Let’s zoom in on what is undoubtedly of most interest to us: unwinding the two tax concessions on property investment that has enriched many for the past two decades – Negative Gearing and the Capital Gains Tax (CGT) discount on established homes.

In essence, negative gearing enabled us to arrive at continuous stream of annual tax losses on our investment properties (mostly, by maximising the investment finance) and to use those losses to reduce our tax liability on our other income (such as wages or self-employed income).

Oh, and if that wasn’t enough, if we held the property for longer than 12 months and we sold it at a profit, we only had to pay tax at our individual marginal tax rates only 50% of the profit (i.e. capital gain).

In 1999, when the 50% CGT discount was made law the national home ownership rate stood at 70% with a majority falling in 25–34 year-old age bracket. As a 1980s first-gen migrant, I still remember how much the Aussie dream of owning a 3-bedroom home with garden (and a Hills Hoist, remember that?) meant to my father and others of his generation.

Fast forward to 2026, while home ownership has held relatively steady at 67% that rate declines to below 50% amongst those aged below 34 years – the impact of lagging housing supply, eased credit conditions and investor tax concessions invariably caused demand to outpace supply and price growth to outpace household earning growth, all this despite a myriad of stimulatory policies to stoke home ownership such First Home Owners grant and the like.

In the 1980’s, we could save for a deposit and buy a home on a single income. How many can do that now?

The sociological impacts seem apparent – as we now buy our homes later in life (most likely on dual incomes), our familial household sizes are smaller, we’re starting families later, our national birth rate has steadily declined, and the number of us aged 65+ years has doubled over the past 20 years. Thank God for our migrants who we will need to continue to add to our workforce (…am I allowed to say that?)

I hold the view that over time the tax concessions of negative gearing and CGT discount – more than any other single tax measure – directly contributed to property investing households accumulating more wealth faster while paying lesser tax than non-investing households who paid more tax for lesser wealth slower at similar taxable income levels.

In other words, the tax system rewarded us more for investing in property than for being productively self-employed or earning a wage. Quick question: How many of us have had our tax agents tell us that we should buy an investment property (with maximum finance)?

Don’t get me wrong – many were on the gravy train cheering on the property investment juggernaut… Banks and other funders, governments at all levels, the real estate sector and many of us driven by the fear of missing out.

Still, my 40+ years in financial services hasn’t diluted my long-held views on the strength of harmonious society having a direct correlation to the strength of its working age middle class – a middle class where a high rate of home ownership is the primary anchor of community and belonging.

To me, a fix was long overdue to redress the tax imbalance on the demand side of the national housing market equation – and I applaud the start the budget makes in this regard.

But…

Where is the supply side fix?

If we felt bad that our national productivity growth lagged our international peers, we should collectively feel sickened that the productivity growth in as nationally significant a sector as residential construction (the family home is the single largest asset of most households and financing this represents about 40% of our big banks on-balance sheet assets) is consistently negative!

In other words, when it comes to building homes every year we spend more effort, time and money than the previous year to produce the same result – let that sink in.

Disappointingly, there appears to be a lack of unified/bi-partisan government-business vision to redress what is increasingly becoming a national embarrassment. Lack of innovation, regulation mismatched to risk nexuses, issues of scale, issues of skills and labour and other such, all of which represented by diverse vested interests that so far have failed to provide any other than less home built per capita than 20 years ago, at a poorer build quality (yes, I’m referring to you, Victoria) for more than twice times the average household income.

Failure to immediately redress the structural impediments in our national housing supply side to turn around productivity materially risks this budget’s attempt to redress generational housing ownership access.