About 75,000 Australians are set to see $19,000 slashed from house prices – but not for years.
As expected, last night's federal budget wound back the 50 per cent capital gains tax discount to its pre-1999 settings and grandfathered negative gearing.
Most of the changes will come into effect from July 2027.
READ MORE: The winners and losers from the federal budget
Treasury estimates the tax reform will help 75,000 people buy their first home over 10 years and save someone buying a home at the national median average price about $19,000 over "a couple of years".
"This improvement in affordability and lower investor demand is expected to shift the ownership mix towards more owner-occupiers," the budget papers said.
While the changes were touted as the most significant of the 21st century, it may take years for lower prices and easier access to the market to reach aspiring first-home buyers.
Grattan Institute's economic expert Matthew Bowes said the changes will lead to three per cent higher home ownership rates over a decade as investors are disincentivised to buy a property due to less generous tax breaks and profit when they sell down the line.
"What these tax reforms do is help ensure that first home buyers aren't being outbid by investors at auctions," he said.
"Over time, they will mean somewhat fewer investors and somewhat more home owners, and help support home ownership."
Bowes said the impact of the twin tax reforms on housing affordability will be "relatively small" in the next few years.
"At least to begin with, based on previous estimates of the impact of these kinds of policies," he said.
READ MORE: Can you break a promise? The government has just bet the house on it
Treasury's numbers also suggest the changes will lead to 35,000 fewer homes built over a decade and a small impact of less than $2 a week for someone paying the median rent.
The government faced a slew of criticisms this morning for breaking an election promise to deliver the tax reforms, including some questions about whether it went far enough to support first-home buyers.
Treasurer Jim Chalmers was asked about whether the tax reforms went far enough if only 75,000 would be helped over 10 years during his post-budget speech today.
He said intergenerational inequity in the housing sector reached a level he was "not prepared to tolerate".
"It's worth it for 75,000 Australians who wouldn't otherwise get a hook in the housing market," he told journalists at the National Press Club.
"It's worth the political risk that we've taken in coming to a different view and changing our policy position in some contentious areas
"I'd rather do the right thing by those 75,000 people and explain why a change in policy was necessary and own that than to leave this problem for someone else to fix down the track and in the meantime to let this problem get worse."
NEVER MISS A STORY: Get your breaking news and exclusive stories first by following us across all platforms.
- Download the 9NEWS App here via Apple and Google Play
- Make 9News your preferred source on Google by ticking this box here
- Sign up to our breaking newsletter here
