Clare O’Neil backs Labor housing tax overhaul as concerns grow over house prices and rents

Housing Minister Clare O’Neil was forced to defend Labor’s sweeping housing tax reforms against criticism they could destabilise the property market, insisting the changes are aimed at improving affordability and helping more Australians buy homes.

Appearing on ABC’s Insiders on Sunday, Ms O’Neil pushed back on concerns the government’s changes to negative gearing and capital gains tax were already unsettling buyers and investors.

The reforms, announced in the federal budget, have sparked fierce debate across the property sector, with business and real estate groups warning they could reduce investment, worsen rental shortages and place downward pressure on house prices.

Asked about forecasts property values could fall by as much as 10 per cent amid global volatility and interest rate pressures, Ms O’Neil declined to speculate on where prices may head but rejected suggestions Labor’s reforms were the primary driver.

“Look, I think there’s a bunch of economic models out there that are in the news, and I’ll let the modellers speak for themselves,” she said.

“What I can tell you is that the tax changes we’re making in the budget are not the main driver of that. What house prices in our country move the biggest driver of them is what goes on with interest rates.”

Labor has argued the changes are designed to reduce investor advantages in the housing market and improve access for first-home buyers.

Ms O’Neil pointed to Treasury modelling showing only a modest impact on prices.

“Treasury has modelled the impact of our tax changes on house prices,” she said.

“There is a mild affordability impact, for that, we get 75,000 rental households into their own home, and a fairer market for housing in this country forever.”

The minister also defended the government’s first-home buyer support schemes after concerns were raised that falling prices could leave buyers who entered the market through the government-backed five per cent deposit scheme exposed to negative equity.

“Our government is incredibly proud of this program,” she said.

“We’ve now got $260,000 Australians into their own home, with the support and backing of an Albanese government that saw their aspiration and helped them realise it.”

Ms O’Neil said defaults linked to the scheme remained “vanishingly small”.

On rents, she rejected claims winding back negative gearing would worsen conditions for tenants, arguing increased housing supply would ultimately ease pressure on the rental market.

“The overall effect of the budget is actually to put downward pressure on rents,” she said.

“So, what’s gonna put the downward pressure on rent? Additional supply.”

The Housing Minister backed Labor’s decision to grandfather negative gearing arrangements for existing investors, despite criticism from housing advocates and the Greens who want the government to go further.

“Negative gearing is a very immediate impact on a household and family budget,” she said.

“It’s not something that governments, when they’re making tax changes, should do to interrupt people’s immediate arrangements.”

Ms O’Neil also rejected Coalition claims migration was the dominant cause of Australia’s housing challenges.

“Migration’s a piece of the puzzle here,” she said.

“It’s not the only or dominant thing that’s driving our housing issues as a country.”

She acknowledged consultation around the government’s capital gains tax changes would need to continue, while signalling the government wanted certainty around the reforms sooner rather than later.

“It’s important that this gets resolved speedily,” she said.

However, she stopped short of committing to a timeline for finalising the changes, saying the government would continue consulting with affected sectors before settling the final model.