You might have to pay 30 per cent more for rent if NAB's forecast comes true - and Albo's to blame. The other option is to buy into a falling market

By PETER VAN ONSELEN, POLITICAL EDITOR, AUSTRALIA Published: 05:01, 18 August 2026 | Updated: 05:15, 18 August 2026 The Albanese government sold its property tax assault as a noble crusade for Australians locked out of home ownership.  Restrict negative gearing to new builds, rewrite capital gains tax rules and investors would retreat, prices would fall and first homebuyers would finally get a look in. Conveniently, the changes will also bank the government more than $40 billion over the next decade. It was a revenue grab dressed up as generational fairness. However, the law of unintended consequences is hitting hard. NAB has warned that the tax slug will force rental yields higher if investors are to keep putting money into housing.  In Sydney and Melbourne, the bank predicts that would lift gross yields from about 3.5 per cent to 4.5 per cent, requiring rents to soar by between 25 and 30 per cent if property prices remained unchanged. We also know that demand is outstripping supply because of record levels of immigration, alongside a host of barriers to building. At today’s median rental rates, a 30 per cent increase would mean roughly another $250 a week in Sydney and $190 in Melbourne. That’s almost $13,000 a year extra for a Sydney tenant and nearly $10,000 in Melbourne. The Albanese government sold its property tax assault as a noble crusade for Australians locked out of home ownership NAB isn’t predicting that every tenant will automatically cop a 30 per cent uplift in their rent. It expects the market to reset through some combination of higher rents and lower property values. But that hardly rescues Labor from the looming disaster all of its own making. For young Australians, both outcomes lead to the same trap: pay vastly more to rent or risk buying into a falling market. Treasurer Jim Chalmers has dismissed NAB’s analysis as speculative and incomplete, with Treasury suggesting the tax changes will add only about $2 a week to rents. Perhaps Treasury will be right, unlike almost every time it hands down a budget forecast. But sneering at the warning doesn’t make the economics of the situation disappear.  Investors will demand a competitive after tax return. If they can’t get it, they’ll leave and invest elsewhere. In a rental market already starved of supply, tenants will be forced to fight over what remains. Meanwhile, the promised army of young buyers is nowhere to be seen. Equifax data shows first homebuyer mortgage applications plunged 19.2 per cent in the year to July, the sharpest fall since late 2022. Enquiries from 18 to 25 year olds collapsed by 22.4 per cent, while those from 26 to 35 year olds fell 20.9 per cent. If Labor thought it was helping younger buyers the data suggests otherwise. Why would they rush in? Buying while prices are tumbling is the financial equivalent of trying to catch a falling knife. Treasurer Jim Chalmers has dismissed NAB’s analysis as speculative and incomplete, with Treasury suggesting the tax changes will add only about $2 a week to rents  Labor’s five per cent deposit scheme makes that danger worse. Even a modest fall can wipe out a buyer’s equity and lock them into a mortgage worth more than their home. Labor insists its carve out for new construction will redirect investors towards increasing supply. Perhaps it eventually will. But homes take years to plan and build. Investors can retreat immediately into other opportunities. The squeeze arrives long before the promised fix. And who gets crushed in the meantime?  Not the wealthy landlords Labor likes to caricature. It’ll be younger Australians, low income workers, singles and struggling families who are all more likely to rent. In other words, Labor’s supposed core constituency. Higher rents also feed inflation by the way, making the Reserve Bank’s job harder, potentially keeping interest rates higher for longer. A policy sold as an affordability fix could make both renting and borrowing more expensive. Pauline Hanson must be licking her lips at the opportunity this policy mess opens up amongst Labor’s traditional base. Albo and his side kick wanted more revenue, cheaper homes and grateful young voters. But it has delivered falling prices, soaring rents and stubborn inflation.