On the back of Labor's historic win, the Government's biggest challenge will be trying to deliver on its promise to reform housing. Callum Seán Murray reports.
LABOR'S ELECTORAL SUCCESS is historic for three reasons.
First, Labor secured its highest number of seats ever; second, it achieved this despite receiving only 34.7% of the primary vote; and third, the Coalition suffered its worst ever electoral defeat.
With Labor’s gains in the Senate and the Greens retaining their seats there, only the latter's support is needed to pass legislation. This dominance has fuelled optimism for structural reform — especially in the housing market.
Over the past forty years, Australian house prices have surged by approximately 150% when adjusted for inflation. This significant rise has been driven by key factors such as population growth, limited housing supply and persistently low interest rates.
Government incentives like negative gearing and capital gains tax discounts have further exacerbated the issue by encouraging speculative investment that inflates housing demand. While opinions differ on the merits of these policies, calls for Labor to spend its political capital on broad housing market reform may ignore the electoral lessons of recent history.
Labor’s current housing policies — 100,000 homes for first-home buyers, five per cent deposits, Help to Buy, and Build to Rent — are predicted to increase demand. Talk of reforming negative gearing briefly surfaced last year. It was swiftly shut down.
The Greens have previously indicated they may pressure Labor into revisiting this policy and others. However, the previous Parliament dispels this hope: the Greens played hardball on housing policy yet eventually conceded. Such intransigence may have contributed to the loss of the Greens' seats in the Lower House.
Despite predictions that Labor's commanding majority virtually guarantees a third term, significant housing reform remains improbable for three reasons: electoral arithmetic, historical precedent and political scars.
Nearly half of the Australian electorate holds mortgages. Any policy that meaningfully reduces house prices risks driving homeowners into negative equity.
The political fallout would likely be severe. Many of these voters could turn to the Liberals, who would campaign to reverse such policies. Labor is aware of this reality; on Q&A, Housing Minister Clare O’Neil subtly acknowledged the political necessity of rising house prices, while former Opposition Leader Peter Dutton explicitly stated as much.
This strategic caution is not unique to Australia.
In 2021, New Zealand Labour secured a historic parliamentary majority — the first of its kind since the introduction of mixed-member proportional system in the 1990s.
New Zealand's housing crisis is worse than Australia's. COVID-19 was considered an opportunity to implement major structural reform. Although the Labour Government held full legislative power – New Zealand's upper house was abolished in 1951 – it failed to meaningfully address housing affordability. Labour feared electoral backlash as the Opposition, disproportionately supported by landlords, pledged to repeal most reforms. Labour lost the 2024 election for other reasons. The housing crisis consequently endures.
Back to Australia, Labor remains scarred by its 2019 election defeat. The Coalition ran a series of effective scare campaigns against Bill Shorten's reform agenda, which included proposed changes to housing policy like capital gains tax and negative gearing.
Liberal Party member Tim Wilson's campaign against franking credits was also particularly effective. Labor's policies were rejected by the electorate. The message was clear: housing reforms that threaten property values or one's hip pocket underpin successful scare campaigns.
This wariness is reinforced by bipartisan historical miscalculations.
In 2004, the Coalition won a rare majority in both the House and the Senate. Rather than proceeding cautiously, it introduced the deeply unpopular WorkChoices industrial relations reforms — policies that had not been flagged during the campaign. The backlash was part of the reason for their defeat in 2007.
A similar event occurred in 2010 when Labor's Julia Gillard promised, "there will be no carbon tax under a government I lead", yet introduced one as part of a deal with the Greens in a hung parliament. This breach of trust helped pave the way for the Coalition returning to government in 2013. Despite three successive Liberal Prime Ministers, no meaningful measures were introduced to address housing affordability.
The current Labor Government is likely to adhere strictly to its campaign promises, given recent electoral history shows that deviation, particularly on housing reform, can be politically damaging. If structural housing reform is to occur, it is most likely to be introduced as part of Labor's platform for the 2028 election.
Historical precedents support this notion: The Hawke and Keating Governments delivered sweeping economic reforms after first proposing them to the electorate, and John Howard successfully introduced the GST in 1998, despite its initial rejection in 1993.
However, significant resistance can be expected from the Coalition, which traditionally rallies landlord support as a reliable voter base. Should a more ambitious Labor reform agenda fail to materialise in 2028, it is difficult to envision when it might.
Although Labor's political capital is substantial, it may not be enough to overcome entrenched electoral sensitivities surrounding housing prices. Until a broader consensus for change emerges, speculation about imminent reform is likely to remain illusory.
Callum Seán Murray resides in WA, works in public policy and has a keen interest in international affairs.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License
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