Housing shortages on the Sunshine Coast could face further pressure, with the building industry warning federal budget tax changes may result in fewer homes being built during the ongoing housing crisis.
The warning comes as the nation’s peak residential building body claims changes to negative gearing and capital gains tax would reduce housing supply nationally.
Housing Industry Association chief economist Tim Reardon said Australia was already struggling to keep up with housing demand.
“Australia’s housing challenge is simple. Consider it as if we are trying to fit 11 million households into around 10 million homes,” Mr Reardon said.
“The solution to a housing shortage is to build more homes. This budget does the opposite.”
The government will limit negative gearing to new builds from July 1, 2027, while replacing the 50 per cent capital gains tax discount with inflation-based cost indexation and introducing a minimum 30 per cent tax on capital gains.
Existing arrangements for current property owners will remain unchanged.
Treasury analysis found the changes could result in about 35,000 fewer homes being built over the next decade while increasing rents by about $2 a week.
However, Treasury modelling also forecast the changes could shift more homes into owner-occupier hands, boosting home ownership by about 75,000 people over the same period.
“The government is stopping 35,000 private homes from being built in order to raise enough revenue to build around 4000 public homes,” Mr Reardon said.
“That is a terrible trade-off in the middle of a housing crisis.”
The Sunshine Coast’s housing pressures have intensified in recent years, with strong population growth, critically low vacancy rates and rising costs continuing to squeeze renters and buyers.
Research from CBRE’s Sunshine Coast Market Report 2025 found the region’s population reached 384,500 in 2025 and forecast it would climb to 440,200 by 2032 – an increase of almost 56,000 residents.
REIQ figures also showed vacancy rates sitting at just 0.7 per cent, well below healthy market levels.
Mr Reardon warned the budget changes risked worsening rental affordability over time.
“At a time when vacancy rates remain critically low, reducing the number of investor-funded homes being built will inevitably place upward pressure on rents,” he said.
“But you cannot tax your way out of a housing shortage.
“The only lasting solution to housing affordability is more homes.”
The federal government defended the reforms, arguing the existing system was failing younger Australians.
Treasurer Jim Chalmers said the government reversed earlier assurances not to alter negative gearing and capital gains tax concessions because maintaining the status quo risked doing more harm.
“The changes would rebalance the tax burden so it was shared more fairly between income from assets – typically relied upon by wealthier, older, Australians – and labour, which younger Australians have a greater reliance on,” he said, according to AAP.
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Mr Reardon said the reforms misunderstood how housing investment supported future construction activity.
“Investors are critical to funding new housing supply and commenced around half of all new home builds in the past,” he said.
“If investors leave the housing market, fewer projects proceed and fewer homes get built.
“The government assumes investors will simply redirect their money into new homes, but housing investment doesn’t work like that.
“If the overall attractiveness of residential investment falls, fewer investors participate overall.”
