| “Do we want Australia’s rental homes owned by overseas institutions, or by Australian mum-and-dad investors?” |
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Australia’s Housing Shift: Mum-and-Dad Investors Under Pressure
(See translation in Arabic section)
Sydney-Middle East Times Int'l: Finally, this budget means that ordinary, everyday Aussies are no longer subsidising greedy investors around the country.
Well, let’s talk about this.
If we go back to around the ’80s, there was a dramatic policy shift where both federal and state governments realised it was just too expensive for them to maintain public housing.
So, we started seeing more tax concessions for everyday mum-and-dad investors to step in and do just that: provide rentals for the Aussie community.
Somewhere along the lines, housing supply has not kept up with demand—a major issue today, and one that has existed for the past many decades.
We also have a situation where housing prices are just out of control. Most people can argue that the two are intertwined.
Now, predominantly, mum-and-dad investors do go for those established properties. They don’t look at developments, and there are many reasons for this. One of the main ones is cost.
It’s just not worth it for them to start developing new properties.
So, the federal government, back in 2023, started shifting its policy away from mum-and-dad investors towards institutional investors.
Many countries around the world do this, including the US and the UK.
The tax policies changed, and these tax incentives started becoming a lot more enticing to these institutional overseas investors.
The tax rate went from 30 per cent down to 15 per cent. We also had accelerated depreciation.
On top of this, there are very generous state-based land tax exemptions available, including, in some states, exemptions of up to 50 per cent.
Then we get the budget from 2026, and you can see that policy shift in full action.
Westpac has announced that applications have fallen by 20 per cent. Westpac expects investor housing credit growth to slow from 9.1 per cent in 2026 to 4.5 per cent in 2027.
As taxpayers, we need to ask the following questions.
1: Is this shift ready?
Mum-and-dad investors are pulling out, but are these institutional investors ready to go?
How many houses do we expect to actually be supplied, and will it make up for the loss of mum-and-dad investors?
2: What is going to happen to housing prices?
Mum-and-dad investors usually lead with their heart. They usually have one or two investments.
So, how is this going to compare with those institutional investments, where it is all about profit for their investors?
3: There is always going to be an element of the population that needs to have rental properties.
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