Independent analysis contradicts Treasury forecasts, pointing to a fall in new home construction and broader economic costs
Independent modelling commissioned by three peak industry bodies has found that the Federal Budget will reduce new housing supply and increase rents over the next four years, outcomes that diverge from Treasury's projections.
The Property Council of Australia, Real Estate Institute of Australia, and Master Builders Australia engaged consultancies Qaive and Tulipwood to assess the full economic impact of the Budget. The modelling projects that, over the next four years, new housing supply will fall by more than 8,700 dwellings, rents will rise by up to $9 per week, GDP will contract by $864 million, and construction employment will decline by more than 3,800 jobs.
Treasury's own modelling is more optimistic, forecasting a rent increase of approximately $2 per week and a net addition of 30,000 homes over 10 years, equivalent to around 12,000 dwellings over the same four-year window.
The analysis attributes the divergence primarily to differing estimates of the $2 billion Local Infrastructure Fund. Qaive and Tulipwood project the fund will deliver up to 5,300 new homes over four years, compared with Treasury's estimate of 26,000. Both sets of modelling agree that the proposed negative gearing and capital gains tax changes will reduce housing supply.
The independent modelling also finds that Federal Government revenue will increase by $3.23 billion — a figure broadly comparable to the projected $3.42 billion rise in the national rent bill. On a $600-per-week rental, this translates to an additional $142 per year in 2026–27, rising to $477 per year by 2029–30.
Impact of negative gearing and CGT changes 
Source: Qaive and Tulipwood estimates
Master Builders Australia has called on Parliament to amend the Budget legislation, arguing the current settings are incompatible with the National Housing Accord target of 1.2 million new homes by the end of 2029.
"If we're serious about improving affordability, we need to turbocharge supply and remove the barriers to building," said Denita Wawn (pictured right), chief executive of Master Builders Australia. "Right now, those barriers are rising, not falling.
"On one hand, construction will be hit hard by the proposed tax hikes on private investment resulting in less housing supply and affordability. And on the other, the 98% of the industry who are small businesses will be negatively affected by the tax increases on capital gains and trusts.
"Genuine consultation must occur to ensure these serious impacts on small business are addressed. Should the tax hikes proceed, it ultimately means fewer homes and higher costs for renters and buyers. The Parliament must act and amend the legislation to incentivise housing investment. Without the tax increases and with stronger investment in supply boosting measures, the Budget could have delivered a significant increase in housing supply, but it fell short."
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