This briefing note outlines how tax breaks for property investors in Australia are contributing to worsening housing affordability. It finds that property investors who make use of these tax breaks add very little to new housing supply. 

The notes proposes that the Federal Government recalibrate its housing policies to prioritise people on low incomes. It must set national social housing targets to end housing stress and substantially boost investment in social housing to meet them. And it should curb the 50% CGT discount and negative gearing and invest the savings in essential supports such as social housing.

Key findings

• 1 in 8 property investments build new homes – but none are affordable to rent or buy at market rates for people on low incomes.
• Tax breaks help wealthy property investors get further ahead – for every renter buying their first home, property investors buy two.
• Governments spend more on one property investor in capital gains tax discounts than they spend on two social housing tenants.
• Property investors are outcompeting renters or people seeking to buy their first home.

Recommendations for Federal Government

• Set and invest to meet national social housing targets to increase social housing to at least 6% of homes over a decade and 10% of homes over two decades.
• Curb the 50% CGT discount by halving it to 25% over five years. End negative gearing for new investments, and over five years for existing investments.