Prime Minister Anthony Albanese has defended the Federal Government’s proposed changes to capital gains tax (CGT) and negative gearing, arguing that Australia’s housing system requires structural reform to improve affordability for future generations.

The comments come as debate continues over the government’s housing tax package, with supporters describing the measures as necessary to address long-term housing challenges while critics warn they could discourage investment and reduce rental supply.

Speaking during an interview, Anthony Albanese said Australia could no longer rely on a housing system in which property prices have increased substantially faster than wages over many years. He argued that younger Australians increasingly face barriers to home ownership and that governments have a responsibility to improve access to housing rather than preserve existing market settings indefinitely.

Under the proposed reforms, future investments in existing residential property would move away from the current 50 per cent capital gains tax discount toward an inflation-indexed system with a minimum 30 per cent concession. Existing investments would remain under the current rules through grandfathering arrangements, while investors purchasing newly built homes would continue receiving stronger tax incentives. The Government says the objective is to encourage additional housing construction while reducing investor demand for existing dwellings.

Albanese rejected suggestions that the reforms are intended to trigger a collapse in house prices. Instead, he said the goal is to create a fairer market where first-home buyers have a greater opportunity to compete, while maintaining incentives for private investment in new housing supply. He argued that moderating future price growth differs from engineering a housing market downturn.

Property industry groups, investor organisations and some economists have expressed concerns about the proposed changes. They argue that reducing long-standing tax concessions could lower investor participation in the established housing market and potentially affect rental supply if fewer investment properties are purchased. Some industry representatives also question whether tax reform alone can resolve Australia’s broader housing affordability challenges.

Housing economists generally note that Australia’s residential property market is influenced by numerous factors beyond taxation. Interest rates, migration, population growth, construction costs, planning approvals and the pace of new housing development all contribute to housing affordability, rental conditions and price movements. As a result, the overall impact of the reforms will depend on how these factors evolve alongside the tax changes.

The Government maintains that the tax reforms form only one part of a broader housing strategy that also includes measures to increase housing construction, support first-home buyers and improve long-term housing supply. Ministers argue that addressing Australia’s housing affordability challenges requires multiple policy initiatives rather than relying on a single reform.

Political debate over the reforms is expected to continue as Parliament considers the legislation and housing market data evolves. Analysts say it may take several years before the full effects of the policy changes on housing affordability, investment activity and rental availability can be properly assessed, given the many economic factors influencing Australia’s property market.