Tax reform unlikely to address the Australian housing crisis

Tax reform unlikely to address the Australian housing crisis

An RMIT expert weighs in on the federal government’s tax cuts, which will come into effect for all Australians from July.

“The new income tax brackets that are due to take effect in the coming financial year will do little to address housing affordability. 

“These initiatives work against the objectives of the Reserve Bank of Australia which has been fighting to contain inflation with the only tool available to them - interest rates.  

“In fact, they have the potential to be inflationary, which means the central bank will likely hold off on interest rate cuts until more inflation data becomes available.

“Even if households put any income tax savings towards a deposit, it is likely that property prices will be bid up. Households that aren’t saving for a deposit will have additional cash to spend, contributing to inflation.

“If tax reform is to be effective at addressing the housing crisis, it needs to consider the attractiveness of property as an investment in a less politically charged arena."

Dr Woon-Weng Wong is Senior Lecturer in the School of Property Construction and Project Management.

General media enquiries: RMIT External Affairs and Media, 0439 704 077 or news@rmit.edu.au

31 May 2024

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