Treasury warns tax reforms will slow housing growth

• Treasury officials warned that planned negative gearing reforms will modestly slow house price growth soon after implementation.
• Modest rental cost increases of 0.2% are projected as investor yields decline and housing demand shifts.
• Regulatory reforms and land-use updates are expected to offset supply constraints while improving home affordability.

The Treasury released advice warning that federal tax reforms would cause a modest, immediate slowing in Australian house price growth.

The disclosure follows a freedom of information request that released heavily redacted documents given to Treasurer Jim Chalmers.

"Advice given to Jim Chalmers said the government's planned housing tax policies would reduce returns for investors and put downward pressure on prices," stated the Treasury report.

Officials stated that higher costs for property investors would likely increase rental prices by 0.2% shortly after the negative gearing policy takes effect.

The department stated that the policy changes are expected to improve home ownership metrics over time as overall housing affordability improves.

The economic agency continues to face public scrutiny over its failure to predict the broader slump in residential property prices.

Market economists currently project that the overall downturn in national house prices could reach as much as 10%.