Prime Minister Anthony Albanese said the Australian government will not cap negative gearing to a single property to support new-build housing supply [1, 2].
The decision maintains a key tax incentive for investors, which the government believes is necessary to increase the total number of homes available in a tightening market. This move addresses the tension between curbing investor dominance and the urgent need for construction.
Speaking on Sky News Australia, Albanese said the administration is prioritizing new constructions to drive the overall supply of homes [1]. He said that the government is focused on using available levers to assist those currently locked out of the market.
"We very consciously have a policy of new builds because that’s what drives supply," Albanese said [1].
The Prime Minister linked the policy approach to the struggles of first-time buyers. He said that another year of younger Australians missing out at auctions requires the government to use every lever to make the system fairer [2].
While the government has declined to limit the number of properties an investor can claim, some changes to the system are expected. Reports indicate that negative gearing changes will apply only to properties purchased after budget night, starting in July 2024 [3].
This approach seeks to balance the immediate need for new housing stock with the long-term goal of increasing accessibility for young buyers. By exempting existing portfolios and focusing on new builds, the government aims to incentivize the creation of new assets, rather than the churning of existing ones [1, 3].
“"We very consciously have a policy of new builds because that’s what drives supply."”
The decision to avoid a hard cap on negative gearing suggests the government is prioritizing immediate construction volume over the redistribution of existing housing stock. By targeting only future purchases and incentivizing new builds, the administration is attempting to stimulate the construction industry to lower prices through increased supply, rather than risking a market shock that could occur if existing investors were forced to liquidate assets.
