The fundamental problem with the housing market is that currently nobody believes that prices will fall.

The issue is not that capital gains are tax free. It’s that capital gains on property are almost certain. (thread ...)

This explains why people are not so enthusiastic about other types of capital gains, which are also tax free - eg gains on investments in businesses.

In those cases the capital gains are *at risk*.

This is why I’m sceptical that a capital gains tax would make much difference to how capital is allocated. Especially if it also applied to other types of investment. And especially especially if there are exclusions related to housing - eg family home is excluded.

If you want to shift investment preferences -eg less into property, more into productive businesses - then you need to make those things you want to encourage either less risky or more rewarding.

If you want to make housing more affordable then you need a solution that causes prices to fall. But nobody wants *their* property value to fall, so any solution that would cause that to happen is considered impossible.

Which takes us back to the beginning of this thread...

The fundamental problem with the housing market is that currently nobody believes that prices will fall.

The issue is not that capital gains are tax free. It’s that capital gains on property are almost certain.