Alan Weiss examines how the “Mamdani Effect” and NSW Greens housing policies could reshape Australia’s property market — from rent freezes to tax reform — comparing US and Australian systems to reveal what’s at stake for investors, tenants, and future housing supply.
The election of Zohran Mamdani in New York City signals a powerful global shift — voters are increasingly willing to trade traditional market mechanisms for affordability. The sentiment driving this change is already strong in Australia, where the NSW Greens’ housing agenda represents the clearest local parallel to what could be called the “Mamdani Effect.”
NSW Greens: A Radical Shift Toward Tenant Protections
The NSW Greens’ housing policy represents a significant departure from market-driven housing models, aiming to rebalance power toward tenants and reduce the profitability of private investment property.
Their agenda includes an immediate two-year rent freeze for all existing tenants, followed by rent caps limiting increases to just 2% every two years — well below inflation and wage growth. This would drastically reduce real returns for investors, particularly those with large mortgages.
They also propose to abolish “no grounds” evictions, meaning landlords could only terminate a tenancy for specific reasons such as selling the property, moving in themselves, or a serious lease breach. While this offers tenants greater security, it also restricts a landlord’s ability to manage their property and re-let at current market rates.
Perhaps the most ambitious element is their commitment to build 10,000 new public and social homes every year for the next decade, and to ensure that by 2040, at least 10% of all NSW dwellings are owned or managed by government or not-for-profit organisations. In practice, this positions the government as a direct competitor to the private rental market — a structural shift toward socialised housing supply.
Together, these measures aim to redefine the purpose of housing — from a speculative investment vehicle to a social utility.
US vs Australia: Ownership, Finance and Risk
While both Australia and the United States have similar home ownership rates — roughly two-thirds of households in each country own their home — the financial systems that support these markets differ sharply.
Australia’s housing market is dominated by variable-rate loans, meaning any increase in the Reserve Bank’s cash rate quickly impacts household budgets. By contrast, most American borrowers use 30-year fixed-rate mortgages, providing stability and predictability over decades.
This structural difference makes Australia far more exposed to interest rate changes, and consequently, more sensitive to economic shocks.
Tax Benefits: The Core Difference Driving Investment
Tax incentives are the cornerstone of private investment in Australian housing. Negative gearing allows investors to deduct any loss — for example, when loan interest and expenses exceed rental income — directly against their personal income tax.
On top of that, Australia offers a 50% capital gains tax discount on properties held for more than 12 months, making long-term property ownership extremely tax-efficient. These two mechanisms work together as a powerful subsidy, encouraging speculative investment and asset accumulation.
In the United States, the rules are much tighter. Investment losses are typically quarantined under what’s known as the “Passive Activity Loss” rules, meaning they can only offset other investment income, not salary or wages. Long-term capital gains are taxed at reduced rates depending on income level, but there is no flat 50% discount.
The US also imposes high annual property taxes, which act as a deterrent to land hoarding. In contrast, Australia’s land tax is relatively light, and often completely exempt for a primary residence.
These differences explain why property investment is so deeply ingrained in Australian wealth culture — and why reform proposals that target these tax settings generate such intense debate.
The Central Dilemma: How to Increase Supply While Removing Incentives
The challenge for policymakers is simple in theory but complex in practice: how do you expand the stock of rental accommodation while removing the financial motivation for private investors to provide it?
The only mechanism capable of achieving both is the socialisation of rental supply. That means shifting housing provision away from individuals and toward governments, institutions, and superannuation-backed Build-to-Rent developers.
Under this model, the state — or large-scale non-profit entities — become the main developers and landlords, delivering high-volume rental stock at regulated prices. The funding for such a transition would likely come from new or restructured taxes, including the removal of negative gearing, reducing or abolishing the capital gains discount, and increasing annual land tax on non-owner-occupied properties.
In the short term, these measures would likely reduce the private rental pool as landlords exit the market. The expectation is that institutional and government-backed developments would eventually replace that supply, creating a more stable and affordable rental sector — though at the cost of a major structural shift in property ownership and investment.
Final Thought
For decades, Australia’s rental market has relied on private investors, supported by generous tax settings that make housing one of the most attractive asset classes in the world. The “Mamdani Effect” — already visible in the US — challenges that model entirely, replacing speculative participation with institutional control and public provision.
If adopted in Australia, such a shift would reshape not just housing affordability but the entire philosophy of property ownership itself.
