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Australia: Australia’s housing crisis is in focus after new federal budget reforms and fresh reporting on the impact of short-term rentals across Sydney and regional Western Australia.
The federal government has announced changes to negative gearing and capital gains tax aimed at improving housing affordability and encouraging investment in new housing supply.
From July 2027, negative gearing will only apply to newly built homes, while existing investment properties will keep current tax settings.
Economists at Commonwealth Bank of Australia said the changes are expected to reduce investor demand for established housing and slow house price growth.
The reforms come as pressure grows over the role of short-term rentals in Australia’s housing market. Recent reporting highlighted housing shortages in regional Western Australia, where locals say long-term rentals are becoming harder to find in tourism-driven towns.
In Sydney, concerns have also been raised over growing Airbnb activity in Millers Point and the loss of long-term housing in inner-city neighbourhoods. CBA senior economist Trent Saunders said the housing reforms are expected to lower house prices by around three per cent compared with previous forecasts, while having only a limited impact on rents.
The bank also expects dwelling price growth to slow to three per cent by the end of 2026. Housing advocates continue to call for tighter regulation of short-term rental platforms, arguing that tax reforms alone will not address ongoing supply shortages in major cities and regional tourism markets.
Highlights
- Australia will restrict negative gearing to new-build homes from July 2027
- CBA forecasts house prices will be about three per cent lower than expected under the reforms
- Regional WA towns are facing long-term rental shortages linked to holiday accommodation growth
- Sydney’s Millers Point has seen rising Airbnb activity amid affordability concerns
- Debate continues over the impact of short-term rentals on housing supply
