Australia’s Land Value Has Gone Through the Roof. Where Does that Leave Young People Who Want to Buy a Home? | Greg Jericho

Why It Matters

The surge in land wealth deepens housing unaffordability for younger Australians and forces a policy crossroads that could alter the investment‑driven property market.

Key Takeaways

• Land now accounts for 42% of household assets
• Land values rose 832% versus deposits 719%
• CGT discount fuels investment over homeownership
• Young buyers face affordability crisis amid rate hikes
• Policy change expected in May budget

Pulse Analysis

Australia’s property market is being reshaped by an unprecedented rise in land values. According to the latest ABS data, land contributed roughly $567 billion USD to household wealth in 2025, lifting its share to 42% of total assets. This growth dwarfs other asset classes; land has appreciated 832% over the past quarter‑century, compared with a 719% rise in bank deposits, and now commands three times the value of residential dwellings—a dramatic shift from the 1.3‑times ratio seen in the 1980s.

The consequences for renters and first‑time buyers are stark. With landlords’ wealth tied up in land, there is little incentive to upgrade rental stock, while soaring land prices push entry‑level homes beyond the reach of many young Australians. Compounding the issue, the 50% capital‑gains‑tax (CGT) discount, introduced in 1999, continues to reward property flipping and investment purchases, leaving owner‑occupiers without comparable tax relief. Recent interest‑rate hikes—partly driven by global oil price shocks—have further eroded borrowing capacity, prompting analysts to predict a slowdown in buyer activity.

Policy makers now face a critical decision point. The looming May budget is expected to address the CGT discount, with opposition parties and independents urging a reduction to level the playing field for first‑time buyers. If the discount is trimmed, it could dampen speculative demand, potentially easing price pressure and improving affordability. However, any change must balance revenue needs against the risk of destabilising an asset class that accounts for nearly half of household wealth, making the upcoming debate a pivotal moment for Australia’s housing future.