Inflation-adjusted home price gains since 1980s and 1990s expose flaw in new tax reforms

A new study by PropTrack highlights the dramatic inflation-adjusted growth of Australian home prices since the 1980s and 1990s, raising concerns about the fairness of the federal government’s recent capital gains tax (CGT) reforms. House values in Australia’s five major capital cities have increased roughly four times the rate of inflation since 1980 and over three times since 1990. For example, a typical Sydney home cost $65,000 in 1980 but would now be worth $351,000 if prices had only kept pace with inflation—its actual value is $1.55 million. In Brisbane, median prices jumped from $35,000 in 1980 to over $1 million today, far exceeding the inflation-adjusted estimate of $181,000. Melbourne’s median prices followed a similar trend, rising from $40,000 in 1980 to $875,000 today, compared to an inflation-adjusted $213,000. SQM Research director Louis Christopher attributed these gains to strong economic growth in the 1980s and 1990s, comparable to economies like Singapore. The study also found that top growth suburbs, particularly in Brisbane and Perth, saw values rise at up to 10 times the inflation rate. The government’s upcoming CGT changes—set to replace the 50% discount introduced in 1999 with an inflation-linked indexation system—have drawn criticism. While existing investors will retain past tax benefits, critics argue the policy could worsen generational inequality. Finch Financial director Julian Finch warned that younger buyers may face higher taxes for similar gains, reinforcing wealth disparities rather than addressing them. REA Group economist Angus Moore noted that the 1999 CGT discount assumed inflation would account for half of property value growth, a premise now challenged by the study’s findings. The reforms, intended to address intergenerational fairness, may instead disproportionately affect Millennials and Gen Z, who struggle to enter the property market.