PM says Australia must play long game on housing supply as new modelling shows Labor falling short of goal

Anthony Albanese has conceded Australia must play the long game on housing supply issues as Budget changes to limit negative gearing and a 50 per cent capital gains tax discount strictly to new builds will not solve the problem overnight.

The Prime Minister’s admission comes as new analysis by Master Builders has revealed Labor will fall 262,000 properties short of its goal to build 1.2 million new homes by the end of the decade.

Speaking in Northern Tasmania on Thursday, Mr Albanese insisted that people could still capitalise on the tax settings but only if they added to supply in Australia.

“If someone wants to invest in an investment property and still use negative gearing and still use a 50 per cent capital gains tax discount, then of course they can,” Mr Albanese said.

“But it’s got to be a new build.

“And why are we doing that? Because that will help to build supply.

“Now, that doesn’t happen within a month or two months or three months of the new financial year, but that will happen over a period of time.

“And that will lead to an increase in supply, and we know that supply is absolutely critical.”

The Master Builders modelling showed in Queensland more than 200,000 new home builds would start across the next five years but it was still about 42,000 short of its national housing accord target.

In WA, forecasts showed the State was expected to fall 11,335 homes short of its target.

Master Builders WA boss Matt Moran labelled it a “wake-up call” if workplace shortages, regulatory red tape, and improving investment settings weren’t improved.

He also used it to call for the Federal Government to reverse the recent tax changes affecting construction businesses and housing investment.

“Our industry’s capacity to deliver more homes remains constrained,” Mr Moran said.

“We don’t have enough workers, productivity has retreated to levels last seen in the 1990s, and the cost of delivering new housing continues to rise.

“Builders continue to face rising costs, workforce shortages, constraints on development-ready land, pressure on the supply of key building materials, and an increasing regulatory and tax burden.

“We need more workers, more development-ready land, more building materials and less red tape if we are going to deliver the homes our community needs.”

The National Housing Accord’s goal of 1.2 million homes by mid-2029 was set after National Cabinet agreement in August 2023 as part of the government’s broader housing agenda.

Mr Albanese and Housing Minister Clare O’Neil also announced on Thursday that Labor’s five per cent deposit scheme has helped 102,000 first home buyers since it was expanded in October last year.

The scheme has, however, been controversial with the Coalition warning it has become a negative equity trap for young people.

The strongest growth in the scheme’s uptake was concentrated in the largest states, with Victoria recording almost 33,500 users, NSW with more than 28,000 and Queensland with more than 20,000, while WA was fourth nationally with 11,207.

The PM insisted people should view homes as an investment in “security” and “certainty” when asked on Thursday what he would say to people in negative equity.

“What I say is that there are less people in negative equity now, from the latest figures, than there were under the former government. So the truth is that people are investing,” Mr Albanese said.

“When you invest in your home. It’s an investment in (the) long term.

“It’s an investment in the security that comes from a roof over your head.

“And having the security of a roof over your head enables you to plan with certainty, to have a family, to invest in education.

“You get better health outcomes.

“You get better outcomes across the board when people have the security of a roof over their head.”