Changing tax rules for investors won’t shrink housing supply or raise rents. Just look at Victoria

The Albanese government is preparing to unveil a budget that will recast housing as shelter – rather than a financial tool – in changes that have already sparked heated warnings that rents will rocket and housing supply will be curtailed. Those warnings are best ignored. It is now clear that Labor will usher in changes to negative gearing and capital gains tax designed to make property less attractive to new investors. The government will have ample protection for existing property investors, known as grandfather provisions, which will give it some protection from a political backlash as it transitions Australia away from an unfair system without burning it to the ground. To be clear, if the anticipated changed settings – a clampdown on negative gearing for future purchases and a less generous CGT discount – means a property is no longer attractive to prospective investors, that’s not a bad thing. Course correction Since 2020, investors have increased their share of new home loans from less than 30% to more than 40%, according to Australian Bureau of Statistics data, while owner-occupier levels have fallen. This is part of a long-term trend, given that the proportion of housing stock owned by investors has been rising for decades. …