The Elephant in the Room
The property podcast for the thinking person.

Episodes

Episode 447: Can We Fix Housing Without Hurting Investors?

For years, housing affordability in Australia has been at the centre of political debate, with one solution repeated time and again: change the tax rules, reduce concessions, and the problem will somehow ease. 

The assumption is simple—reform negative gearing and the market will rebalance. But if that's true, why do house prices remain so stubbornly high, and is the Australian housing crisis really caused by tax settings alone?

In this episode, Chris Bates and Veronica Morgan are joined by respected economist Saul Eslake to challenge one of the most widely accepted narratives in the Australian property market. Drawing on decades of experience in economic policy, Saul explains why negative gearing cannot be viewed in isolation from the Capital Gains Tax Discount, broader Capital Gains Tax settings, and the way Australia taxes different forms of income. Rather than treating property as a special case, he argues for a more consistent approach to tax policy and explores what that could mean for investors, renters and first-home buyers.

Saul also examines how housing tax reform affects investors, unpacking the likely impact on an investment property, rental supply and long-term wealth creation. The conversation looks at whether tax concessions actually increase housing supply or simply intensify demand for existing homes, and whether Australia has become too reliant on mum-and-dad investors to support the rental market Australia depends on. Chris and Veronica also explore the role of institutional investment, social housing, rentvesting and alternative investment opportunities, while keeping the discussion grounded in the realities of housing economics rather than political slogans.

Throughout the discussion, Saul challenges listeners to rethink one of the biggest assumptions in Australian property: is negative gearing good for the economy, or does it simply distort the market? From the financialisation of housing to the many forces that shape prices, he explains why housing affordability cannot be solved by tax reform alone and why governments may need to rethink the way they approach housing policy. The episode also asks whether negative gearing reform will lower house prices, and if so, whether that would be enough to improve access for first-home buyers in a meaningful way.

Listen now to discover why negative gearing reform Australia is about far more than one tax concession, what really drives housing affordability, and why understanding the economics behind property investment is essential if we're serious about creating more affordable homes and a stronger Australian property market for future generations.

Episode Highlights

01:34 – Meet Saul Eslake

05:30 – Why Property Beats Startups on Tax

10:56 – The CGT Discount Explained

14:45 – Challenging the Case for Tax Reform

16:42 – Does Negative Gearing Increase Supply?

18:12 – Do Tax Incentives Really Build More Homes?

23:07 – Who Wins, Who Loses Under Tax Reform?

28:56 – The Unintended Consequences of Reform

31:46 – Has Australia Become Addicted to Property?

34:44 – Why Social Housing Keeps Falling Short

38:32 – What Happens If Investors Leave?

41:24 – Can Supply Incentives Really Work?

45:36 – Why Cheap Apartments Are Disappearing

49:06 – Is Australia's Tax System Really Fair?

54:02 – What's Behind Australia's Productivity Slump?

59:04 – Why Higher Inflation May Be Here to Stay

About the Guest

Saul Eslake is one of Australia's most respected independent economists, with decades of experience analysing the Australian economy, public policy, housing markets and taxation. Throughout his career, he has served as Chief Economist for ANZ Bank and Bank of America Merrill Lynch Australia, while also advising governments, businesses and industry organisations on economic policy and reform.

Known for his evidence-based approach and willingness to challenge conventional thinking, Saul is a leading voice on issues including housing affordability, taxation, productivity and Australia's long-term economic future. His commentary regularly appears across Australia's major media outlets, where he helps translate complex economic issues into practical insights.

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Visit our website: https://www.theelephantintheroom.com.au

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Chris Bates