Tax reforms boost housing affordability, investors shift to new builds

According to the Australia Institute, the recent tax adjustments targeting investor incentives represent the most significant improvement in housing affordability in five decades. Since the budget, national house prices have declined by 5.2%, a trend already underway due to higher interest rates and living costs. Investor borrowing for established properties dropped 14% in the June quarter, while loans for new-build projects increased 4.4%, suggesting a real change in investor strategy.

Auction clearance rates have stayed under 50% for two weeks, and the number of auctions is down 31% year-on-year, reflecting cool owner-occupier demand. Rental price growth eased to 0.5% in the September quarter, supporting the view that reduced investor activity lowers rental pressure. Economists argue the reforms will prevent house-price growth from outpacing income, gradually enhancing affordability even after the market stabilises.