ACOSS is calling on all parties and candidates to support reforms to negative gearing and the 50% capital gains discount and invest the revenue raised in social and affordable housing after releasing analysis showing how the measures have supercharged inequality and contributed to the housing affordability crisis.
The ACOSS report, Homes for living, not wealth creation, includes analysis showing that the wealthiest 10% of households hold two thirds of the value of investment property.
The ACOSS report also finds that competition for homes from investors increased dramatically following the introduction of the 50% capital gains tax discount in 1999. Investors led two surges in home prices - by 13% a year above inflation from 2001 to 2003 and by 6% a year from 2013 to 2017.
Since 1999, home prices have increased by 142%, while wages have only risen by 44%.
Contrary to the idea that encouraging investment is needed to generate new supply, 81% of investment loans are for existing properties.
"Australia's absurdly generous tax breaks are supercharging the housing crisis and rising inequality in our society," said ACOSS CEO Dr Cassandra Goldie.
"As long as our tax system encourages speculative investment in housing, the housing affordability crisis won't be solved just by building more homes."
"Independent modelling indicates that halving the capital gains tax discount and curbing negative gearing would reduce home prices by up to 4%, similar to the impact of the government's target to build an additional 1.2 million homes over five years.
"Politicians claim that "mum and dad" investors are the ones benefiting from these concessions - but our analysis shows that the wealthiest 10% own two thirds of investment property.
"These tax breaks disproportionately benefit the well-off in our society while millions struggle to pay the rent, let alone save a deposit to buy their first home.
"These unfair tax breaks fuel speculation by investors in housing stock and distort investment decisions, yet do little to increase the supply of rental properties, let alone affordable homes."
"These tax breaks for investment properties also come at a cost of at least $11 billion each year, which could be invested in social and affordable housing for people with low and modest incomes."
ACOSS is calling on the next government to:
Halve the Capital Gains Tax (CGT) discount from 50% to 25% over five years, reducing it by 5% per year.
Restrict negative gearing for new investments so that investment losses can only be offset against investment income rather than wages, and phase out negative gearing for existing investments over five years.
Also halve the CGT discount for super funds, prohibit self-managed superannuation funds (SMSFs) from borrowing to invest in property, and close loopholes in the taxation of super that allow people to avoid paying CGT after they retire.
Invest revenue from CGT and negative gearing reforms into building 47,000 new social and affordable homes per year to address the unmet need of 940,000 homes over 20 years
Key stats:
The top 10% of households by income receives over four fifths (82%) of the $16 billion CGT discount and nearly two fifths (39%) of all tax deductions for rental properties.
Since the capital gains discount was introduced in 1999 the median home price has doubled from 4 to 8 times the median income.
The proportion of income needed to meet mortgage payments has risen from 27% in 2001 to 49% in 2024 and renters now spend an average of 33% of their income on rent, up from 26% in 2006.
The time required for a median income household to save a 20% home deposit for a median value dwelling has increased from around 8 years in 2004 to nearly 11 years in 2024.
From 1991 to 2023, the annual number of social housing lettings for people with low incomes declined from 52,000 to 32,000, a reduction of more than 58% when we take account of population growth.
Revenue raised from reform of the tax breaks could raise $19 billion over four years, and (subject to development and construction constraints) fund the delivery of up to 49,000 additional social and affordable homes in future - soon approaching a doubling of the existing federal government commitment to build 55,000 such dwellings.
After several years, annual revenue raised could fund the federal government's contribution to addressing unmet social and affordable housing needs (around $9-14 billion per year on average, on top of existing funding), matched by States and Territories combined.
Read the ACOSS report at this link
