The Issue that government needs to solve is housing supply and innovation in Australia

The proposed changes to negative gearing and capital gains tax appear less about solving the core housing supply crisis — and more about increasing government revenue. (Treasurer, Jim Chalmers  expects the changes to raise around $40 billion over a decade. )

If the real issue is housing affordability, then the key question is:

Will this policy materially increase housing supply?

Removing negative gearing on established properties may reduce investor demand at the margins, but unless there is a major increase in new housing construction, planning reform, infrastructure, and productivity in the building sector, affordability pressures will continue to exist.

The policy allows for negative gearing on existing homes and investments , and reducing incentives for those entering the market , which will further reduce supply as it is not in anyone’s interest to sell their existing properties .

This will cause 

• rental supply could tighten

• rents could rise further

Is  the government trying to solve a housing tax problem… or a housing supply problem?

Interested in other views.

this is the Afr article