Negative gearing and the Capital Gains Tax have long been controversial, with experts saying they contribute to Australia’s growing housing crisis by propping up investors, over home buyers and renters. Earlier this year a reform was submitted to the senate for the May 2026 Budget highlighting changes for housing, tax and cost-of-living.

The proposed changes include removing negative gearing and slashing the capital gains discount to improve housing affordability.

By removing negative gearing and lowering the CGT discount, it is expected to make purchasing property for investment less attractive.

As a result, this could make a more balanced, less speculative market, leaving more affordable housing for first-home buyers and owner-occupiers. But will it actually deliver any relief for Perth’s rental market?

Many fear that these proposed changes will make poperties more scarce, and put upward pressure on renting.

New homes consultant Kien Lam says rent prices will continue to rise whether or not these changes will come into effect.

“I think that it is a really good point for a lot of renters who are concerned about the fact that these tax changes will come into play, because unfortunately it’s going to go up anyways. It’s bound to happen,” he says.

“Flip it the other way; if the government was going to give even bigger concessions to investors, would rental properties go down? Of course not.

“If the landlord knows that is already getting 1000 dollars a week from his property and he gets bigger tax breaks, He’ll go “Great! I’ll still charge 1000 dollars; I’m just going to make more money off it now”.”

When asked what the biggest issue in the property market is right now, Mr Lam believes supply is the biggest problem for both renters and buyers.

“This is why the supply is low; because there is too much demand. If there are more people getting into the property market because property prices are lower, then there will be less demand for rentals, so you’ll see those levels balance out,” he says.

Deputy President of the Real Estate Institute of Western Australia Rob Mandanici also believes supply is the biggest issue, so the reform won’t be helping renters.

“Definitely supply. There are just so many more tenants than there are available properties,” he says.

“In terms of helping renters directly is anything that can help increase the amount of supply in the market, and events of late aren’t helping.

“I can see how people think that it may help but in the long term for renters, it could lead to a further shortage of available rentals in our marketplace.”

In a 2025 report from the Bankwest Curtin Economics Centre, there were 20,000 new homes built in 2024.

While this may sound like a lot, it is still about 4,000 homes below the projected annual demand.

The 2025 Rental Affordability Index reported Perth is the least affordable capital for renters.

The median rent in Perth is about $740 per week, taking up 32 per cent of an average household’s income.

Mr Lam says help is needed for renters and buyers as the market is in crisis.

“We need to tax where people can afford it, because right now people are struggling,” he says.

“I speak to probably fifty new clients every single month in my job role, and a lot of them can’t even put together 2000 dollars to even save enough money to put a bond down. It’s pretty scary out there.”