Lifting taxes won’t get more homes built, warns Housing Industry Association
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Photo by Expect Best
The Housing Industry Association (HIA) is set to present a compelling argument to the Select Committee on the Operation of the Capital Gains Tax Discount, emphasising the detrimental impact of increased taxation on residential property. The association’s message is clear: imposing higher taxes will not result in more homes being built.
Jocelyn Martin, Managing Director of the HIA, underscored the heavy tax burden already shouldered by the housing sector. “Housing is already one of the most highly taxed sectors in the Australian economy,” she stated. According to Martin, independent research indicates that nearly half the cost of new house and land packages in capital cities consists of taxes, fees, and charges, with apartments facing a similar situation.
“This is already reducing the ability of the market to deliver new homes, because more and more the feasibility does not stack up for projects of all sizes, even when approvals are secured,” Martin explained. She warned that altering Capital Gains Tax (CGT) arrangements would effectively act as a new tax on a market already under strain.
Martin highlighted the critical role investors play in the housing market, noting that last year, two in every five homes were financed by investors to bolster the rental supply. “If we increase the tax on investors, there is little doubt that they will seek opportunities elsewhere, or if they remain in the housing market, there will be upward pressure on rents to compensate,” she cautioned.
The construction industry is currently operating below capacity, with the first year of the Federal Government’s commitment to build 1.2 million homes falling short by approximately 60,000 homes. “Therefore, every investor that leaves the market represents one less rental property, not an additional family into their own home,” Martin asserted.
She argued that the solution to Australia’s housing crisis lies in building new homes to meet the demand from both owner-occupiers and renters. “It is a quite simple equation based on the fact that we have more households seeking accommodation than we do homes,” Martin said.
The HIA has emphasised that housing supply is now a macroeconomic problem. Martin pointed out that increasing the housing supply is essential to easing inflation, improving productivity, and restoring affordability. “We must remove the barriers preventing new homes from being built,” she urged.
In its recent 2026–27 Federal Pre-Budget Submission, the HIA outlined a comprehensive suite of supply-side reforms. These reforms span taxation, finance, infrastructure, planning, skills, and regulation, all aimed at supporting the delivery of the government’s housing targets.
“The focus of government must be on reducing barriers to increasing supply of housing, rather than going back to the well yet again to try and squeeze more revenue out of housing,” Martin concluded.
As the HIA prepares to present its case, the debate over CGT and its impact on the housing market continues to intensify. The association’s stance highlights the complex interplay between taxation and housing supply, urging policymakers to consider the broader implications of tax changes on an already burdened sector.