Generally, people allocate their money into saving, transaction and investment. Many governments around the world, including Australian government, collect tax on income derived from investment. But imputed rent and capital gain in property market are not levied tax because of exempting from Australian government. Imputed rent describes the benefit gained by the household compared with a corresponding household living in a rental dwelling with market rent. And capital gain is the difference between your capital proceeds and the cost base of your CGT asset – that is, where you receive more for an asset than it cost you. Water flows from high elevation to low elevation, money also flowing out from high-taxed asset to low-taxed asset so the money, leaking out from other assets, has flowed into real estate market. Under market mechanism theory, the overflowing of money has lifted demand in properties, leading to escalating house price in Australia.
Support by Gavin Wood; Rachel Ong and Ian Winter (2012), the exemption of imputed rents and capital gain in federal tax bias between property and other assets, expanding the conflict to between homeowner and first-homebuyer.