Price Trajectories Projected
Dwelling price paths under current policy vs your selected reform. Prices are driven by income growth and the supply-demand gap. Reform effects phase in over 5 years.
When Can You Buy? Deposit Race
Your cumulative savings vs the deposit required under each scenario. The crossover point is the year you can afford a deposit.
Housing Stock Balance
Cumulative dwelling demand vs construction, showing how the supply gap compounds over time under each scenario.
Housing Price Impact by City with confidence range
Central estimate with upper/lower bounds showing the range between conservative (Grattan) and upper (Treasury) estimates. Cities with higher investor concentrations see larger effects.
First Home Buyer Affordability
Deposit, stamp duty, and total upfront costs across the CGT discount range. Includes state-specific stamp duty with FHB exemptions.
Lending Market Share
Estimated shift in the share of new housing lending between first home buyers, investors, and other owner-occupiers.
Budget Revenue Impact
Additional annual government revenue from reducing the CGT discount, with and without negative gearing reform.
Supply-Side Impact Grattan est.
Estimated effect on new housing construction and median rents. At 25% discount, Grattan estimates ~2,000 fewer homes/year and <$1/week rent increase.
Overview
This model estimates the impact of changes to Australia's capital gains tax (CGT) discount on housing prices, first home buyer affordability, and government revenue. It uses piecewise linear interpolation between published estimates from multiple independent Australian research institutions, with confidence bands showing the range of estimates.
Unified Supply-Gap Framework
Both the static snapshot and time-series projection use the same price model. Price growth is derived from two fundamentals:
price_growth = income_growth + (annual_supply_gap / dwelling_stock) × 8.5
- Income growth (adjustable, default 3.0% p.a.) is the equilibrium anchor — in a market where supply meets demand, house prices track incomes over the long run.
- Supply gap premium captures the structural undersupply. The annual gap between dwelling demand and construction, expressed as a share of total housing stock, is multiplied by a calibration factor of 8.5 to produce the excess price growth above income growth.
Calibration: At current conditions (demand ~223K, construction ~177K, gap = 46K, stock = 11.45M), the formula yields: 3.0% + (46K ÷ 11.45M) × 8.5 = 3.0% + 3.4% = 6.4% p.a. — consistent with long-run Australian dwelling price growth of ~6–7% p.a.
Migration, household size, and construction capacity all feed into price growth automatically. Increasing NOM widens the gap and accelerates prices; reducing it narrows or reverses the gap.
Confidence Bands
All price impact estimates are presented with three scenarios reflecting the range of published research:
| Scenario | Basis | Scaling |
|---|---|---|
| Lower bound (conservative) | Grattan-aligned: <1% at 25% discount | 0.6× central |
| Central estimate | Midpoint of published estimates | 1.0× |
| Upper bound | Treasury-aligned: 4.5% combined max | 1.4× central |
CGT Discount Mechanism
The CGT discount allows individuals and trusts to reduce their taxable capital gain by 50% for assets held
longer than 12 months. Introduced on 21 September 1999, it replaced the previous cost-base indexation method.
The effective tax rate on capital gains is: effective_rate = marginal_rate × (1 - discount%).
Non-Linear CGT × Negative Gearing Interaction
The model uses a multiplicative interaction between CGT and negative gearing. When the CGT discount is high (50%), investors rely heavily on negative gearing to fund holding costs while waiting for tax-advantaged capital gains. Removing NG at full CGT discount has maximum effect. When CGT discount is already reduced, capital gains strategies are less attractive, so removing NG has a smaller incremental effect.
Formula: NG_effect = base_NG_effect × (0.5 + 0.5 × CGT_discount / 50)
Stamp Duty Calculation
State-specific stamp duty is calculated using simplified graduated rate schedules from each state's revenue office. First home buyer exemptions and concessions are applied where applicable.
Interest Rate Sensitivity
Users can vary the mortgage interest rate (3.5% to 8.5%) to see how rate changes interact with price changes. Monthly mortgage payments and income needed for serviceability (at 30% of income) update in real time. The RBA cash rate was raised to 4.10% on 17 March 2026 (second consecutive 25bp hike), with typical variable mortgage rates around 6.3-6.7%.
Supply-Side Impact
The model estimates the effect on new housing construction and rents, calibrated to the Grattan Institute's estimate of approximately 10,000 fewer homes over 5 years (2,000/year) at a 25% discount level, with a rent impact of less than $1 per week.
Time-Series Projection
The model projects dwelling prices, affordability, and housing supply forward year-by-year over a user-configurable horizon (5–20 years). It runs two parallel simulations — one under current policy and one under the selected reform — to show how differences compound over time.
Each year in the simulation:
- Population grows by the user-selected Net Overseas Migration (NOM) per year.
- Dwelling demand is calculated from NOM and household size, combined with non-migration demand.
- Construction starts from the baseline (~177,000/yr) and incorporates the CGT reform's construction impact as it phases in over 5 years (Grattan approach).
- Dwelling stock grows by annual construction.
- Price growth each year combines income growth, the supply gap premium, and the phased-in CGT reform effect — using the same formula as the static model.
- Savings accumulate each year; the model identifies when cumulative savings reach the deposit required at that year's price.
Price Impact Calibration
| CGT Discount | Lower Bound | Central | Upper Bound | Source |
|---|---|---|---|---|
| 50% (current) | 0% | 0% | 0% | Baseline |
| 25% | -0.6% | -1.0% | -1.4% | Grattan / Treasury range |
| 0% | -1.9% | -3.2% | -4.5% | Treasury (combined), scaled |
Key Assumptions (adjustable via sliders)
- Typical investor marginal tax rate: 39%
- Average holding period: 9 years (NSW Treasury median 8.8yr)
- Deposit percentage: 20% (adjustable 5%-30%)
- Annual household savings: $40,000 (adjustable $10K-$100K)
- Median household income: $105,000
- Default mortgage rate: 6.4% (adjustable 3.5%-8.5%)
- Loan term: 30 years
- Serviceability threshold: 30% of gross income
- Net overseas migration: 306,000 (adjustable 0-500K)
- Persons per dwelling: 2.5 (adjustable 2.0-3.0)
- Projection horizon: 10 years (adjustable 5-20)
- Price growth: derived from income growth + supply gap premium
- Income growth: 3.0% p.a. (adjustable 0-6%) — ABS Wage Price Index long-run trend
- Supply gap premium multiplier: 8.5 (calibrated to historical AU price growth ~6.5% vs income growth ~3%)
Remaining Limitations
- Uses piecewise linear interpolation calibrated to published estimates, not a full general equilibrium model
- Projection assumes constant annual NOM and construction capacity; real-world values fluctuate with economic cycles
- Supply gap premium multiplier (8.5) is calibrated to historical averages; actual sensitivity may vary by market cycle
- Supply-side estimates are scaled linearly from a single calibration point (Grattan, 25% discount)
- Stamp duty schedules are simplified approximations; actual duty may vary
- Does not model state-level land tax or planning regulation differences beyond stamp duty
- Does not model foreign investment restrictions or their interaction with CGT reform
- City-level investor shares are estimates derived from ABS lending patterns (confidence: moderate)
- Phase-in timeline assumes linear adjustment; actual market adjustment may be front-loaded or delayed
- Income growth is applied uniformly; actual household income varies by age, region, and occupation
ABS Total Value of Dwellings Dec 2025
Mean dwelling prices by state/territory. Released 10 March 2026.
abs.gov.au — Total Value of Dwellings, Dec 2025
| State/Territory | Mean Dwelling Price | No. of Dwellings |
|---|---|---|
| NSW | $1,301,100 | 3,484,300 |
| VIC | $933,100 | 2,873,100 |
| QLD | $1,066,000 | 2,310,200 |
| SA | $938,100 | 832,600 |
| WA | $1,014,200 | 1,194,700 |
| TAS | $703,800 | 268,200 |
| NT | $580,000 | 86,800 |
| ACT | $973,800 | 196,600 |
| Australia | $1,074,700 | 11,452,200 |
ABS Lending Indicators Dec 2025
Seasonally adjusted new loan commitments. Released 11 February 2026.
abs.gov.au — Lending Indicators, Dec 2025
| Category | No. of Loans | Value ($B) | YoY Growth |
|---|---|---|---|
| First Home Buyers | 31,783 | $19.3B | +9.1% |
| Investors | 60,445 | $43.0B | +23.6% |
| Owner-Occupiers (total) | 88,990 | $65.3B | — |
| Total | 149,434 | — | — |
Research Calibration Points 2022-2025
| Source | Reform | Key Finding | Vintage | Link |
|---|---|---|---|---|
| Australian Treasury | Full CGT + NG reform | -4.5% max price impact | 2025 | AFR |
| Grattan Institute | CGT discount to 25% | <1% price; +$6.5B rev; -10K homes/5yr | 2025 | grattan.edu.au |
| e61 Institute | CGT discount to 33% | +$2.85B revenue | 2025 | e61.in |
| Warlters / NSW Treasury | Halve discount + remove NG | +4.7pp owner-occupied share | 2022 | Economic Record |
| McKell Institute | Modest CGT adjustment | ~130,000 additional homes by 2030 | 2025 | |
| ACOSS | CGT + NG reform | $19.7B annual cost; 89% to top 20% | 2025 |
Stamp Duty Rates Mar 2026
Simplified stamp duty schedules by state with FHB exemptions.
money.com.au stamp duty calculator
|
FHB concessions guide
| State | FHB Exemption | Notes |
|---|---|---|
| NSW | Exempt up to $800K | Concession $800K-$1M |
| VIC | Exempt up to $600K | Concession $600K-$750K |
| QLD | Exempt up to $700K | Concession $700K-$800K; new builds no cap (from May 2025) |
| SA | Exempt (new homes only) | No value cap for new homes (from June 2024); existing homes: no concession |
| WA | Exempt up to $430K | Concession to $530K |
| TAS | 50% discount under $600K | Must be principal residence |
| NT | Abolished for OO | Conditions apply |
| ACT | Exempt up to $607.5K | New homes only |
Migration and Housing Demand 2024-25
| Metric | Value | Source |
|---|---|---|
| Net overseas migration (2024-25) | 306,000 | ABS |
| Average household size | ~2.5 persons | ABS |
| Migration dwelling demand | ~122,400/yr | Derived: NOM / household size (adjustable) |
| Total annual dwelling demand | ~223,000 | NHSAC 2025 |
| Actual construction (2024) | ~177,000 | NHSAC 2025 |
| Annual supply gap | ~46,000 | Demand minus construction (dynamic) |
| Cumulative shortfall (2022-24) | 179,287 | IPA |
| Housing Accord target | 1.2M (5yr) | Treasury |
| Expected delivery | 938,000 | NHSAC forecast |
| Accord shortfall | 262,000 | NHSAC 2025 |
| Migration-price elasticity | 1.0 (0.5–1.5) | Tran & Faff (2023), Nature |
| Baseline population | 27,400,000 | ABS Population (Dec 2024) |
Interest Rate Data Mar 2026
RBA cash rate: 4.10% (raised 17 March 2026, second consecutive 25bp hike). Typical variable mortgage rates: ~6.3-6.7%.
RBA Monetary Policy Decision, March 2026
Other Sources
Treasury TEIS 2024-25 — CGT discount cost ($19.7B)
ATO CGT Statistics 2022-23
PBO NG + CGT Discount Analysis
ABS Building Approvals, Jan 2026
CGT benefit distribution analysis (The Conversation / ACOSS)
CGT Discount Benefit Distribution
| Group | Share of Benefits |
|---|---|
| Top 20% of income earners | 89% |
| Australians over 60 | 52% |
| Australians aged 18-34 | 4% |