Capital Gains Tax: This Could Freeze Australia’s Property Market 🗞️ Real Estate Market Wrap

If the capital gains discount is cut, here’s how it'll unfold:

• Investors make less when they sell
• Many delay selling to avoid the tax hit
• Listings drop
• Turnover slows
• Stamp duty falls
• Rental supply tightens

And when supply tightens?

Rents go up.

This isn’t theory. It’s demand and supply.

And here’s the part no one wants to say out loud 📢

75% of investors own ONE property. They’re not tycoons in Mykonos. They’re nurses, teachers, small business owners negatively gearing with the hope of one future payday.

If you change one lever without increasing supply, you don’t fix housing.

You freeze it.

One lever policy in a multi-layered crisis creates unintended consequences. Migration needs alignment. Construction needs acceleration. Trades need support.

Because if investors stop selling and supply shrinks, the people who wear it first are tenants.

And they’re already stretched.

Think carefully about this

Property doesn’t operate in isolation. It’s an ecosystem.

Transcript

Warning On Rental Shock

Tom Panos 0:00

I am just absolutely gobsmacked because people do not understand what is about to happen. The fabric of real estate in Australia is on the verge of being changed forever, and there are going to be some unintended consequences in that. And let me tell you, one of those unintended consequences is that tenants who are the most vulnerable cohort people of Australia will get impacted because rents will go up. It is like it's not if, it's they will go up. And the reason that they will go up is that there's going to be less rental properties and basic demand and supply says rents are going to be pushed up.

Capital Gains Discount Under Fire

Tom Panos 0:41

Then there is talk that if you actually brought in the reduction of the capital gains tax from 50% to only have a discount of 25%. So basically what it means is you pay capital gains tax on 75%. Now I want you to know this. Listen to me carefully. Australia already has probably the highest capital gains tax in the world. Right? Do you understand? We already are at the peak, right? I mean, there are countries that don't have capital gains tax, right? Uh at all. New Zealand being one. Do you understand that? Now, if you listen to that senator, he talked about uh what they want to get rid of is the people that flip homes for uh and push the prices up because they're flipping and they're competing against homeowners that want to own a property. Well, that's not correct. In Australia, if you flip a property within 12 months, you're paying full capital gains tax. Right?

Political Chaos And Policy Risks

Tom Panos 1:48

So what I want to do is let you know this is all happening right now for no other reason except we've got a Liberal government that is in absolute chaos and mess. And whilst in previous years they were able to bring to the surface what it meant, and in fact, it's cost the Australian Labour Party an election a number of times when they've been trying to muck around with property, right? With property taxes. And you know why? Because everyone's impacted. That's why. And you would have thought that they would have learned. And one of the unintended consequences is that people, if you're going to actually do this, they won't sell. If you don't sell, think about it. You stop actually having transactions, you create a gridlock. When there's a gridlock, you stop collecting the big, big money that is paid in stamp duty. They don't see that there, right? All they're saying is the cash grab. Let's get money from there. But they don't understand one simple concept. Your average investor is not rich. Your average investor owns one property. 75% of investors own one property. They are not people that are going from property to property, collecting rents, living it up, living in Las Vegas, living in Nikonos, driving Maserates. They're not. They are people that own an investment property that are negative gearing, and negative gearing means you're losing money that year on that property, with the view that one day this property is going to go up and there's going to be a payday for you. But no, what the Australian government is saying is no, no, no, no, no. What we want to do is we want you to make a loss during the process, but in addition to that, we want to tax you

Investors Are Not The Elite

Tom Panos 3:40

significantly on the game. And I've got to say to you, I just can't believe that we have no one standing up now, right? We should be having politicians understanding that look, we have got tenants. It's obvious what's going to happen. Rents will go up. But what I want to do is to read out a few notes, a few notes that I've made here on things that I think might happen. Number one, yes, after you sell as an investor, you will make less money because a smaller discount means more of the gain is taxable. We accept that that is a possibility. Number two, what people are gonna do is they will delay selling. It will trigger a big tax bill. So what they're gonna do is they're gonna hold on to the property, right? Which is gonna reduce turnover, which is gonna reduce listings, which is then gonna reduce the amount of money the government makes out of stand duty, right? Next, what's gonna happen is a lower discount generally means an increase on income on gains raising receipts. So, yes, they will get money coming in out of that. Possible scenarios. What we're gonna see, a

Tax Changes And Market Gridlock

Tom Panos 4:59

house price maybe dip a little bit. I don't think there'll be a crash. I think the next thing that will happen is we'll we're we're gonna end up seeing rents rise, no question about it. Because if investor supply sort of vanishes, right, rents are gonna rise. The next thing that's gonna happen, and I've already started seeing it, is you're gonna get the first group of people that are gonna say, let's fast track and sell our properties now before it comes in. And I can tell you, real estate agents right around Australia have been reporting into me that there has been a significant increase of people putting properties on the market now, thinking to themselves, we better do it. Let's keep going on. Uh, what are three things that to me still need to be cleared up and clarified? Number one, and these are three choices that change everything. Number one, grandfathering versus not grandfathering. Grandfathering softens immediate shocks but reduces near-term revenue and behavioral change. So grandfathering is basically sort of saying, like in 1985 where they turned around, and in 1985, you would pay zero capital gains tax, right? So if you owned the property prior to 1985, you paid zero capital gains tax. What we're saying is that it boils down to say, let's assume they pick a date May the 7th. I'm just saying May the 7th. They're saying everyone that owns property before May the 7th gets the 50% discount.

Short‑Term Seller Rush

Tom Panos 6:37

Everyone that buys after that date gets the 25 uh percent discount only. Okay? But without a doubt, to me, the second thing that needs to be cleared up is this gonna be property or it's property uh versus other assets? So at the moment, and it was a dreadful, when I read the article, I've got to tell you I threw the paper down in the Australian Financial Review yesterday when there was talk there that this is only gonna be on property. It's not gonna be on other assets, it's not gonna be on crypto, it's not gonna be on the share market, it's gonna be property-only target. Like, why are they doing this? Because they obviously think to themselves that they can solve the housing problem, right? Because if it wasn't that, they'd be going for every sort of asset, they'd be going for shares, manage funds. But they think to themselves it's gonna reduce the price of houses and solve the housing problem. That's what they think. And I've got to tell you, if you are using one lever only, and that

Grandfathering And Asset Scope

Tom Panos 7:42

is some sort of incentive, it has unintended consequences. So they're using one lever tax to actually try and help the housing problem. When they should be looking at migration and making sure it's aligned to the amount of properties that are being built, because the speed of migration is higher than the speed of properties being built. That's the first thing. And by the way, while you're migrating people in, why don't you bring in some proper tradespeople? Because that might take labor costs down, because we've seen what's going on in Melbourne at the moment, right? So I've got to tell you, we need a bigger group of tradespeople in this country. So if you're gonna do migration, start bringing in proper tradespeople so we can re reduce labor costs down. Then I've got to say that anyway, I'm listening I'm fired up. All I want, I'm really hoping that someone gets loud, even if it's um what's it, that lady from one nation, right? Even if it's someone, right? And I'm really hoping that this new and before you go on, oh, this is a liberal puppet, I want to let you know, I'm a swinging voter. I come from

One Lever Policy Vs Housing Reality

Tom Panos 8:54

a family that actually was brought up believing that Golf Whitlam was the saviour of Australia. I come from a family that's not very wealthy at all. I come from a family that understands the importance of having good health, of being able to support the most vulnerable cohort of people. I come from a family from the lowest socioeconomic um status there could have been. But I've got to tell you, as I've gotten older, I make decisions and I voted for Labour and I voted for Liberal based on policies and also based on the people that I have a good feel with. So don't turn around and think there's some sort of ideology. I just know that in my heart that we're gonna have rents go up, we're gonna have a gridlock of property not being sold, we're gonna have people that will defer tax, and I have got to say to you, no one is gonna win there. Anyway, team, I'm going off to watch the soccer, and

Migration, Trades, And Build Capacity

Tom Panos 9:53

I wanna tell you it's been an extraordinary week. We had our real estate gym kickstart. Uh it was an absolute sellout, amazing speakers, and the feedback we had from the event is extraordinary. Uh team, March 3, March 4, our black belters go to Byron Bay. I'm just so excited at the moment with everything that's going on. But I've got to tell you, one thing that I'm miserable about is the fact that we've got a clear runway for the Australian Labour government to do exactly what they want to do with no one keeping them accountable.