Critics of proposed property tax changes warn that aggressive intervention could have unintended consequences that ultimately harm the very people the government intends to help. Investors and industry experts argue that tampering with negative gearing and capital gains tax could reduce the supply of rental properties, further driving up costs for those already struggling. They contend that the housing crisis is primarily a supply-side issue, and that focusing on tax reform is a political distraction from the urgent need to build more homes. For these critics, the focus should be on increasing housing density and streamlining development, not penalizing property owners.
Furthermore, there is concern that grandfathering existing investors—a common feature in such policy shifts—would create a two-tier system that unfairly protects those already in the market while punishing new entrants. This approach could lock in current inequalities rather than solving them, leaving smaller investors and those trying to build a modest retirement portfolio at a significant disadvantage. Skeptics argue that a more balanced approach is required, one that encourages investment while simultaneously addressing the barriers to entry for first-home buyers. They caution that hasty policy changes could destabilize the market and create long-term economic risks for the entire country.