The government should focus on housing supply to fuel economic growth instead of fiddling with negative gearing, the Housing Industry Association says.
HIA chief economist Harley Dale is calling for national oversight on land supply, infrastructure funding and planning regulations, as well as reinstating a minister for housing.
"The federal government needs a role in guiding how we house our ageing and growing population," he said.
Dr Dale said tinkering with negative gearing and capital gains tax won't magically solve Australia's housing affordability and home ownership challenges.
"(It) doesn't represent real reform, but risks damaging confidence towards the housing industry at a crucial juncture in the cycle," he said.
News that makes sense
Your trusted source for staying up-to-date with the world around you. Get free daily news updates and analysis, straight to your inbox.
New home building activity is headed for a significant cyclical downturn next year and beyond, the latest HIA National Outlook report shows.
New dwelling commencements are forecast to decline from a record peak of 220,000 last year to a trough of around 160,000 in 2017 and 2018.
Growth in house prices will also continue to slow.
Meanwhile, annual rental price inflation is running at its slowest pace in 21 years, easing to 1.2 per cent in the December quarter.
Dr Dale said properly addressing housing supply with policy reform will directly benefit economic growth by abolishing inefficient taxes.
"You're reforming the system, you're putting a roof over people's heads and you're generating productivity at the same time," he said.
"In an environment that was a little bit less combative you'd think that was a no brainer."
