![\"Housing](\"https:\/\/www.europesays.com\/australia\/wp-content\/uploads\/2026\/07\/1783607007_649_e9a49fd334245897a2d5aff3be87e11d.jpeg\")
<\/p>\nThe Albanese government\u2019s big spending and high-tax agenda has helped drive up rents and locked aspiring homeowners out of an increasingly unaffordable market.<\/p>\n
The latest data has revealed rents have surged 12 per cent over the past year with interest rates rising three times over that period.<\/p>\n
Since Labor\u2019s \u201caspirational\u201d May federal budget, designed to help housing affordability, rents have risen by as much as 6.3 per cent.<\/p>\n
Economists have warned the government’s big spending agenda has pushed up inflation and interest rates, which has translated to higher rents.\u00a0<\/p>\n
The perfect storm has put further pressure on aspiring homeowners unable to save up for a deposit while rents keep continue to rise.<\/p>\n
AMP chief economist Shane Oliver said high levels of government spending were \u201ccertainly\u201d contributing to higher prices in the rental and property markets.<\/p>\n
Mr Oliver told SkyNews.com.au that government spending acted alongside private demand and contributed to capacity constraints, putting upward pressure on prices.<\/p>\n
\u201cThere\u2019s certainly a correlation,\u201d Mr Oliver said when asked whether government spending was pushing up interest rates and impacting rents.<\/p>\n
\u201cGovernment spending \u2026 acts in concert with private demand. There\u2019s been more demand in the economy, which causes capacity constraints.<\/p>\n
\u201cThere’s a shortage of homes generally, whether it’s homes to buy or homes to rent and to the extent that you’ve got high levels of government spending.<\/p>\n
\u201cIt diverts resources away from the ability of private providers to meet demand and in this case home builders basically.\u201d<\/p>\n
The comments come as new rental data shows tenants face much sharper rental increases than the Albanese government forecast when it unveiled its budget.<\/p>\n
Treasury modelling released alongside the budget suggested Labor’s tax reforms would increase rents by about $2 per week.<\/p>\n
From March to June, average rental prices across combined capital cities increased by $10 to $700 a week \u2013 after Treasurer Jim Chalmers handed down his budget in May.<\/p>\n
The federal budget included the scrapping of negative gearing for existing builds and implementing a minimum 30 per cent tax on capital gains.<\/p>\n
Economists and industry figures have warned the real-world impact of those changes remains uncertain and will likely be significantly worse than the government predicted.<\/p>\n
Sydney has been among the hardest-hit markets, with house rents climbing $50 a week over the quarter to a record $850, a 6.3 per cent increase.<\/p>\n
Brisbane rents rose $20 weekly to $700, Melbourne rose $5 to $600, Canberra $10 to $710 and Adelaide increased $10 per week to $650.<\/p>\n
Domain chief residential economist Nicola Powell said the acceleration was too sudden and concentrated to be explained by seasonal factors alone.<\/p>\n
She said that \u201cmany landlords appear to have responded\u201d to Labor\u2019s housing taxes by \u201cincreasing asking rents where market conditions gave them the opportunity\u201d.<\/p>\n
The rental pressures have fuelled a political fight over whether Labor\u2019s tax changes are responsible for worsening conditions.<\/p>\n
Betashares chief economist David Bassanese said the impact of the budget changes was still emerging but argued the reforms would place upward pressure on rents.<\/p>\n
\u201cThe reality of the budget is that it will put up rents,\u201d Mr Bassanese said, arguing investors would seek higher rents to compensate for reduced tax benefits.<\/p>\n
Independent economist Saul Eslake said the impact of the tax changes would take time to become clear but argued rents were ultimately determined by market conditions.<\/p>\n
\u201cLandlords charge what the markets will bear,\u201d Mr Eslake said, pointing to rental vacancy rates as the best measure of market power.<\/p>\n
He also questioned claims that landlords had passed on previous falls in interest rates to tenants through lower rents.<\/p>\n
<\/p>\n
Liberal Senator James Paterson said the latest rental figures showed Treasury\u2019s $2-a-week forecast was a fantasy.<\/p>\n
\u201cThat was always a completely farcical prediction,\u201d Senator Paterson told Sky News on Thursday.<\/p>\n
He said Labor\u2019s tax changes risked having \u201cserious unintended consequences\u201d and would not achieve the government\u2019s stated goal of improving housing affordability.<\/p>\n
Opposition Leader Angus Taylor has also used the rental crisis to attack Labor\u2019s broader economic agenda.<\/p>\n
\u201cUnder Labor, government has gotten bigger and Australians have gotten poorer, that is the brutal truth,\u201d Mr Taylor said.<\/p>\n
The Coalition argues government spending restraint, migration settings linked to housing supply, and tax cuts are needed to ease pressure on households.<\/p>\n
The government has defended its housing policies, arguing Australia\u2019s affordability crisis was the result of years of inadequate supply.<\/p>\n
Housing Minister Clare O\u2019Neil has made the bold claim that falling house prices were due to a normal market \u201ccorrection\u201d.<\/p>\n
The comments come amid plunging auction clearance rates and warnings that the government\u2019s negative gearing and capital gains tax changes will weigh on values.<\/p>\n
\u201cLook, I think the housing market is cyclical in Australia, a very uncontroversial comment,\u201d Ms O\u2019Neil said recently.<\/p>\n
\u201cWe see periods of very significant house price growth, and then we see the market make a correction. And that’s what we’re seeing at the moment.\u201d<\/p>\n
Asked directly whether the country was in a market correction, Ms O\u2019Neil said: \u201cThat’s correct. I don’t think that’s controversial at all.\u201d<\/p>\n
\u201cWe’ve just been through what has been extremely high house price growth in the period from Covid basically before Covid to today.<\/p>\n
\u201cHouse prices have gone up just in that time by more than 50 per cent. And we are seeing a correction on that.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"The Albanese government\u2019s big spending and high-tax agenda has helped drive up rents and locked aspiring homeowners out…\n","protected":false},"author":2,"featured_media":47457,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[483,22,4917,4920,21,8460,35096,1200,3180,7450,11142,6016],"class_list":["post-47456","post","type-post","status-publish","format-standard","has-post-thumbnail","category-australia","tag-anthony-albanese","tag-au","tag-auspol","tag-australian-politics","tag-austrlia","tag-clare-oneil","tag-david-bassanese","tag-james-paterson","tag-jim-chalmers","tag-saul-eslake","tag-shane-oliver","tag-treasury"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/australia\/wp-json\/wp\/v2\/posts\/47456","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/australia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/australia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/australia\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/australia\/wp-json\/wp\/v2\/comments?post=47456"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/australia\/wp-json\/wp\/v2\/posts\/47456\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/australia\/wp-json\/wp\/v2\/media\/47457"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/australia\/wp-json\/wp\/v2\/media?parent=47456"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/australia\/wp-json\/wp\/v2\/categories?post=47456"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/australia\/wp-json\/wp\/v2\/tags?post=47456"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}