Changes to housing tax breaks could hit rental supply

The Australian government is reportedly considering clamping down on tax breaks for property investors. If the government did indeed reduce and/or phase out existing tax concessions, it would make the purchase of rental properties less attractive. In the near-term, that could have a modest dampening effect on house prices. But of greater concern to us, the policy changes could derail the nascent recovery in rental construction, thereby stifling housing supply over the medium term.