Land, it is fair to say, is important.In Australia this is very much the case – and even more so in the past 25 years.Last week the Bureau of Statistics released the December 2025 national accounts figures for finance and wealth.These get less attention than the other national accounts, which have the GDP figures, but given they contain the breakdown of household wealth they are vital to understanding why younger Australians especially feel the economy is not working for them.In 2025, total Australian household wealth increased by $1,751bn – 49% of that, or $859.

8bn, came from land,The crucial thing to remember is that we are talking land, not houses,The great Australian dream might be to own a home, but really it is the land on which your home is built that is of real value,This was not always the case,Back in the 1980s, the value of land held by households was about 1.

3 times that of the value of the dwellings; now it is three times that value:If the graph does not display click hereIf you look at the past 25 years, land value has increased well beyond other assets.Even superannuation, which is much bigger now than it was in 2000, has not grown by as much:If the graph does not display click hereEven percentages can hide just how huge this difference is.Land assets that increased 832% compared with a 719% increase in deposits over the past 25 years is hard to wrap your head around – especially as the amount we hold in our bank deposits is much smaller than land values.But when you compare percentage growth to actual dollar-growth figures, the importance of land comes through clearly:If the graph does not display click hereThat, as you can imagine, is great for those who already own land; it is not so great for those seeking to do so.Land now makes up 42% of all the assets held by Australian households – well up from the 30% it was in 1988.

And yet oddly the combination of land and dwellings has changed little:If the graph does not display click hereThis is the whole reason why, as Dale Kerrigan in the 1997 film The Castle put it: “You can overcapitalise, can’t you.” Spending big on your house will only deliver marginal profit, given land prices are really what determines the real-estate value.When you consider this it makes sense that some landlords might not feel much need to fix up any broken or old parts of a rental, given it will do little to improve their profit should they sell the property and make a capital gain.And capital gains and house prices remain very much a hot-button political issue – even if the focus on petrol prices and a possible gas export tax seem more prominent in the run-up to the budget.The fuel excise cut will drop petrol prices initially but they could be wiped out by more increases in world oil prices.

But they already have had an impact.The petrol price rise since the start of the US-Israel war on Iran has effectively equalled a 45 basis point increase in interest rates.Given we already had a 50 basis points increase from the February and March rate rises, it is little wonder property analysts are suggesting prospective buyers are abandoning the market and prices may be set to fall.If the graph does not display click hereBut lowering house prices in response to an economic horror-show of high oil prices and rising interest rates is not a great way to go about improving housing affordability.The problem goes back to the issue of wealth.

Right now, the 50% discount on capital gains tax (CGT) rewards those who buy and sell properties (and the land on which they sit) in order to increase wealth.And it has clearly done its job.Back in the 1990s, the value of land held by households was about 1.5 times annual household income; now it is 3.8 times.

If the graph does not display click hereIt’s not a coincidence that things started changing around 1999 when the CGT discount was introduced.The government is now expected to lower the discount.Independent MPs, including Dr Sophie Scamps, support such changes, as do the Greens.The Liberal party remains opposed, but for weird reasons.When he became leader of the party in February, Angus Taylor said he was against changes to the CGT discount because home ownership was “the centrepiece of the Australian dream”.

Similarly, this week, the shadow treasurer, Tim Wilson, told Triple J’s Hack program that he was against it because he wanted “young Australians to have a chance to buy their own home”.But the capital gains tax discount only applies to people selling investment properties.It provides no help or incentive to anyone buying a home to live in.This is the problem with the current policy settings that have been in place since John Howard and Peter Costello made the changes 27 years ago.Housing has become about investing and building up assets and wealth rather than providing people with a home to live in.

And worse still, housing has become about ensuring those already with wealth are able to gain even more of it at the expense of those hoping to one day own their own place.The May budget is the time to change that.Greg Jericho is a Guardian columnist and chief economist at the Australia Institute