Rents across Australia could increase by as much as 30 per cent if capital gains tax settings are repealed, according to property investor and B.Invested founder Nathan Birch, who warns that reduced investor activity would tighten rental supply.
Birch said the potential impact mirrors the period between 1985 and 1987 when similar tax settings were removed and rents rose sharply across major cities. Data from the Australian Bureau of Statistics shows rents increased by 31.9 per cent in Sydney, 22.9 per cent in Melbourne and 33.5 per cent in Perth during that period, with five of the eight capital cities recording rises above the consumer price index.
“Building a property affordably not only means you need to live far from most capital cities, but you will also need to wait for the build to be completed and continue renting in the meantime, so we will effectively see many years of rent rises,” Birch said.
He argued that fewer investors entering the housing market would reduce the number of rental properties available, placing upward pressure on rents. This, he said, would occur alongside strong population growth, with an average of around 970 migrants arriving in Australia each day, increasing demand for housing.
Industry constraints are also adding pressure. Modelling indicates the construction sector could face a shortfall of 300,000 workers by mid-2027, with an immediate need for about 130,000 additional workers to meet housing targets. Efforts are under way to recruit mature-aged apprentices, but labour shortages continue to slow new housing supply.
Rents across Australia could surge if capital gains tax changes reduce investor activity, according to property investor Nathan Birch. Drawing on historical data and current supply constraints, he argues that fewer rental properties, rising construction costs and strong population growth could combine to push rents higher, placing added pressure on tenants in an already tight housing market
Birch said rising costs are further complicating the outlook for housing affordability.
“Even with more skilled apprentices, rising fuel prices and import costs have increased building materials by up to 30%, with the Master Builders Association reporting that in some cases, freight costs have increased tenfold,” he said.
He warned that changes to tax settings, including discussions around limiting negative gearing, could worsen conditions for renters if investor participation declines further.
“It’s simply not the time to repeal negative gearing or capital gains tax discounts, the housing of everyday Australians depends on it.”
Birch, who holds a personal portfolio of more than 350 properties, said the current environment is already making it harder to identify lower-cost investment opportunities.
“This will become much harder to do going forward, so my advice is to secure this stock as soon as possible into your portfolio.”
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