Labor Must Stop Juicing House Prices and Make Buying a Home the Australian Dream – Not Negatively Gearing One | Greg Jericho

Why It Matters

Rising house prices erode affordability and widen wealth gaps, pressuring the Labor government to rethink tax‑favoured investment incentives.

Key Takeaways

• Q4 2025 dwelling prices rose 2.7% nationally.
• WA saw 7.5% price jump, exceeding $1m median.
• 5% deposit guarantee lifted prices 12% in Perth.
• CGT discount lets investors pay less tax than workers.
• Reform needed to restore home‑ownership as Australian dream.

Pulse Analysis

The Australian housing market has entered a new phase of price acceleration, driven largely by policy measures that boost demand. Nationally, dwelling values rose 2.7% in the December quarter, the strongest quarterly gain since 2021, while Western Australia recorded a 7.5% surge, pushing its median home price above the $1 million threshold. First‑home‑buyer schemes, particularly the 5% deposit guarantee, have unintentionally amplified these trends, with price spikes of up to 12% in Perth and similar lifts in Brisbane and Adelaide. This pattern underscores how government‑backed incentives can translate into higher market valuations, squeezing out lower‑income buyers.

At the heart of the debate is the capital gains tax (CGT) discount, which currently allows property investors to pay a 50% tax rate on capital gains. This creates a paradox where a high‑earning executive paying 22.5% on a $400,000 profit faces a lower effective tax burden than a minimum‑wage worker taxed at 30% on an extra shift. Proposals to trim the discount to 33% or even 25% aim to level the playing field, but critics warn that half‑measures may leave the incentive structure largely intact. Negative gearing, another tax concession, further entrenches investment‑driven demand, diverting capital away from productive sectors and inflating residential prices.

Politically, the Labor government faces a dilemma: maintain popular first‑home‑buyer assistance or confront entrenched property‑investment lobbies. Treasurer Jim Chalmers has hinted at reform, yet Prime Minister Anthony Albanese appears cautious about unsettling the status quo. A decisive overhaul of the CGT discount and negative gearing could curb speculative buying, improve affordability, and restore the notion of home ownership as the Australian dream. However, incremental changes risk being ineffective and may even delay more comprehensive reforms, leaving the housing market vulnerable to continued price pressure.