Former federal Liberal MP Keith Wolahan has proposed capping negative gearing at one established property and five new builds, arguing the change would boost housing supply and help first home buyers. In an essay titled 'Liberal Foundations', published on Monday in Inflection Points, Wolahan said the Liberal Party has lost ground to Labor in multicultural and outer suburban seats, and must adapt to appeal to younger voters.
Wolahan pointed to 2025 data showing 82% of investor loans went to established dwellings, and said his proposal would free up more homes for young people. He suggested the policy should be fully grandfathered, meaning existing investment properties would be unaffected, to provide certainty and avoid a scare campaign.
The proposal has drawn mixed reactions. Jonathan O'Brien, editor-in-chief of Inflection Points and lead organiser for Yimby Melbourne, welcomed the focus on spurring productive investment. However, Martin Duck from the University of Sydney described it as 'a very minor tweak', noting that about 70% of the 1.12 million Australians using negative gearing do so on just one property. Brendan Coates from the Grattan Institute called it 'a step in the right direction', though he said the impact on supply was hard to judge.
Shadow treasurer Tim Wilson opposed the change, arguing it would mean 'taxing losses which will lead to less investment'. The Coalition's housing spokesperson Andrew Bragg was contacted for comment. Labor has ruled out changing negative gearing after taking a similar policy to the 2019 election and losing, but faces pressure to reform the capital gains tax concession.
