The Australian government has reaffirmed its defense of the housing tax changes introduced in the recent budget after property data firm Cotality reported a 0.4% national decline in dwelling values in June.
Starting the new financial year, the government announced that over 14 million Australians will receive a tax cut of up to $268. Additionally, Paid Parental Leave has been extended from 24 weeks to six months, and new laws targeting price gouging now apply to major supermarkets including Coles and Woolworths.
The temporary three-month halving of the fuel excise has ended, with the discount reduced to 16 cents per litre, while the Heavy Vehicle Road User Charge has increased to 16 cents per litre. Both measures are expected to phase out entirely by August.
The housing tax changes involve restricting negative gearing to newly built homes and replacing the 50% capital gains discount with an inflation-indexed model, measures described as efforts to level the playing field in the housing market.
A Labor frontbencher expressed strong confidence in Treasury's modelling, which suggests house prices will continue to rise, though at a slower pace. The frontbencher noted that the recent softening in prices and auction clearance rates is attributed primarily to interest rate rises and the impact of the Iran war on consumer confidence, rather than the budget changes themselves.
"This is a cyclical market, and the main thing that drives movement in house prices from month to month and year to year is what goes on with interest rates," the frontbencher said. "The Treasury modelling shows us the impact of the government's tax changes will have a modest affordability effect on the market."
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