Rents to jump 350 per cent under budget measures, modelling shows

Master Builders Australia, the Property Council of Australia and the Real Estate Institute of Australia have released new modeling from Qaive and Tulipwood showing the Budget’s housing measures will cause rents to rise by $9 per week – a 350 per cent increase on the Budget forecast – while the supply of new homes will fall by more than 8,700, GDP will fall by $864 million and the number of construction jobs will fall by more than 3,800.

The researchers approached the topic by modeling the impact of the $2 billion Housing Support Program on the national landscape, and also separately modeled the impact of the changes to negative gearing and capital gains tax outlined in the budget.

“The impact of the $2 billion Housing Support Program, while housing supply increased, did not outweigh the reduction caused by the tax changes resulting from negative gearing and the CGT rebate,” the study said.

“The main driver of the impact was the changes in negative gearing, rather than the changes in the CGT discount.”

The Treasury budget estimated that rents would rise by around $2 per week, while housing supply would increase by 30,000 over the next decade.

“The National Housing Agreement target of 1.2 million new homes by the end of 2029 is supported by builders, government and the community,” the real estate organizations said in a joint statement.

“Fiscal institutions are not aligned with the policies that would make this objective a reality.”

The real estate sector has criticized the measures introduced in the budget. They say they will stunt growth and discourage investment, while penalizing first-home buyers and renters.

The negative gearing changes do not apply to properties already owned, nor to newly constructed properties acquired in the future.

“The main driver of the difference in new home construction forecasts is the expected impact of the $2 billion Local Infrastructure Fund over the next four years, with independent models predicting up to 5,300 new homes, compared to the Treasury’s 26,000 new homes,” the joint statement said.

“The modeling shows that federal government revenues will increase by $3.23 billion, which is comparable to the $3.42 billion increase in the national rent bill.

“At a rent of $600 per week, the increase in rents equates to $142 per year in 2026-27, rising to $477 per year in 2029-30.”

The three associations urge parliament to adjust the policy package to “better support the housing supply and make the objective of the Housing Agreement achievable”.