Australia’s peak property and construction groups have intensified their criticism of the Federal Government’s housing reforms, releasing updated economic modelling that estimates the package could result in 10,700 fewer new homes over the next four years.
Master Builders Australia, the Housing Industry Association, the Property Council of Australia and the Real Estate Institute of Australia released the findings in a joint statement, arguing the measures risk working against the Government’s ambition to lift housing supply.
The updated analysis, undertaken by Qaive and Tulipwood Economics, examines the combined effect of changes to negative gearing and capital gains tax concession arrangements, the $2 billion Housing Support Program and an additional measure preventing self-managed super funds from using limited recourse borrowing arrangements to purchase ordinary residential investment property.
That SMSF measure was incorporated into the modelling after being added to the broader package during negotiations between Labor and the Greens.
According to the modelling, the combined measures are estimated to reduce new dwelling starts by approximately 10,700 over the four years to 2029–30, reduce cumulative GDP by about $1.05 billion and reduce construction employment by approximately 4,740 FTE-years.
The modelling also estimates rental prices would be approximately 1.69 per cent higher by 2029–30 than under the no-policy-change baseline.
The industry groups characterised that effect in their joint statement as an increase of approximately $10 a week in rents.
The modelling shows the impact on new construction increasing over time. New dwelling starts are estimated to be 1,424 lower than the baseline in 2026–27, widening to 2,351 in 2027–28, 3,067 in 2028–29 and 3,851 in 2029–30.
The groups said the updated findings represented a further deterioration from modelling released immediately after the Budget and argued Australia could not address its housing shortage through policies that made rental housing more difficult to finance, build and supply.
“Australia cannot resolve its housing shortage through policies that make it harder to finance, build, and supply rental homes.”
They warned that with the national target of 1.2 million homes already under pressure, removing an estimated 10,700 dwellings from future construction would push Australia further away from its housing objectives.
“Housing policy must place supply first,” the organisations said, calling for faster planning and approvals, enabling infrastructure, greater construction capacity and skills, and continued investment in housing for a growing population.
SMSF change adds further pressure
The supplementary modelling provides a clearer picture of the impact attributed specifically to the SMSF borrowing restriction.
Qaive and Tulipwood Economics estimate the SMSF amendment alone would reduce housing supply by nearly 2,000 dwellings between 2026–27 and 2029–30, increase average weekly rents by approximately $1.15, reduce GDP by $182 million and reduce construction employment by 886 FTE-years over the period.
The economists based their analysis on data including ATO SMSF statistics, APRA superannuation figures, ABS Lending Indicators and ABS Building Activity, before applying the estimated shocks through their economic and housing modelling.
Of the estimated 10,700 reduction in dwelling starts under the combined package, around 1,950 are attributed to the SMSF amendment.
The modelling also estimates construction output would be $219 million below the no-policy-change baseline in 2026–27, with the difference widening to $485 million in 2029–30. Construction employment is estimated to be 725 FTE lower in the first year and 1,569 FTE lower in 2029–30.
The industry groups said there remained a significant gap between the modelling they commissioned and the Government’s expectations for the reforms.
According to their joint statement, the Government has said its housing measures are expected to produce around 75,000 additional owner-occupiers over the next decade, lift rent by less than $2 a week for a household paying the current median rent and leave house-price growth around 2 per cent lower over several years than it otherwise would have been.
The Government has also claimed its measures, when combined with other supply initiatives, could result in up to 30,000 additional homes over the decade.
Master Builders Australia, HIA, the Property Council and REIA said they would continue to monitor market data and assess the reforms against those expectations as their effects flow through the housing market.