Tax changes will help 75,000 young people get a home: Chalmers

Treasurer Jim Chalmers will claim that a suite of tax changes covering negative gearing and capital gains tax will help 75,000 young Australians get into the property market.

The reforms to the contentious tax concessions, which critics argue have combined to put upward pressure on housing prices since the turn of the century, are part of a housing and tax package central to Tuesday night’s budget.

But the changes, particularly reforms to negative gearing, would be a clear broken promise from last year’s election campaign.

Before releasing the details of the tax changes this evening, Chalmers, Prime Minister Anthony Albanese and Finance Minister Katy Gallagher used social media to champion the reforms while outlining the battle young people now face to own a home.

The government is expected to restrict negative gearing, which is the ability to offset taxable income with the losses incurred on a rental property, to new buildings. The current 50 per cent concession on capital gains tax is expected to be returned to its pre-1999 form.

Justifying the changes, which Chalmers will say will deliver 75,000 more homes to young Australians, the government published data showing how people under 40 have been pushed out of the property market over the past four decades.

The median sale price has climbed from $44,250 in 1981 to $851,300 in 2025, a nineteenfold increase. Over the same period, average full-time earnings have increased sevenfold, from $14,200 to $105,600.

Since the Howard government introduced the CGT concession in 1999, house prices have increased by more than 400 per cent, almost twice the pace of average full-time earnings.

The price to income ratio for a home has lifted from 3.1 to 8.1, while the average time to save a deposit has climbed from 7.1 years in 2002 to 11.2 years in 2025.

This had all contributed to a sharp drop in home ownership rates among people under the age of 40. In 1981, about 53 per cent of those aged between 25 and 29 had a home. By 2021, this had fallen to 36 per cent.

Among 30- to 34-year-olds, ownership had fallen from 68 per cent to 50 per cent, while among 35- to 39-year-olds, it had plummeted from 74 to 59 per cent.

This morning, Albanese said the budget would be large on reform while tackling issues that had been “kicked down the road for too long”.

“The dream of home ownership is becoming so difficult for young Australians in particular, and they’ve raised it with me, but so do their parents and grandparents,” he told Nova Radio Adelaide.

“Now we will be addressing that tonight. We know the key to housing is supply, and that’s why reform is focused on that. But it’s also about giving people a fair crack – everyone, including young people.”

In his pre-budget press conference on his way into Parliament, Chalmers said the tax system was working against the interests of young people.

“The status quo in the tax system and in the housing market isn’t working. The tax system is out of whack,” he said.

“Too many people are locked out of housing, and we don’t have enough homes. And so the budget does have a very significant focus on housing and a very significant emphasis on young people in particular.”

The budget will also contain $2 billion that will be shared among local councils and utility operators to put in place the infrastructure necessary for the development of new housing. A quarter of that will go to regional areas.

HSBC Australia chief economist Paul Bloxham said the tax reforms would probably ease price pressures across the housing sector.

“If the policies are implemented as expected, then this would likely see modest downwards pressure on housing prices,” he said.

“In the long run, the combined policy changes are likely to shift the relative incentives towards occupying a dwelling rather than renting it. However, it does not directly address the key fundamental challenge for Australia’s housing market: constrained supply.”

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