduce dwelling starts by almost 9,000 homes over four years.
"Housing is already highly taxed, with up to 40 cents in every new home dollar blown away by taxes and charges."
"Beyond that, the property industry is dealing with elevated construction costs, financing constraints, infrastructure bottlenecks and slow post-approval processes. That all but guarantees fewer homes, fewer jobs, and more pressure on affordability."
Mr Zorbas said broader Budget tax changes make for a perfect housing storm.
"Proposed changes to discretionary trusts and retrospective measures affecting foreign investment are going to hurt investment and jobs. Many small and medium developers, family businesses and private capital rely on these structures to finance projects. With this level of uncertainty, capital will step back and everyone loses."
Mr Zorbas said if the legislation proceeds, protecting pro-supply carve outs will be critical.
"Grandfathering and new supply carve-outs go directly to confidence, feasibility and whether projects proceed. They are currently the only difference between a bad outcome and a diabolical one."
