I asked ChatGPT how to fix the housing crisis: This was the answer
It’s the 1.2 million home question — how to fix Australia’s housing crisis.
Given there seems to be many different opinions and AI appears to have the answer to everything these days, I decided to ask ChatGPT.
The answers might surprise you.
This was the question: ‘If a government had one single policy move to immediately address a housing crisis, what would it be?’
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The housing crisis will be a major issue for voters in the 2025 federal election. Picture: iStock.
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It answered by saying the most commonly recommended single move was to “limit (or remove) negative gearing for all future purchases of existing properties, while retaining it only for newly built homes”.
Why? “It discourages speculative demand for existing housing. Investors who rely on negative gearing primarily purchase existing stock rather than financing new supply. Limiting negative gearing to new builds would nudge investor demand into creating additional dwellings.”
ChatGPT had some interesting answers when asked how to fix the housing crisis. Photo by: Kirill KUDRYAVTSEV.
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However, a more specific question about what the Australian government should do evoked this response:
“There’s no silver bullet, but the most impactful single policy move would likely be massive investment in social and affordable housing. Of course, this would need to be paired with planning reforms, tax changes (such as rethinking negative gearing and capital gains tax concessions), and tenant protections to fully address the crisis.”
Property analyst Michael Matusik agrees. Mr Matusik believes all state and territory governments should scrap stamp duties, and that the federal government should remove the investor capital gains tax discount and negatively gearing tax breaks for resale homes.
A general view of display homes in Edmondson Park in Sydney, Australia. Photo: Brendon Thorne.
“This would be phased in over a five-year period for investors who currently negative gear,” Mr Matusik said.
“Also, negative gearing for new homes would only stay in play for five years too.”
He would also impose a broad-based land tax on all properties set at between 2.5 per cent and 5 per cent, and introduce a capital gains tax on all properties, with the percentage set to decline on length of time held.
Everybody’s Home spokesperson Maiy Azize is calling on parties and candidates to scrap investor tax handouts, like negative gearing and the capital gains tax discount, in the lead-up to the federal election.
Houses in Sydney’s Neutral Bay. Photo: Brendon Thorne.
“It is unfair to spend billions of dollars propping up investors and pushing up costs while people on low and middle incomes are left behind,” Ms Azize said.
But Ray White chief economist Nerida Conisbee said it was “too simplistic” to blame negative gearing for high house prices.
“Many countries without negative gearing also face significant housing affordability challenges,” Ms Conisbee said.
“The main drivers of Australian house prices include limited housing supply in desirable areas, strong population growth, strict planning regulations, and the concentration of jobs in major cities.
The Australian Federal Treasurer Dr Jim Chalmers MP during a pre-budget address in Brisbane. Picture: NewsWire/Tertius Pickard.
“Negative gearing is just one piece of a complex puzzle that includes broader economic
factors like household income levels, lending policies, and construction costs.”
It comes as The Greens launch a direct appeal to Labor ahead of Tuesday’s budget, calling on federal treasurer Jim Chalmers to urgently reform negative gearing and capital gains tax.
Labor directed Treasury to undertake modelling on reforms to negative gearing and capital gains tax over the last term of government, and a growing number of backbenchers quietly supported the idea of overhauling the tax benefits.
But the treasurer killed off policy changes in that area because he was not convinced changes would boost housing supply.
The growing pressure on Labor to institute more ambitious policy to address the housing crisis comes as research commissioned by the Property Council revealed Australia was set to fall short of the ambitious 1.2 million national Housing Accord goal by 462,000 homes, potentially pushing average rents up by nearly $100 a week.
NSW currently faces the biggest gap of 185,000 homes, which, if filled, could see rents decrease by $130 a week.
In Queensland, filling 96,000 homes would mean an $80 saving a week, while Victorians could save $50 a week in rent should the 71,000 housing shortfall be filled.
The Property Council is calling for Labor to institute a range of policies to fill the housing gap, such as doubling the $3bn New Home Bonus, which offers states incentive payments for building more homes than their share of the target.
“2025 is the year for Australia to redouble our housing supply efforts with the urgency and commitment this crisis demands,” Property Council chief executive Mike Zorbas said.
“Missing the target by 462,000 new homes by July 2029 would set off a housing affordability time bomb.”
