MATTERS OF PUBLIC IMPORTANCE
Senator SHARMA (New South Wales) (17:29): Mr Acting Deputy President, $34.1 billion wiped out in a single quarter—that is what the loss in the value of Australia's housing stock amounts to in just the last quarter. What we're witnessing across Australia is an absolute crisis in the housing market. It's a failure on housing that isn't an accident in the market; it's a design feature of this government's budget.
This budget, their budget, delivered tax hikes that have smashed confidence, have driven away investment, will result in fewer homes being built—by design—and are going to have ripple effects all across the economy. Just this week, ABS stats out confirmed that $34.1 billion was wiped off the total value of the Australian residential property market in the June quarter alone.
That's the first drop in the net national housing stock value since late 2022. But major forecasters HSBC, the Commonwealth Bank and AMP are saying that this is just the start. They are expecting peak-to-trough falls of somewhere between nine and 13 per cent.
In Sydney, house values have already dropped by seven per cent. In Melbourne, thousands of homes are losing value week on week, and over 90 per cent of capital-city suburbs are now in outright price decline. Housing crises like this do not happen in a vacuum.
The primary catalyst—indeed, the predominant catalyst—for this freeze was the government's May budget. It was a budget that delivered a body blow to property investment by changing the tax rules in the middle of the game. By targeting negative gearing on established dwellings and by unwinding longstanding capital gains tax arrangements, the Labor government told thousands of everyday Australians—investors, superannuants and mum-and-dad property owners—that their capital was no longer safe in Australian real estate.
The government assured us that there was nothing to worry about. In the Treasury budget papers, the government explicitly claimed that these tax interventions would lead to nothing more than 'a small and temporary slowing in housing price growth'. Well, does the Labor government still stand by this prediction?
Do they think $34 billion wiped out in a single quarter is 'a small and temporary slowing in housing price growth'? Do they think a fall in house values of somewhere between nine and 13 per cent, from peak to trough, is 'a small and temporary slowing in housing price growth'? The reality is that the assumptions behind Labor's assault on housing in this budget have completely collapsed, because this budget has smashed investor confidence.
What that has done is choke off the very capital that is required to build new housing. Developers cannot secure presales because private investor demand has evaporated. Institutional builders are pulling back projects because the regulatory and tax environments are unpredictable and volatile.
When you scare away private investment, you don't create more housing; you create less housing. In the middle of an acute national housing shortage, this government has engineered a policy framework that ensures that fewer slabs are poured, fewer frames are erected and fewer keys are handed over to new owners. And the damage doesn't stop there.
Construction is one of the largest private-sector employers in this country, and so, when home building stalls, subcontractors lose work and apprentices are let go. Small businesses right across the supply chain feel that squeeze. The housing collapse is also having a devastating impact on consumer confidence because, for the vast majority of Australian households, their home is their primary asset.
And, when families see literally tens of thousands of dollars stripped from their home's value overnight, they tighten their belts. It's the obvious thing to do. You see that retail sales drop, hospitality suffers and broader domestic demand contracts.
The wealth effect works both ways, and this government is presiding over a reverse wealth effect that threatens to drag our wider economy into stagnation. You cannot tax your way into housing affordability. You cannot bludgeon the housing sector with tax changes and then wonder why new supply is not coming online.
You cannot punish investors and then expect builders to keep building. This housing failure was designed on the treasury bench. I call on the government to admit that its budget tax hikes have failed and are destroying confidence in the Australian housing market and to reverse course before it is too late.