House prices spiral out of control as the government does nothing

With interest rates close to zero and no end to investor tax breaks in sight, Australia has recorded record inflows of capital into the housing market. House prices are likely to continue to increase by 20 per cent year-on-year for the foreseeable future.  

Removing housing tax breaks alone is unlikely to slow house prices while interest rates are so low. When interest rates do rise many recent home buyers are likely to find themselves in significant financial stress. 

Macro-prudential controls such as loan caps based on the recent taxable income of the buyers offers a pathway back to affordable housing prices.

With all bidders limited to borrowing a fixed percentage of their recent taxable income to buy a home, house prices should be able to be managed down to affordable levels. Different borrowing limits on investors, movers and first home buyers would bias outcomes in favour of first home buyers. 

We also propose reforming negative gearing and capital gains tax exemptions, along with building thousands of new homes for both public housing and sale to first home buyers.

See also our Housing Platform


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