However, according to new modelling from Cadence Economics on behalf of the Master Builders Australia, a likely change in government at the next federal election — and coinciding proposed changes towards the tax treatment of housing — could make the current downturn a whole lot worse.

“Labor’s policies on negative gearing and CGT fails its own test,” said Denita Wawn, CEO of Master Builders Australia, referring to the Labor Party’s proposed policy to halve the capital gains tax on properties held for over 12 months and limit negative gearing to new builds from a yet to be determined date.

Rather than helping to boost new housing supply and employment across the sector, it says the proposed changes will have the opposite effect.

“Independent modelling by Cadence Economics shows that Labor’s policy would mean up to 42,000 fewer new homes would be built over the five years following the implementation of Labor’s policies, resulting in a reduction in the value of residential building activity of between $2.8 billion and $11.8 billion,” Wawn said.

“Home renovations would also be hit by an expected reduction of between $50 million to $210 million in activity over a five year period.

“Inevitably this would mean a fall in employment which is expected to be between 7,200 and 32,000 less jobs across the country.”