Australia’s housing mess is mainly driven by tax‑fuelled speculative buying. Since tax changes in 1999, unlimited negative gearing and the 50% capital gains tax discount have turned property into a heavily tax‑subsidised investment for landlords. Those two concessions cost the budget around $11–20 billion a year, mostly to higher‑income investors.

More than 90% of negatively geared purchases are for existing homes. They don’t add new places, they just bid up the price of what’s already there. That’s pushed the house price‑to‑income ratio from about four times median earnings to eight or nine, and has been a major factor in driving home ownership for under‑35s down from about 61% in 1981 to roughly 36% now.

This isn’t just population pressure. During the 2020–2022 COVID border closures, when net migration was near zero or negative, house prices still jumped by around 30% nationally. This shows how much of the market is being driven by tax‑fuelled speculation rather than just extra demand from new arrivals.

Supply often gets blamed, but it hasn’t been the main constraint over the long run. From 2001 to 2021, the number of dwellings grew by about 39%, while the population grew 34%. On paper that implies a surplus of around a million homes.

None of this will be fixed while tax policy actively rewards speculation. Winding back negative gearing and the capital gains discount has to come first. Once that’s fixed, we can focus on bringing empty homes into use, reforming planning so more homes can be built where people need them, public transport, etc.

People love blaming boomers for hoarding houses and migrants for adding demand, but the real problem is the policy makers.