Nick Files

It's probably not recognized everywhere, but Australia has one of the most expensive housing markets in the world.

We are ranked just behind Hong Kong.

Places like Sydney are in terms of the expense of buying and renting houses.

That's partly a reflection of high levels of migration.

So more people coming here and needing a place to live.

uh struggles in keeping up with demand in terms of building new houses and the house price spike which has sent you know in a place like sydney median house prices over a million dollars and has meant that many many people professionals even into their mid to late 30s are still in share houses they simply can't afford to spend what it takes to compete for a house

So the government of Anthony Albanese, which is a Labour government, last month in the budget decided to reverse some tax incentives that were introduced in 1999 under a conservative government, which has led to this sort of house price boom.

The figures they're citing are that since that time, house prices have increased about 400%.

compared to about a doubling of income growth.

And they say that means the housing market is decoupled from wage growth and something has to be done about that.

So the measures proposed are to abolish negative gearing, where people who own multiple properties can offset rental losses or mortgage losses against other taxes, but to limit that to existing stocks.

So you can still benefit from that on new development.

They've also introduced another suite of tax reforms, including capital gains, and our family trusts are taxed as well.

And they've done that in the name of generational inequality and making the housing market more affordable.

The immediate impact has been that the housing market has effectively granted a standstill in many places, including Sydney.

We have some forecasts out there that perhaps a market correction of about 10% might happen.

So that's the worst housing market correction in Australia in 40 years.

Others think that it might be more modest than that.

Now you can interpret that as either a disaster if you already own a house and you bought at the top of the market, or that we're really just going to slow the rate of growth to sort of correct this issue.

What are the risks here, Nick?