Labor’s housing reforms to slash 10,700 homes and cost thousands of jobs

Labor’s housing crackdown is being blamed for making Australia’s housing crisis worse, with explosive new modelling warning the reforms will wipe 10,700 homes from the pipeline, push rents higher and cost thousands of jobs.

And in another red flag for renters, fresh investor data suggests landlords are already heading for the exits.

The Federal Government’s flagship housing package has come under fierce attack after updated independent modelling found the changes could deepen the national housing shortage instead of easing it.

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The analysis, commissioned by Master Builders Australia, the Housing Industry Association, the Property Council of Australia and the Real Estate Institute of Australia, found the combined impact of the Budget housing measures would reduce new dwelling starts by 10,700 between 2026-27 and 2029-30.

It also forecasts rents will rise by about $10 a week, cumulative GDP will be cut by about $1.05bn, and more than 4700 construction jobs will be lost.

Labor’s high-stakes housing overhaul is under fire after new modelling forecast a sharp hit to housing supply, rental affordability and construction jobs. Picture: Stewart McLean

The grim figures come from updated modelling by Qaive and Tulipwood Economics, and are even worse than the industry’s original post-Budget warning, which had already found the package would hit housing construction, economic activity and renters.

The package includes Labor’s changes to negative gearing and capital gains tax concessions, along with the government’s $2bn Housing Support Program.

The revised modelling also includes the extra measure agreed to by Labor and the Greens to get the broader package through parliament, which bans self-managed super funds from using limited recourse borrowing arrangements to buy ordinary residential investment property.

“The updated figures reinforce a straightforward point: Australia cannot resolve its housing shortage through policies that make it harder to finance, build, and supply rental homes,” a joint statement by the industry bodies reads.

Source: Qaive and Tulipwood estimates

“With the national 1.2 million-home target already under significant pressure, policy settings that are estimated to remove 10,700 new homes from the market move Australia further away from its housing objectives.

“Housing policy must place supply first. This means accelerating planning and approvals, delivering enabling infrastructure, supporting construction capacity and skills, and maintaining the investment needed to provide homes for Australia’s growing population.”

The housing industry also remains concerned about the difference between the Government’s stated expectations and the findings of the independent modelling.

Labor has said its housing measures will create about 75,000 additional owner-occupiers over the next decade, lift rents by less than $2 a week for households paying the median rent, reduce house price growth by about 2 per cent over several years, and deliver up to 30,000 extra homes over the decade when combined with other supply initiatives.

Source: Qaive and Tulipwood estimates

But the property and construction sectors say their independent modelling paints a far darker picture.

Adding to the alarm, the Property Investment Professionals of Australia on Friday released its Annual Investor Sentiment Survey 2026, one of the first major industry surveys since Labor’s negative gearing and CGT discount changes became law.

Its message was blunt: investors who warned they would walk away are now doing exactly that.

“Last year, investors told us they would walk away if these reforms became law,” PIPA Chair Cate Bakos said.

“This year’s survey is the first national read by PIPA since the changes were legislated, and it shows a lot of them are doing exactly that.”

Updated independent analysis commissioned by Master Builders Australia, the Housing Industry Association, the Property Council of Australia and the Real Estate Institute of Australia estimates the combined housing measures will cut new dwelling starts by 10,700 between 2026-27 and 2029-30.

The survey found 18.3 per cent of participants sold at least one property in the year to August, marking the third straight annual rise.

More than half of those sellers, 51.6 per cent, sold to an owner-occupier, taking those properties out of the rental pool.

Another 9.7 per cent of investors said they had already withdrawn a property from the long-term rental market, while 82 per cent expected rental supply in their area to fall.

In another sign of market stress, only 7.6 per cent said now was a good time to sell, down from 36 per cent a year ago, suggesting many are cashing out because the numbers no longer stack up.

The survey also points to a buyer retreat.

Just 14.7 per cent said their buying plans were unaffected, one in five said they would not buy again unless the changes were repealed, and only 27.8 per cent planned to buy another property at all, down from 41 per cent last year.