Detailed new analysis by The Australia Institute reveals the "immediate positive impact" this year's property tax changes have had on those who'd previously been locked out of the housing market.
It concludes that changes to the capital gains tax discount and negative gearing have "finally cracked the nut of the housing crisis".
"For the first time in a quarter of a century an Australian government has introduced property tax reform that has actually worked. The data shows that prices are falling and investors are building new homes rather than buying existing homes," said Greg Jericho, Chief Economist at The Australia Institute.
Key points from The Success of Changes to CGT and Negative Gearing report:
- Property prices have fallen around 5% since March.
- Investor loans for new builds have increased by more than 20% year-on-year.
- Investor loans for existing homes have fallen by 14% year-on-year.
Separate analysis, also published today, reveals that Labor's tax changes, including a shake-up of the Coalition's stage 3 tax cuts, have helped nine out of ten Australians.
That analysis shows that the biggest beneficiaries of the stage 3 changes and most recent tax cuts are those under the age of 25, who are, on average, more than $1000 per year better off.
"The original stage 3 tax cuts would have made older, richer Australians even richer and delivered very little for struggling families. The biggest beneficiaries of the revised and subsequent changes are those under the age of 25 and those aged between 25 and 34," said Matt Grudnoff, Senior Economist at The Australia Institute.
Key points from the Who Benefits from Labor's Tax Cuts report:
- 90% of Australians are, on average, $1340 better off under the revised stage 3 tax cuts.
- Labor's tax changes have overwhelmingly helped younger people on lower incomes.
- The changes have saved those earning under $150,000 a year $25 billion since their introduction and will deliver $15 billion in savings next financial year.
"Inflation driven by Donald Trump's war in Iran and huge corporate profits are making life tough, but property tax changes have at least delivered hope for younger Australians who were otherwise facing a lifetime in the rental market," Greg Jericho said.
"You can't undo the damage caused by 25 years of awful policy overnight, but we are on track to see the biggest improvement in housing affordability in 50 years."
"Income tax reform and a fresh round of tax cuts are helping Australians who have been hit hardest by the cost-of-living crisis: those on low and middle incomes," Matt Grudnoff said.
"The original stage 3 tax cuts were terrible policy which would have helped the richest Australians get even richer more quickly. Labor's changes provide something of a fair go to the vast majority of taxpayers, preventing many from sliding into poverty."
