The Opposition has unleashed on the Albanese Government over its housing policies, accusing Labor of “crashing” the housing market and demanding it scrap changes to capital gains tax and negative gearing.

Senate Opposition Leader Michaelia Cash hit out at Housing Minister Clare O’Neil during a fiery Sunrise clash, pointing to falling new home sales, struggling builders, rising rents and investors walking away from the market.

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“How much more pain do Australians need to feel before you actually admit that your housing taxes are actually crashing the housing market?” Cash asked.

“New home sales down 20 per cent. They’re actually now at an all-year low. Builders are actually going broke. Rents are soaring.”

The attack comes as the Housing Industry Association (HIA) warned builders will struggle to withstand further interest rate rises on top of the government’s property tax changes, with its chief economist pointing to weakened market confidence and increasingly difficult financing conditions.

Cash argued the figures showed the government’s changes to capital gains tax and negative gearing were discouraging property investment. “Clare, how much more evidence do you need when the Housing Industry of Australia is saying it’s your taxes?” Cash said.

“The changes you made to CGT, the changes you made to negative gearing despite ... Albanese telling the Australian people 50 times before an election there would be no changes, the evidence is now there.

“The housing market is crashing and everywhere I go, people say to me, ‘What is the Liberal Party, what is the Coalition going to do?’.”

O’Neil rejects claims market is ‘crashing’

O’Neil rejected the suggestion the government’s housing changes were responsible for the deterioration in new home sales, pointing to other data she said showed the market was moving in the right direction.

O’Neil said housing approvals were up more than 8 per cent and had increased for the third consecutive year.

“They’ve gone up 26 per cent since the National Housing Accord began,” she said.

“We’ve got leading indicators for the Australian Bureau of Statistics that show us that we have got, since records began, higher number of investor home loans going into new builds and an overall greater number of dollars going into new builds than since records began.”

She argued the government wanted to redirect investor money away from existing homes and towards new construction.

“The problem before was that you were basically having investors being subsidised by the young people of this country to outbid them at auctions for existing housing, and we want that money going into new builds because that’s important for the country,” O’Neil said.

Nat Barr presses housing minister

Sunrise host Nat Barr challenged O’Neil over the apparent disconnect between the government’s figures and warnings from builders.

“Are you saying that the Housing Industry Association, which claims there’s basically a 20 per cent drop in new home sales, are you saying they’re making that up?” Barr asked.

O’Neil said she respected the industry’s figures but argued they should not be viewed in isolation.

“No Nat, I’m really respectful of the property industry who have come forward with these numbers. But I’m just telling you that they don’t paint the full picture,” she said.

O’Neil also pushed back against Cash’s criticism, arguing Australia had been dealing with a housing shortage for decades.

She said young Australians were bearing the consequences of a housing system that had failed to deliver sufficient supply.

“We’ve got housing pain spread right across this country because, for far too long, Australian governments stood back and did nothing about a housing market that was breaking before our eyes,” she said.

“A low-income young person in our country is half as likely to own their own home.”

But Barr stopped O’Neil as she moved into the broader housing crisis, bringing her back to the immediate concerns being raised by builders.

“Clare, I have to stop you there. We all know there’s a housing problem. The question here is what we’re doing to fix it,” Barr said.

Sunrise host Nat Barr has pressed Housing Minister Clare O’Neil over the apparent disconnect between the government’s figures and warnings from builders. Credit: Sunrise

O’Neil responded by pointing to the range of factors affecting the housing market.

Interest rates blamed for pressure

O’Neil noted the economy had also been affecting demand and highlighted recent rate rises.

“We’ve had three interest rate rises,” O’Neil said.

Barr asked O’Neil directly whether, three months after the government’s changes, she believed the policy was not working or whether Australians should simply “give it time”.

O’Neil rejected the premise, arguing the market had shown concerning signs even before the budget.

“What I can say to you really clearly is that there is a lot going on in housing. We were seeing some concerning signs about what was going on in the housing market even before the federal budget,” O’Neil said.

“The biggest driver of how many homes get built from year to year is interest rates.”

O’Neil maintained the government’s policy was designed to encourage investors to put money into new housing rather than existing properties.

“You can still get access to those generous housing tax concessions, as long as you do something important for the country and that is build more homes,” she said.

O’Neil maintained the government’s policy was designed to encourage investors to put money into new housing. Credit: Sunrise

Cash vows Coalition will reverse changes

Cash remained firm that the government’s approach was making the housing shortage worse.

She pointed to what she described as a combination of falling construction, rising rents, investors leaving the market and high migration.

“Under us, you are building around 200,000 homes a year. Under Labor, this has now fallen to around 170,000 homes a year,” Cash said.

“Couple that with record migration numbers: 1.5 million people brought into this country in four years. In one year alone, over half a million.”

Cash said the government needed to reconsider its approach as housing pressures continue to mount.

“Clare, you’re the housing minister. Australians are sleeping in cars,” she said.

“Again, this is a direct linkage to Labor’s policies which are failing Australians.”

She said the Coalition would reverse the changes if returned to government.

“It’s very easy. The evidence is there. Labor’s taxes are to blame,” she said.

“Angus has been clear we will scrap Labor’s toxic taxes. Changes to CGT, gone. Changes to negative gearing, gone.

“Because you do not solve the housing shortage in Australia by taxing the housing market and making investment less attractive.

“The question that Anthony Albanese now needs to ask himself is this. How much more pain does he want Australians to feel before he admits we got it wrong and he scraps those toxic taxes.”