Jones Real Estate weighs in on Labor’s budget measures and the outlook for residential and commercial property markets
The Intergenerational Housing Debate Is Oversimplified
Paul Jones | Managing Director, Jones Real Estate
The intergenerational wealth debate around housing has become increasingly emotional and, in many respects, overly simplified. There is a constant comparison between younger Australians and the “boomer” generation, however the reality is that previous generations generally sacrificed significantly more in order to build wealth. Broadly speaking, they spent less on lifestyle, consumed less, travelled less and were prepared to work longer hours over a sustained period of time.
The Australia of today is also fundamentally different to the Australia of yesterday. Younger generations have access to globalised opportunities, technology, mobility and earning potential that previous generations simply did not have. Whilst housing affordability is clearly an issue, patience, discipline and delayed gratification have also materially changed across society.
There also appears to be an assumption that housing should continuously and materially outperform forever. Many of the policies currently being proposed or introduced by the Labor Government, particularly around taxation and investor treatment, may ultimately suppress residential property growth to some degree over the longer term.
This raises an important question: if residential housing no longer delivers the same capital growth outcomes historically associated with Australian property, will people remain as emotionally attached to ownership as they are today? A large portion of the public discussion focuses on wanting lower prices or reduced investor participation – however there appears to be limited discussion around the broader consequences if those outcomes actually occur.
I believe investment capital will increasingly shift from residential to commercial property. If residential property becomes less attractive from a taxation and growth perspective, investors will naturally seek stronger returns elsewhere – particularly in commercial property sectors offering higher income yield and stronger cash flow fundamentals. Over time, this may place upward pressure on commercial property values and compress yields further.
Ultimately, the government should be focused far more heavily on increasing housing supply rather than discouraging investment. Australia’s core issue is fundamentally a supply issue. Long-term affordability will only improve through materially increased supply, faster planning approvals, improved infrastructure and policies that encourage development and private investment – not discourage it.
Foreign Investment Rules Tighten but Capital Will Adapt
Vincent Lam (林维钧) | Manager, Asian Investment Service Desk, Jones Real Estate
Australia is tightening parts of its tax treatment for foreign investors. Key proposed changes include a broader CGT net for land-linked assets, a new 365-day lookback test, and an ATO notification requirement for certain disposals above $50 million.
This comes at a time when foreign capital into Australia remains meaningful. In the June 2025 quarter alone, approved commercial foreign investment proposals totalled $49.3 billion across 326 proposals, including $10.1 billion into commercial real estate.
My read is these latest changes will not stop offshore capital, but they may make buyers more selective and more tax-driven. Foreign resident CGT withholding already increased from 12.5% to 15% from 1 January 2025, and the old $750,000 threshold was removed, so withholding can now apply to all relevant property transactions unless an exemption applies.
Larger offshore groups are likely to invest more time in structuring, diligence and exit planning before committing to Australian assets. Under the proposed rules, foreign residents disposing of certain interests worth more than $50 million would be required to notify the ATO before the transaction is executed.
The policy direction looks to be more compliance-focused, not less. Treasury’s median processing time for approved commercial investment proposals was 36 days in that quarter, which suggests foreign investment is still active, but the bar around certainty and process remains important.
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