It was a budget pitched at making housing fairer for young people. But shocking footage shows nothing has changed for Aussie renters.
Long lines of Australians spending their Saturday morning queuing around the block to inspect a property that they have little chance of securing have become an all-too-common sight in the nation’s capital cities. And this phenomenon has not disappeared since the release of the federal budget last month. This reporter witnessed around 30 people lining up for a two-bedroom rental in Sydney’s inner west last weekend, with demoralised renters turning away upon seeing the size of the crowd.
Video shared on social media late last month told a similar story in Perth, with about 80 people queuing for an inspection in the northern suburbs. Some experts warn that Labor’s property tax changes announced on May 12 could make the situation worse.
Mixed Impact of Tax Reforms
On one hand, abolishing negative gearing and removing the capital gains tax (CGT) discount for established properties appears to have put further downward pressure on house prices, which were already declining due to high interest rates. In Sydney and Melbourne, prices have been falling for months, and economists now predict a nationwide correction of up to 10 per cent. These market conditions, combined with the government’s expanded 5 per cent deposit scheme, could enable renters to purchase homes who otherwise would not have been able to.
However, the budget also made investment properties less tax effective, and critics argue this will prompt landlords to raise rents or sell their properties to owner-occupiers, thereby reducing rental supply. The national rental vacancy rate is already at a historic low of 1.5 per cent. Cotality research director Tim Lawless warned that renters could be forced into share houses or back home with their parents due to looming rent rises.
Metropole founder Michael Yardney said the rental market was about to get tougher. “I think the budget changes will hurt renters — and the irony is that this is probably the last thing the government intended,” he told news.com.au. “The properties that transition from investor-owned rentals to owner-occupied homes do help some buyers, but for every renter who buys, there are many more who can’t, and they’re now competing in a tighter pool.”
Mr Yardney predicted rents would rise in established suburbs — where most renters want to live — as investors offload their stock. “Competition among tenants will intensify,” he said. “And the people who will feel this most acutely are those who can’t buy, such as older renters on fixed incomes, younger people still trying to save, and anyone who simply doesn’t earn enough to service a mortgage at current rates.”
Divergent Views on Impact
Macrobusiness Chief Economist Leith van Onselen disagreed, arguing the tax changes will make “zero difference” to the rental market because if investors sell, those homes become available to former renters who become first home buyers. As a result, rental supply reduces in tandem with demand. “Melbourne is a case in point,” Mr van Onselen said. “The Victorian government massively increased land taxes on investors in 2024, and thousands of investors have exited the market. But Melbourne’s rents have risen by less than the other capitals, while first home buyer purchases have risen.”
Landlords Using Tax Changes as ‘Excuse’ to Raise Rents
Tenant advocates have actually welcomed the property tax changes in the budget, though they contend the government did not go far enough. Housing activist and former Senate candidate Jordan van den Lamb (known online as Purple Pingers) described the removal of the CGT discount as “objectively good” and agreed with abolishing negative gearing, though he thought the government did it in a “half-a***d way” through grandfathering and keeping the practice alive for new builds. “I think doing these things without actually doing anything to address the problem is quite pathetic,” Mr van den Lamb said. “And it’s clear why they did that. These people don’t want house prices to fall; they still want housing to be an investment, a commodity that keeps going up.”
The activist said investors were using the tax changes as a dishonest “excuse” to raise rents. “Landlords raise rents because they can — not because of the tax settings or anything like that,” he said. “While there was negative gearing, while there was the capital gains tax discount, and while interest rates trended down for 30 years, rents still went up way faster than wages.” Mr van den Lamb noted there were hundreds of thousands of homes across Australia that stood empty as speculators “hoarded” property for capital gains.
Tenants’ Union of NSW CEO Leo Patterson Ross described long queues for inspections as a “longstanding condition of the rental market” that predated the budget. “We’ve had 1 to 1.5 per cent vacancy rates for years and years across all of the capital cities,” Mr Patterson Ross said. “The country should be working towards a much, much higher vacancy rate — we’re not getting there.” He said the union had been campaigning for negative gearing and capital gains tax reform for a long time.
“The way government has structured it to try and push money towards new builds rather than merely trading existing stock will have some positive impact,” Mr Patterson Ross added. “But actually I think the more positive impact for renters generally over time — and it will take a while — is going to be reducing the amount of money spent by landlords on loans as opposed to repairs, maintenance, and making places energy-efficient; things like that.” With the loss of negative gearing reducing investors’ borrowing power, they would not be so overextended on their mortgages and would be better able to afford repairs, making rentals more liveable for tenants, he argued.
