Mike Zorbas, chief executive of the Property Council of Australia, said the government's plan to curb negative gearing in the 2026 federal budget is problematic [1].
The dispute highlights a fundamental disagreement over whether tax reform or increased construction is the primary solution to Australia's persistent housing crisis.
Speaking on Sky News Australia, Zorbas said that "new supply" is the most vulnerable part of the housing market [1]. He said that the Albanese government's focus on changing the tax regime ignores the scale of the structural deficit in available homes.
Zorbas said that Australia is lagging behind other advanced economies by 100 homes per 1,000 homes [1]. He said this gap is a failure to keep pace with global peers over a significant timeframe.
According to Zorbas, the current housing shortage has built up over a 30-year period [1]. He said the country has "lost that race" and noted that the issue cannot be fixed in four or five years.
Zorbas said the shortage will not be resolved by altering the negative-gearing tax regime [1]. He said that the government's approach fails to address the core need for more physical dwellings to stabilize the market.
Property developers and industry leaders have frequently argued that tax incentives are necessary to encourage the high-cost investment required for new residential projects. By curtailing these incentives in the 2026 budget [1], the government intends to shift demand and potentially lower prices, but critics like Zorbas say this may inadvertently stifle new construction.
“"new supply" is most vulnerable in the housing market”
The clash between the Property Council and the Albanese government underscores a tension between demand-side management and supply-side necessity. While the government views negative gearing as a driver of price inflation, industry leaders argue that removing such incentives during a chronic shortage could further discourage the development of new homes, potentially worsening the long-term availability gap.
