Top auctioneer Tom Panos has weighed in on rumours the federal government could reduce the 50 per cent capital gains tax discount, warning the move could push rents higher and freeze the housing market.

Mr Panos said the policy, which could be a centrepiece of Treasurer Jim Chalmers’ budget in May, will have unintended consequences for all.

Under rules introduced by the Howard government in 1999, investors who hold an asset, including an investment property or shares, for more than 12 months only pay tax on half the profit when they sell.

However, speculation around possible CGT changes includes halving the discount to 25 per cent. 

‘I’m absolutely gobsmacked because people don’t understand what’s about to happen… the fabric of real estate in Australia is on the verge of being changed forever,’ Mr Panos said.

‘Rents will go up as there will be less rental properties. After you sell, as an investor, you will make less money because a smaller discount will mean more of the gain is taxable.

‘So what people are going to do is delay selling, they’ll hold on to the property, which is going to reduce turnover, reduce listings which is then going to reduce the amount of money the government makes out of stamp duty.’

While Mr Panos doubted the likelihood of a housing market crash, he said he expected house prices to dip slightly if the policy was introduced.

Tom Panos warned changes to the CGT policy would have ‘unintended consequences’ for all

He said rents will rise and mortgage holders will hold on to properties, meaning less listings

Treasurer Jim Chalmers is expected to introduce changes to the CGT policy in the May budget

However, he also raised the question of whether it will just be property that is targeted under the new policy, or whether other assets like cryptocurrency and shares would also be included.

‘The government don’t understand one simple concept – your average investor is not rich, your average investor owns one property, they are not people that are going from property to property, collecting rents, living it up,’ Mr Panos said.

‘They’re using one lever – tax – to actually try and help the housing problem when they should be looking at migration and making sure its aligned to the amount of properties that are being built.

‘The speed of migration is higher than the speed of properties being built… and while you’re migrating people in, why don’t you bring in some proper tradespeople because that may bring labour costs down.’

He slammed the Coalition for its role in helping Labor dance around the concept of CGT changes with little scrutiny.

‘This is all happening for no other reason except we’ve got a Liberal party that’s in absolute chaos and mess,’ he said.

‘I just can’t believe we have no one standing up.’