Volatility isn’t a reason to panic about housing policy

Housing markets have their ups and downs — that's nothing new. But instead of reacting emotionally, we need to look at the bigger picture and make informed, long-term decisions.

Australia's housing issues aren't just about interest rates or inflation. They're tied to deeper problems like not building enough homes, complex planning rules, and unpredictable policy shifts.

Negative gearing often gets blamed, but scrapping it wouldn't solve the problem — in fact, it could make things worse. The Grattan Institute found removing it would only save about $1.7 billion a year in tax, while costing the government $15 billion in the long run. And it wouldn't magically make housing more affordable.

Take Labor's 2019 policy to wind back negative gearing and halve the capital gains discount. It backfired badly at the election. People were scared it would crash the market, and Labor lost votes. That's a lesson: radical housing policies can spook voters and do more harm than good.

We also need to look at land supply. Governments have been slow to release enough land for new housing, especially near jobs and infrastructure. When supply is tight, prices soar.

There are also calls to tax superannuation more heavily, thinking it might reduce demand for property. But that won't stop people using their super or other savings to invest. It just adds more costs to retirement and won't fix housing affordability.

Stamp duty reform is another area to focus on. It's an inefficient tax that discourages people from moving, downsizing, or buying homes that better suit their needs. Replacing it with a broad-based land tax would be more stable and fairer.

The bottom line? Panic-driven decisions don't fix housing problems. Instead, we need smart, stable policies that increase supply, streamline planning rules, and support long-term investment — not knee-jerk reactions to market swings.

Chris Waterman