Carrington Clarke

I mean, the Perth market is just racing along.

And it's very interesting because when I did the Housing Hostages podcast last year with the News Daily team...

Melbourne was a bit of a case study in housing affordability precisely because prices have really gone nowhere for the last five years or so and it's actually made it accessible to first home buyers.

It's had one of the highest rates of first home buyer entry into the market of any of the capital cities and it's not surprising.

I imagine Perth is rapidly heading the other way as its prices go through the roof.

That was the mining boom, you know, mark one, if you like, boom that WA had.

But, you know, what's really interesting in that Macquarie note as well is that jump between 2000 and 2003, 45% in just three years.

And they say, well, look, as economists say, correlation is not causation.

But to quote the Macquarie note, the large jump in real house prices in that period was

suggests the introduction of the capital gains tax discount was a significant factor pushing prices higher.

Yes, interest rates had been on a bit of a structural decline, but that was already happening prior to 2000 because we'd been coming off very high interest rates, moved into inflation targeting, and the real juice to the market was that September 1999 change to the capital gains tax.

that introduced this 50% discount, which interacted with the negative gearing and suddenly made property investment a great tax minimization tool, which up to then it hadn't been as much.

And essentially what the government's trying to do is unpick that.

If that change contributed at least in some significant part to a 45% real increase in

home prices in three years, then one can only imagine that removing it might contribute something towards a decrease in real home prices over the years going forward.

And a question people need to ask themselves, is that a bad thing?

Because we have been moaning in this country about housing affordability for the better part of this century, basically since that 45% real jump in prices at the start of this century through housing affordability, way out of whack.

where we went from housing being three, maybe four times incomes to being eight in Sydney, 12 or 13 times incomes.

Now, the only way to make housing more affordable is for prices to either fall in absolute terms or at least rise more slowly than people's wages and household incomes are going up.

And that's a simple reality.